As we are getting ourselves ready for full-timing, starting a consulting company has been a major task that's been a bit difficult to work through.  I wanted to take a minute and share our steps for those who may need to do the same thing.  First off I have worked for the same two companies for 21 years so consulting will be a new if exciting challenge.  I have several professional colleagues that are consultants though and numerous talks with them have led me to taking this route.  Please keep in mind I am not an expert in any area this is all what I have learned and should be validated for your personal situation with an accountant and possibly a lawyer. 

1.  Sole proprietorship or LLC - I met (for free) with a local group that provides free assistance to folks starting a small business.  Look up the small business association in your area and the support was fantastic.   After learning that an LLC must be registered (with a unique name) in every state you work in, we decided to go with a sole proprietorship.  Because you have less protection if you are sued however we will need to get good professional liability insurance.  It runs $1500 -$2000K for year.  This decision is largely based on how risky the thing is you are consulting on.  For example, I have a friend who does physical fitness consulting and she had to go to an LLC because someone could take her advice and get hurt.  Since I plan on providing risk management and project management advice it is less risky but still need the insurance in case I gave bad advice and someone lost some money on what I suggested.  The sole proprietorship has much easier tax filing requirements although it does have to be done quarterly.

2.  What to charge - I had no clue so reached out to several consultants.  and had them assess my skills and tell me what they thought they were worth.  Because you have to pay the employee portion of Social Security you pay 15% social security taxes and I am hearing it ends up being roughly 50% of what you make goes to taxes.  Yes you can deduct a lot but make sure you account for half going to taxes and bill yourself accordingly.

3.  Marketing myself - this has been the biggest challenge for me.  I've heard consistently you need some sort of website in order to make your business legitimate.  Linked In alone will not get it done.  You also need references so in the beginning, you may want to think about doing non profit work, or working at a much reduced rate so you can get some nice recommendations from the start.   This includes designing a logo, business cards, etc...which you can certainly pay someone to do, but there are some online companies out there that assist with that.  The other consistent piece of advice is being active on Linked In and joining professional groups.  Not only do they post jobs but it's a nice way to network.  Something else I am going to do, is after I leave my current position I will send a private liked in message to colleagues and let them know I have started my own company.  I have also target reached out to a couple of folks from other companies and let them know my timelines in the hopes they could be my first clients. 

One of the most revelations for me has been that I may not have to follow the work, but could build it in the area I choose to be in.  I thought we would have to take jobs wherever they are, but a very good friend (and long time consultant) talked about how to market my skill set in a new town.  So if we wanted to go to Yellow Stone Park we could see what is available in Idaho Falls.  My friend recommended joining the local chamber of commerce and volunteering to do an hour presentation on something I was familiar with. They are always looking for speakers and this is a great way to let other small companies in the area know, you are in town and available to consult.  What I thought was brilliant about her suggestion was to offer to train first.   Small companies in rural areas need assistance and don't have the large pool of people to pull from that big cities have.  So if you have a special skill set, offer to train their folks on how to perform those tasks.  Way cheaper for the company than sending people to a big city to learn and it's a great way to get your foot in the door.  For example, I could teach a one day seminar on project management, and if it went well they might bring me back to provide additional consulting to their folks.  I can see this working with many different skill sets.  Know a lot about computers, or marketing, or safety etc ...you can do a one hour introduction at the small business association and then possibly more detailed training to a larger group.  I know this doesn't apply to everyone, but thought it was a great way to think about it and would allow us to choose where we wanted to go rather than the other way around which is incredibly exciting.  

I know this doesn't apply to everyone, but wanted to share what I have learned in case someone out there was traveling a similar path :)

-- Edited by Trace on Saturday 14th of December 2013 03:14:47 PM