Not everyone can be an expert on everything, which is why we often turn to others who have the skills and knowledge to help us. These people are usually consultants, who have an area of expertise they use to help organisations grow and function more effectively. 

If you have a particular specialisation and the urge to utilise your expertise to aid others, then starting a consultancy business might be for you. Before you jump into helping clients though, there’s a number of legal considerations you need to think about when starting your own consultancy business. Let’s get into them below.  

Do You Need A Licence To Start A Consulting Business?

Consultants can be part of many different industries. Therefore, whether or not you’ll need a particular licence, registration or qualification will depend entirely on what your business will be providing consulting for. There’s no general or standard licence for all consulting businesses. 

If you’re going to be providing consulting for something related to healthcare or the law, then you will likely need to attain the proper qualifications and have the right licence before you can work in the industry as a consultant. Other industries, such as IT may not require a specific licence. However, it still helps to have relevant qualifications and experience in the area you plan on providing advice in. 

If you’re having trouble trying to figure out what licences, registration or qualifications you might need to have, then talking to a Regulatory Compliance Lawyer will help. Then can let you know exactly what you need to do, that way you can be fully prepared to start your consultancy business.  

How To Start Up A Consulting Business: A Legal Checklist

When starting any kind of business, a lot of business owners get so stuck in the details of the service they offer, they forget how important the legal aspects of running a business are. It’s crucial to ensure all parts of your business are getting the necessary attention, that way it can function properly as a whole entity. Not to worry though, our team of legal experts are here to make the legal side of running a business much simpler. 

Here’s a checklist of the key legal considerations for starting your own consulting business: 

  • Have the proper qualifications and licences 
  • Create a business plan 
  • Register your business 
  • Get the right legal documents

We’ve discussed licensing and registration (it depends on your industry), so let’s move on to creating a Business Plan. This isn’t necessarily a strict legal requirement, however it’s a very helpful document to have. A business plan contains your goals, research, financial planning, marketing ideas and much more. Having all your plans and ideas in the same place can help you stay organised and on top of things. Moreover, it’s much easier to identify your business’s strengths and weaknesses when you’ve got everything all written out. 

Once you’ve got a solid business plan in place, you’ll be better equipped to make important decisions, such as deciding what the legal structure of your business is going to be. Not only will your business’s legal structure set the foundations for your business but it will also determine the process for registering your business, so it’s a pretty important step. 

Registering Your Consulting Business 

The three most common legal structure people choose for their business are: 

  • Sole trader
  • Company 
  • Partnership 

Registering as a sole trader is the better option if you’re looking to set up a business that is low maintenance to run, with a quick registration process. As a sole trader, you’ll be personally liable for the entire business, so have a think about the risks first. If it sounds like the right structure for you, then you can go ahead and apply for an Australian Business Number (ABN) online. It’s a relatively simple process and if it goes we’ll, you’ll relieve your ABN shortly after. Remember to Register A Business Name as well, if you plan on operating your consulting business under a name that is different to your personal one. 

If you’re not comfortable with running a business as a sole trader and want something that can offer a little more legal protection, then you can always Set Up A Company. You’ll need to get an ABN to operate as a company as well. In addition to it, you’ll also require an Australian Company Number (ACN). The process to complete all of this can be long and a little complex, as there’s a lot more rules and regulations to setting up a company than there is to becoming a sole trader. However, once it’s set up, the company will be a legal entity on its own, meaning your liability will be protected should something go wrong. 

If you’re thinking of setting up your company with a partner, then you’ll need to make sure you have all the right legal documents in place, such as a Partnership Agreement or a Founders Term Sheet.  

For more information on the difference between a company and a sole trader, check out our article ‘Sole Trader Vs Company: Should I Make The Switch?

Can You Start An Online Consulting Business? 

Yes, you always have the option of starting your consulting business online. This way, you can operate from home, which is a lot more cost effective and convenient. Before you start setting up your home office, you will need to check any local council and zoning requirements. Zoning regulations are going to impact what kind of business you’ll be able to run from your house. Additionally, local councils might have permits or registrations they need you to complete if you plan on running your business online and from home. You can always chat with one of our Regulatory Compliance Lawyers for some expert guidance. 

Starting an online consulting business can be a great way to reach out to clients that you otherwise might not be able to chat with, due to geographical limitations. However, being online comes with a different set of risks. As you will be operating on the internet, it’s important to make sure you have the right legal protections in place that can help keep you and your clients protected while you conduct business online. 

A few legal documents you might want to consider getting include: 

  • Privacy Policy: A privacy policy is legally required if your going to be collecting any kind of information from your clients, so it’s important to have a legal expert draft this one up for you 
  • Website Terms and Conditions: You’ll need to put in place rules and boundaries for using your online platform. That way, you’ll be able to retain some form of control and protect your liabilities- a website terms and conditions is one of the best ways to achieve this 
  • Cookie Policy: In most cases, a cookie policy is not legally required. However, it can help your business be more transparent with everyone that visits your website. In turn, you’ll be able to build more trust with your clients which is always a good thing 
  • Data Breach Response Plan: When you operate online, a lot of information is going to be stored on your devices. Sometimes, important information gets accessed by the wrong people. When this happens, you want to have a strong plan in place so your response can be as efficient as possible 

It can be difficult to guess the best way to project your business while it operates online. Talking to Data and Privacy experts is essential in order to understand the risk you may face and your options to minimise them.

What Other Legal Documents Do I Need To Run A Consulting Business?  

Privacy documents aren’t the only legal documents that will come in handy when protecting your business. In fact, there’s a number of legal documents that are necessary for keeping your business safe. Let’s take a look at a few of them below. 

Consultancy Agreement 

A Consultancy Agreement is an important contract that will be between you and your client. This agreement will determine things like the scope of work, payment, key responsibilities and obligations as well as termination. Getting one personalised to meet your business’s needs is key in keeping things running smoothly. 

Employment Agreement

If you’re thinking of getting people on board to help with running your business, then it’s important to start the relationship off with a strong contract. Employment Agreements let both parties know what they can expect from one another and covers matters like pay, leave, duties, entitlements, company policies and much more. It’s worth getting drafted.

Trade Mark  

Planning on having a logo for your consultancy business? Then it’s important to protect it by registering it as a Trade Mark. A logo can help distinguish your business from others in the market and be integral to your business’s identity. Ensuring its legal protection is the logical next step. You’ll need to register your logo with IP Australia so it can be approved as a trade mark. After that, you’ll own it for the next 10 years. This process can take a while and be a little complex. Having a legal expert in your corner always helps.

Can I Start My Consulting Business On The Side?

Taking the leap into the business world can be pretty daunting. However, it’s not necessary for you to quit your day job entirely and pursue your dream of running your own consultancy business full time (if you don’t want to). You can always test the waters by doing it on the side or run it as a freelance business. 

How To Start A Freelance Consulting Business 

Starting a freelance consulting business will be the same as starting any kind of consulting business. You will need to go through the same planning and registration process. Moreover, there will still be a need to have all the right legal documents in place, as your business is  open to the same risks, whether you’re running it as a full time gig or a side hustle. 

Next Steps 

A consulting business can be an exciting new step in your career as a consultant. However, it’s important to take care of all the legal considerations before you start working with clients. 

To summarise what we’ve discussed: 

  • Starting a consulting business requires considering various legal aspects
  • The need for licences, registrations, and qualifications depends on the specific industry you plan to consult in
  • It’s advisable to consult a Regulatory Compliance Lawyer to understand your legal requirements.
  • Key legal considerations for starting a consulting business include having the proper qualifications and licences, creating a business plan, registering your business, and obtaining necessary legal documents
  • A business plan helps organise your goals, research, and financial planning
  • Your business’s legal structure determines the registration process. Common structures are sole trader, company, and partnership
  • Registering as a sole trader is simpler but involves personal liability
  • Setting up a company offers more legal protection but involves a complex registration process
  • If partnering, ensure you have the necessary legal documents like a Partnership Agreement
  • You can start an online consulting business but need to consider local zoning regulations and obtain legal protections
  • Important legal documents for online consulting include a Privacy Policy, Website Terms and Conditions, Cookie Policy, and Data Breach Response Plan
  • Consulting data and privacy experts is crucial for online business protection
  • Other legal documents to consider for a consulting business include a Consultancy Agreement, Employment Agreement as well as getting a Trade Mark registered
  • You can start a consulting business on the side or as a freelance venture while keeping your day job 
  • Starting a freelance consulting business follows similar legal requirements 
  • Ensure you address all legal considerations before working with clients in your consulting business 

If you would like a consultation on starting your own consultancy business, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

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