Human resources (HR) plays a significant role in a business’s operations, growth and success. HR is a department that looks after the people working within the organisation, so if you want business operations to run smoothly, having an effectively working HR unit is crucial. 

This is why many businesses like to hire HR consultants to help them out with this. If you have a solid understanding of HR, then you might consider starting your own HR consulting business. This is a fantastic way to use your skills to aid others in building a better organisation. However, before you start offering your services- it’s important to take care of your business’s needs first. Specifically, the legal requirements that should be addressed when you start your own HR consultancy. This way, you can ensure your business is well protected. 

What Is Human Resource Consulting? 

Human resources refers to a pretty broad spectrum of functions. In most cases, HR is a department in an organisation that takes on the management, training, hiring and termination of staff. Anything related to employment law or employee matters is usually dealt with by HR. 

HR consultancy on the other hand, is a service provided by professionals. They are hired externally, coming on board to help improve the effectiveness and efficiency of an organisations HR functions. 

How Do I Become A HR Consultant? 

HR consultancy is not a strictly regulated profession. That means, there’s no board exam, registration or specific qualification you need to attain. However, there are studies and experiences you will likely need to undertake, so you can gain the understanding needed to start your own HR consulting business.  

Consider getting a bachelor’s degree in HR and gain professional work experience. Establish a specialisation and improve your knowledge in this area. When you have the right expertise, organisations are more likely to take you seriously enough to hire your consulting services. 

How Do I Become A Freelance HR Consultant?

When you feel you’ve got enough expertise to start consulting others on their HR matters, then it’s time to start your own consulting business. You might be thinking of becoming a freelance HR consultant. This can be a great way to give yourself more flexibility and options. However, even if you just plan on freelancing, it’s important to legally register as a business. 

Let’s discuss how you can go about this in more detail below. 

Register Your HR Consultancy Business 

Whether you’re starting a fully fledged HR consultancy company or you’re going to be freelancing on the side, it’s important to register your business. Understanding how you want to operate your business and what you’re willing to commit is key. This will determine the kind of business structure you need. Commonly businesses are registered as a:

  • Company 
  • Sole trader
  • Partnership 

If you plan on starting a partnership with someone, you will need legal documents like a Partnership Agreement. To keep your business protected, it’s important to get legal documents like this one drafted by a professional. 

The same concept applies for starting a company. Registering a Company is a complex process that requires planning and following legal regulations. To get your company off to a strong start, it’s wise to have the help of a legal expert so they can make sure nothing goes wrong and your company is all set for success. Even though registering a company might seem like a long winded process, once it’s set up the company will be a legal entity on its own. This is often considered better for protecting your own liability as all assets, legal matters and debts will belong to the company itself, as opposed to you. 

If you’re looking for something a lot simpler, then a company or partnership business structure might not appeal. If this is the case, then you can always enter the business world as a sole trader. As a sole trader, you’ll be entirely responsible for the business and all its liabilities. Setting up as a sole trader is relatively simple. It can be done online by getting an Australian Business Number (ABN). You will also need to Register A Business Name if you plan on going by something other than your personal name. Once you have all that sorted, your HR consulting business is all set up and ready to function. 

It’s also important to know, there are alternative business structures to the ones we mentioned above, such as a Dual Company Structure. This takes additional legal documentation and more planning, so it’s important to have a legal expert guide you through this process. If you want to know more about your options, our specialist lawyers are happy to have a chat. 

What Legal Documents Do I Need To Start A HR Consulting Business? 

When your business is registered, the next step is to get your legal documents prepared. Legal documents are one of the most important aspects of any business as they will ensure your business remains protected. We’ve listed a couple of key legal documents you may want to consider getting for your HR consulting business below. 

Consultancy Agreement 

A Consultancy Agreement sets out the terms and conditions for your working relationship with each client. It covers important matters such as the scope of work, duties, responsibilities, payment and termination. Having a written agreement in place keeps both parties on the same page and prevents miscommunication, so it’s worth getting one catered for your business by a legal expert.   

Employment Agreement 

As a consultant, you might hire help to help you run the business. Expanding your team is always a great way to ensure increased productivity however, it’s important to start this relationship off on the right note. An Employment Agreement covers all important matters, from role description to leave. Setting the correct tone with your employees can help operations run much smoother when running a HR consulting business.  

Disclaimer 

As a consultant, you’ll be offering valuable advice. However, you cannot be liable for everything that happens. That’s why it’s important to have the right legal documents that clearly state what you cannot be legally responsible for. A Disclaimer is useful in this scenario. When you’re running a consulting business, limiting your liability is crucial. You don’t want something out of your control coming back to hurt your business. 

Website Terms and Conditions 

Most businesses and firms like to have a website their clients can find and contact them on. However, being online comes with its own set of risks. It’s always wise to have Website Terms and Conditions in place, so others can know the correct way to engage with your website. Terms and conditions are especially important if you’re going to be providing any kind of information on your business’s site, as this can help keep things regulated and protect your liabilities.   

How Much Do HR Consultants Charge? 

You might be wondering about how much you will charge for your HR business’s services. It’s good to do your research on what the general industry standard is, take a look at business costs and see how much profit you’ll need to make in order to survive as a new HR consultancy business. This requires a fair bit of research, so we recommend putting all your information in one place, such as a Business Plan and go from there.

A business plan can help keep things on track and allow you to assess any potential risks, liabilities or issues, so you can be better prepared for them. Additionally, if you’re thinking about getting investors involved in your HR consultancy, then they’ll most likely want to see a business plan. In that case, we can help you with drafting a Non-Disclosure Agreement (NDA) so you can secure finances for your business while still protecting it. 

Any Other Legal Considerations For A HR Consulting Business? 

You’ll need to keep an eye out for any additional legal considerations, even after you have registered, planned and gotten the right legal documents drafted. For example, if you have a business website, then you may need to get a Privacy Policy drafted in order to be compliant under the Privacy Act and Australian Privacy Principles.  

However, a general response it’sn’t an ideal answer to this question. When it comes to opening a HR consulting business, the exact legal considerations that are going to impact your business will depend on your unique business. No two businesses are exactly the same, so neither are the issues that will impact them. It helps to talk your plans and ideas through with a Commercial Lawyer. A legal expert can help you identify any potential issues and the best way to manage them.  

Next Steps

Opening a HR consulting business is an exciting new way to share your skills and knowledge but it’s important to start your business off with the right legal protections. To summarise what we’ve discussed: 

  • HR consultants provide external expertise to enhance HR efficiency of an organisation
  • Becoming an HR consultant involves education, specialisation and experience- make sure you have these before starting your business
  • Whether you’re doing freelance consulting or starting a company- you will require legal registration of your HR consulting business
  • Legal documents like Consultancy, Employment Agreements, Disclaimers, and Website Terms ensure business protection
  • Setting consulting fees requires industry research and a comprehensive Business Plan
  • Ongoing legal considerations include Privacy Policy for your website- however this mostly depend on your unique business factors
  • Consulting a Commercial Lawyer helps manage legal issues and ensure compliance- get in touch with ours today 

If you would like a consultation on starting your own HR 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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