If you have expertise in a particular field, you could be sitting on a gold mine: The U.S. consulting market has a value of $68.5 billion.1 From expert business strategists to experienced dog trainers, people are looking for reliable advice from reputable professionals of all types. If you’d like to earn a stream of income by sharing your hard-earned skills and wisdom, here’s how to start a consulting business from scratch.

In a consulting business, you (the consultant) are hired by clients to share advice on a particular subject. The client pays you with hopes that you will help them achieve a desired outcome. If you can continuously help your clients get the results they want, you’ll be on track to building a thriving business. But how do you get started? Whether you’re wondering how to start a consulting business on the side or full-time, here are six practical steps.

1. Choose your area of specialization

The first step in starting a consulting business is choosing your area of specialization. Where does your expertise lie, and how can you define it so it aligns with a common need among the people who would benefit from your wisdom and advice?

For example, say you have 15 years of experience working in human resources for various companies, including two on the Fortune 500 list. You could become a human resources consultant who helps medium-sized companies optimize their HR operations.

On the other hand, say you are a certified personal trainer who has an incredible personal transformation story, along with numerous client success stories. You may want to become a health and fitness consultant for a certain demographic of individuals based on your experience.

Think over your skills and experience. Then, define exactly what type of consultant you want to be and who you want to help.

2. Register your consulting business

Once you have a clear idea of the type of consultant business you are going to run, it’s time to check all the legal boxes. You’ll need to register with local, state, and federal authorities, pay all of the necessary fees, and file for your business license.

It’s also a good idea to speak with a CPA (certified public accountant) to figure out which type of business entity you should form. Common business structures for consultants include:

  • Sole proprietorship: A sole proprietorship is the default tax status for independent contractors. With this setup, your business is an unincorporated pass-through entity, meaning business income is reported on your personal tax return. From the IRS’s perspective, you are your business, and your business is you. Further, you are personally liable for any claims involved with your business.2
  • Limited Liability Company (LLC): An LLC is an unincorporated structure where income and losses pass through the owner’s tax returns — similar to a sole proprietorship. However, the LLC separates the owners from being personally responsible for the business which can help to shield you if your business is sued or goes bankrupt.3
  • S Corporation (S Corp): An S Corp is an incorporated entity that has stock shares appointed to the owners and which helps to shield personal assets. The profits flow through to the shareholder’s personal taxes so they are taxed at an individual rate. S Corps also pay dividends that aren’t subject to self-employment tax. As a shareholder working in your business, you would need to pay yourself a taxable salary.4
  • Benefit corporation: Whereas a traditional corporation focuses very narrowly on maximizing profits, a benefit corporation expands its focus to consider all stakeholders in the decision making process, beyond just the corporate officers and shareholders. With a mission-driven approach that calls for higher standards of purpose, accountability, and transparency, benefit corporations, benefit corporations are focused on building long-term value through improved corporate citizenship.5

Your CPA can help you weigh the pros and cons of your options. Then, you’ll just need to request an Employer Identification Number (EIN), the reference that both federal and state governments use to identify your business, and you should be all set up to get back to your core business.

3. Set your rate

Before you open up for business, you’ll need to determine your rates. How much will you charge, how will you package your consulting services, and how much are you willing to work? It can help to perform research on what consultants in your niche are making in the area you’ll be serving. Then, adjust the salary accordingly based on your skills and experience.

For example, if you are going to be an HR consultant in Austin, Texas, the average salary is $97,500.6 You can adjust that salary up or down depending on whether you believe your services are below, at, or above average. Then, you can break down the salary per month, week, day, and hour to determine how to price your services.

If you are going to offer 40 hours of consulting per week, you would need to be charging at least about $50 per hour to hit your salary goal ($46.88/ per hour to be exact). Remember, if you’re trying to figure out how to start a consulting business on the side, you will need to ensure you limit your hours accordingly. Furthermore, you will have costs associated with your business such as taxes, a business phone plan, computer equipment, professional attire, small business insurance, and possibly travel. These expenses will come out of your bottom line so should be considered when setting your prices.

Beyond the price you charge, you may also want to require certain time commitments. For example, you may require a minimum six-month contract for your consulting services. Do some research and run the numbers for your type of consultancy in your area. Then, define your service packages. If you’re trying to figure out how to start a consulting business on the side, you will want to figure out how many hours you’re available to work, and then plan accordingly.

4. Market yourself

With your plans in order, it’s time to let the world know what you have to offer. That means developing and implementing a marketing strategy that builds your brand and attracts your target clients. But how?

For starters, build a professional website. A well-designed website can help to establish credibility, attract the right clients, and inspire them to book a meeting.

Be sure to optimize your website for search, also known as search engine optimization (SEO), so that it ranks on search engines for the right keywords. The right keywords are the ones your prospects are using when looking for your services. For example, if you’re an HR consultant, it might be search terms like “human resources consultant” or “outsource HR advisor.” An SEO specialist can help you figure out the right words to target and how to incorporate them.

Additionally, it’s wise to take advantage of social media. Identify the best platforms to reach your audience and begin building out your presence on those sites. For example, if you are targeting VPs and CEOs, LinkedIn may be the best option. If you want to reach new moms, you may opt for Instagram and Facebook. A social media consultant could help you here.

Once you decide on platforms, optimize your profile to engage your audience and create content regularly that builds trust and shows your expertise. For example, you could share:

  • Tutorials
  • Testimonials
  • How-tos
  • Interviews
  • Discussions and blogs of industry trends

Additionally, utilize your existing network. Chances are, you have plenty of experience and business contacts in the industry. Lean on them to get the word out or to speak on your behalf. You can also offer discounts or rewards for referrals to quickly grow your client base.

5. Build client rapport

In a service-based business, building quality relationships with your clients based on trust is essential. When offering advice, rushed or ill-conceived recommendations don’t just come at the cost of upset clients. Consider how your guidance will affect the livelihoods and the finances of employees and families. On the flip side, when you give advice that drives the results they want, it doesn’t just impact your client’s prosperity, but their employees and families as well.

With each client you take on, be honest about your qualifications for each job. That means speaking openly about your knowledge of industry trends, updates, and changes. Honestly detail your specific areas of expertise and how your expertise can translate into tangible benefits to your clients.

Simply put, as you take on the role of a paid consultant, remember that it comes with a level of responsibility. Taking that to heart and being honest with clients will help to earn their trust and continued business.

And that also brings us to professional liability insurance.

6. Protect yourself with insurance

No matter how great of a consultant you are, something could go wrong at some point. In the litigious world we live in, this poses a serious risk for you and your consulting business.

If financial losses occur based on recommendations you gave, you could be accused of negligence. Professional liability insurance can cover errors and omissions that resulted in a financial loss for the client as a result of the professional advice you provided. It also provides for the investigation and legal defense of claims.

However, as an independent consultant, you may worry about paying for a full-time policy that you only need on occasion. Fortunately, Thimble’s Consultant Insurance can be customized to your needs.

We offer on-demand insurance policies that cover you by the job, month, or year. Purchase a business insurance policy when you need it, and save money when you don’t.

Start your consulting business!

Now you know the basics about how to start a consulting business. By following these 6 steps, you’ll have a strong foundation to build a thriving consulting business. Like any service-based business, it can take time to get the ball rolling. But don’t worry — after delivering referral-worthy consulting to a few clients, you’ll start building momentum.

Want to learn more about Thimble’s business insurance? Just click “get a quote” or download the Thimble mobile app, answer a quick set of questions, receive your quote, and click to purchase — all within minutes.


  1. Source Global Research. The US Consulting Market in 2019. 
  2. IRS. Sole Proprietorships. 
  3. IRS. Limited Liability Company (LLC). 
  4. IRS. S Corporations. 
  5. Benefit Corporation. What is a benefit corporation? 
  6. Indeed. How much does an HR consultant make in Austin, TX.