If you want to run a consulting company that requires little maintenance, a one-person company is probably the best option, but it leaves you with personal responsibility for your business.. Therefore, an LLC may be the best option because, in general, it protects your personal assets from liability. Previously, Jason managed the execution of agreements for PwC clients, and had experience working directly with integration leaders and the C suite on more than 20 merger integrations. Jake Simpson is the chief revenue officer at Catalant, where he leads marketing, sales, customer experience and revenue operations.
Before joining Catalant, Simpson held positions of chief operating officer and CRO in business-based cybersecurity at iboss and Onapsis, respectively. An influential percentage of Simpson's experience comes from the pioneering software and services company PTC, where he spent 17 years in global leadership positions in sales and general management. Simpson has a degree in Mechanical Engineering from the University of Massachusetts. One of the most important decisions faced by consultants and freelancers is whether to become or continue to be self-employed or a 1099 for tax purposes.
For example, if you are incorporated as a type S limited company, composed of fewer than 100 shareholders, you will pay income tax on your share of the company's income (salaries, dividends and taxable benefits paid to you by the corporation) according to your personal tax rate; you can also use corporate losses to offset other income. The S corporation itself is unlikely to pay direct income taxes. C corporations, on the other hand, pay a fixed tax rate of 35%, so be very careful about how you create your corporation. The constitution adds a certain level of professionalism to your business and customers will notice, especially those who prefer to work from corporation to company rather than collaborating with 1099.
LLC consulting is an advisory service for entrepreneurs who are creating a limited liability company (LLC). This business structure provides personal responsibility, along with the convenience of transferring taxes, in which profits and losses are reported on the owner's individual tax return. An LLC has a lot of benefits, making it a great choice for many start-ups, including consulting firms. As a consultant, you often give advice about your areas of expertise.
If their guidance has negative consequences for their customers, sadly, they can take legal action. With an LLC, your personal assets won't be at risk. An LLC also provides you with a lot of flexibility in terms of management, as well as tax advantages. If you are in doubt, consult with an attorney to make the right decision for you and your consulting firm.
There are no complex legal requirements for establishing a sole proprietorship, but this type of business also doesn't offer the same protections that an LLC or other formal business structure can provide. Many companies need the help of independent professionals and are willing to hire consultants flexibly, project by project. A dedicated Catalant account team partners with your organization's strategic leadership to design and implement an agile consulting program that generates results. Before co-founding Catalant, Petitti was a consultant at the negotiation and conflict management consultancy Vantage Partners and, before that, at Booz Allen Hamilton.
But regardless of what happens with the overall size of the consulting market, there are plenty of ways to build a successful business as a consultant. An LLC is an increasingly popular business structure among start-ups, offering liability protection for property and greater flexibility than a corporation, especially in terms of taxes. If you are doing business on your own, under your own name, without a formal business structure, you are a sole proprietor and your company is a sole proprietorship. If you are the sole owner of your business, a single-member LLC can help protect you from liability for business obligations.
An LLC isn't the only business entity you can choose from, and you may prefer the ease of running a sole proprietorship or the tax benefits of a corporation. However, if you decide to form a single-member LLC, your personal assets are protected, as your company is considered an independent legal entity. One of the biggest expenses, and often one of the first to be cut from the budget of consultants and freelancers, is health insurance. From liability protection to tax savings, there are good reasons for consultants to formalize their business structures.
The information provided on this site does not constitute legal advice, does not constitute a lawyer referral service, and no confidential attorney-client relationship is established or will be established through the use of the site. You should also create an operating agreement, which sets out the internal rules for how you will manage your LLC, including how you will divide profits and responsibilities between the owners and what will happen to the business if the owners can no longer (or want) to manage it. .