So you’re thinking about taking the leap, abandoning your comfortable full time job and becoming an independent consultant. Here’s some of the plumbing mechanics to consider:
Pick a Company Name
There’s an old joke that says there’s only two hard things in computers: naming things, cache invalidation, and off-by-one errors. Don’t overthink the name – you can always go by something else if you have to. (Brent Ozar Unlimited® is actually Brent Ozar PLF, LLC® Doing Business As Brent Ozar Unlimited®.)
After you’ve picked one, search the web for your company name by itself, and in combination with terms related to your line of work. For example, if you pick Acme Consulting, search for “Acme Consulting”, and then search for Acme SQL Server, Acme Database, Acme technology, etc. You want to make sure you’re not stepping on someone else’s toes in the same business.
If you’re in the clear, then check to see that your company name is available as:
- A domain name
- A Twitter handle
- A Facebook page
- An Instagram handle
If they’re not, then check out who has them and what business they’re in, because you might have to go back to the beginning. (See, this is why I tell you not to overthink it – odds are, your first half-dozen names aren’t going to be as unique as you thought.) Register those accounts, saving your receipts, and then it’s time for the legal stuff.
Get an Accountant and a Lawyer, Then Incorporate
Consulting companies are remarkably similar to law firms. They’re collections of professionals doing risky but high-value work, with varying service agreements with clients and compensation agreements amongst the partners. Check around with your business network to see if you know any lawyers, and ask what accounting firm they use.
Then, ask the accountants if they can recommend a few lawyers who represent small businesses. (You don’t want to find the right lawyers in your peer network – that’s probably not going to be the right fit.)
These attorneys will give you a free 30-minute Q&A to find out if you’re a good fit. Be yourself during the calls, and trust your gut. You’re going to have to work with them more often than you think, and under not-so-happy circumstances. You want the relationship to be as enjoyable as possible.
After you’ve picked your accountant and law firm, talk to both of them about how you should incorporate. You’ll have to decide a few key things:
- What kind of corporation to start – LLC, C-Corp, S-Corp, …
- Where to incorporate – Delaware, Nevada, your home state, …
- What your articles of incorporation should say – how income, expenses, initial investment, ownership, and disputes will be handled
These are all huge topics. Don’t be scared at all – this is what your professional partners specialize in. Just as your lawyer shouldn’t be designing a database schema, you shouldn’t be designing your own articles of incorporation. The pros know just what questions to ask you in order to arrive at the right answers.
Setting Up the Accounting Plumbing
Register a trademark for the company name. This process can take months, and you want to get this ball rolling as soon as practical. Your attorney will handle the legwork.
(Side note: by now, some of you are thinking, “I could totally do this part myself” – and you’re right. But I’m only scratching the surface here of all the work that needs to be done, and I need you to focus on the parts that only you can do – and no one else can do for you. Carry on.)
Set up an accounting system. I’m a huge believer in using online services rather than installing software locally, and there’s a lot of good online accounting options. Before you pick one, run it past your accountant – you want them to already be familiar with it. (Remember, they’re charging you by the hour.) You can do this in a matter of minutes.
Set up a bank account. You’ll need to contribute your own personal funds to get this thing off the ground, and the tracking will be determined by your articles of incorporation.
Move the domain/Twitter/Instagram/etc assets into the company name. At this point, you’ve got a company debit card so you can transfer any bills over, and you’ve got a company name & mailing address so you can transfer accounts over.
Get errors & omissions insurance. This is insurance that helps cover you when a client sues you. I know, you think you’re the perfect consultant, but the reality is that big clients are going to demand E&O insurance coverage from all of their partners. It’s way more affordable than you think – ours was only around $1k/year when we started.
Finally: Product and Marketing
You’ll need to define:
- Your audience
- The pain points your audience is experiencing
- How you’ll relieve it (this is your product)
- What you’ll charge for it
- How you’ll get the word out to the public
But you can do all of the accounting/legal stuff first, regardless of what you’re going to sell. Maybe it’s an app, or services, or training – who knows? Go ahead and start down the legal/accounting setup road first, and your dream will start to become more real.