If you're thinking about hanging up your shingle
as a consultant, you probably already have most of what you'll need.
Odds are, you know the business, you have the skills and experience,
you know or have the certifications you'll need, and you may have
a good idea of where your first clients will come from. The following
steps can help you start on the right track:
1. Prepare a personal inventory
You want to be sure you have the basic skills any independent
contractor needs, no matter what the business. For example: you
will need to
- organize an office,
- handle records and finance,
- manage your own time,
- promote your services, and
- negotiate contracts.
Don't be reluctant to hire experts to help with
some of these tasks, and when appropriate barter your expertise
for theirs.
2. Write a Business Plan
As soon as possible after you've decided on your consulting path,
you should put together a business plan: write down where you
want to go and how you want to get there.
You business plan should spell out:
- What services do you plan to sell?
- Who do you think will buy your services, how big your market
is, how much income you expect to make, and when?
- What resources you'll need to do this (money, equipment, extra
help)?
- What personal qualifications do you and anyone working for
you has so that you can meet the above challenges?
3. Organize your Business
Once you are ready to get started, you'll need to decide how to
structure your business. Will you run things simply as sole proprietorship,
a partnership, or a corporation? Consult with a business attorney
or your accountant to help guide you in selecting a structure
that fits your circumstances.
Generally, if you operate as a sole proprietor
and have no employees, you can use your social security number
as your Tax ID. Corporations and firms with employees need an
Employer Identification Number (EIN) from the IRS. You may get
one online from: http://www.irs.gov/businesses/small/index.html
Don't mess with the IRS. They are the one creditor
you don't want to have. As a self employed business you'll be
required to pay social security tax (FICA) in addition to regular
income tax. In 2003, your first $87,000 of income is subject to
FICA. For 2004, that figure jumps to $87,900.
4. Organize Yourself
You will need to set up an office. This means you'll need all
the things that you ordinarily would expect from an employer:
- a useable workspace;
- computer, e-mail and other equipment;
- files for correspondence, expenditures, billing, et cetera;
- a phone with voicemail;
- business cards, stationery, and probably a Web site
You will also have to organize your life and
probably impose discipline on yourself, to make sure deadlines
are met. If you work from home set aside time and space for yourself,
when and where family members should not intrude.
5. Have Adequate Working Capital
Starting a consulting business can be thought as running a marathon.
Perseverance and staying power are probably the most important
resources to being successful. One key element to stay in the
game is having access to enough working capital to weather the
downturns. One of newest options to getting cash is by borrowing
from your retirement funds thru a self-employed 401(k) loan. Before
2002, with few exceptions, you could borrow from your retirement
funds only if you were still working for your employer. While
tapping your retirement funds may often times not be the best
or wisest source of financing, it is one option that you should
be aware of and one that has advantages over many other forms
of financing commonly used by self-employed individuals. You may
find more information on the self employed 401(k) loan on http://www.click2borrow.com
Inexorably, more and more employers are treating
their workers as in-house consultants for renewable short term
assignments. Instead of fighting this trend, you can strategically
develop your consulting skills so that more than one client will
want to pay for your time. Then you too can join the rank of those
who bask in the financial and emotional rewards of being an independent
consultant.
Credit:
Daniel Lamaute, a retirement investment specialist with Lamaute
Capital's http://www.investsafe.com
provides tips on how to avoid taxes and penalties on your retirement
funds withdrawals.
Related
Information:
NBA
Benefit Provider - Business
Insurance Profiler
NBA
Resource Article - Business
Sense
NBA
Resource Article - How
to Protect Yourself & Your Business
Reprint of this article does not constitute an
endorsement by the National Business Association; the article
is for informational purposes for our members and viewers of our
Web site.
