Hey this is Drew with Hourslogger and welcome back to our consulting crash course. In this video we're going to take a look at how to actually set up your consulting business. We'll take a look at choosing your name and logo, getting business cards in a website, choosing your legal structure, and some basics on accounting, bank accounts, and insurance.
Now before we get into it I just want to start by saying that you don't technically need all of these things to start consulting. The most important thing when you're getting started is finding work and making money and you technically don't need a website to do that. However, if you want to run a legitimate consultancy, these are the things that you should do to protect yourself legally and look professional. One of the first items you'll need to decide is your business name. You can use your own name or choose a different name for your business.
Choose something that is likely to have the domain and social accounts available. So, for example, our business name is DNM Devco. We added the D and the M because they are our initials and they make our name unique.
Devco.com and at Devco weren't available, but DMDevco.com and at DMDevco were. And we still go by Devco for short. Go on a logo that displays your name and at least two or three versions of it. A long, short, and an icon.
A long version is good for navigation bars and footers. A short version and an icon are good for profile pictures. Here are some examples of our logo.
Business cards and a website help validate your business and build trust with potential clients. Your website should clearly state what you do and showcase previous or sample projects. It's common for clients to ask for a resume or examples of your work.
Now it's important to have a professional and cohesive presence. All items should feel similar in design. Check out Canva for well-designed templates.
It's a good idea to iterate on these items based on feedback from a circle of trusted friends. Here are some resources to help you quickly create these items. For business name ideas, check out NameLix. For logo design, Looka 99 Designs and Fiverr.
For color palettes that match, use Color Hunt. For various well-designed templates, check out Canva. For business cards, we use Moo.
For a website builder, check out Card. Squarespace, Weebly, or Wix. For free images for commercial use you can use Pexels or Undraw and I left a link to our site for an example. The correct legal structure depends on what you want to do with your business.
The main options that make sense for consulting are an LLC, limited liability company, or a sole proprietorship. We recommend an LLC because it limits your liability to the amount invested in the business. It separates your personal assets, like your car, your house, or cash, from your business assets so no one can take your car or your house if the business is sued for a large amount of money. You can even file yourself via LegalZoom.
So let's look at some of the differences between a sole proprietor and an LLC. First, sole proprietor. Now you're a sole proprietor by default. If you're doing business and making money and you haven't filed anything, you're technically a sole proprietor.
You and your business are treated as the same entity. Your personal assets are not protected. There's no paperwork or filing fee and you can file a DBA or Doing Business As to change your business name.
A DBA ensures that no one else is doing business under your name and it allows you to open bank accounts and other business services under your business name. Now let's look at an LLC. Your business is viewed as a separate entity. Your liability is limited to your investment in the LLC. Your personal assets are separate and are protected.
An LLC can be used to house multiple of your business ideas. There is a yearly filing fee and tax. In California, it's about 800 bucks a year.
An LLC usually holds more market credibility. And you can check out more on LLCs at LLC University. Here's a link if you want to read more about the differences between LLCs and sole proprietors.
You're going to need a place where you can save various business documents and easily find them online. We use and recommend Google Drive and the rest of the G Suite. It allows us to view, upload, or download all of our docs from any device. Dropbox and Microsoft OneDrive are similar options. Now let's talk some really high level accounting.
You're going to want to use some sort of accounting software like QuickBooks Online for your bookkeeping. I recommend QuickBooks Essentials or Simple Start. It's about $40 to $25 a month. I've heard upgrading from QuickBooks Self-Employed is a big pain.
If you have a chance of growing, go with the typical QBO plan. QBO allows you to track customers, times, invoices, payments, and expenses. It also helps you generate your tax documents at the end of the year.
I highly recommend that you find somebody that you can ask for accounting and bookkeeping advice. We'll have a lot more information on this later in the accounting for consultants section. Once you have an LLC set up, you can open a business bank account.
You'll need your TIN, Tax Identification Number to open a business account. You get this after successfully filing for your business. You may need additional documentation to prove your business. If you're a sole proprietor, you're not legally required to open a business bank account.
However, it may be smart to open a separate checking account. We bank with Chase and recommend them. Bank of America and Wells Fargo are other options, but choose the bank that's right for you.
Getting heirs and emissions insurance, also known as E&O, is a good idea. This covers you from mistakes, bad advice, copyright issues, and more. It costs roughly $500 to $1,000 a year per employee.
Do your research and choose an insurance provider. Here's a link for more information about E&O insurance from Progressive. That's all I've got in this video. Next, we're going to talk about consulting pricing strategies.
Thanks and see you in the next video.