Whether you call yourself a management consultant, freelancer or contractor, this article will provide you with useful hints and tips on starting out as a management consultant and setting up your own limited company, which as any accountant will tell you is just about the most tax-efficient way of working.
A management consultant will primarily use their business skills to provide the end client with advice on issues such as value, maximising growth, business performance for their company along with change management. They can work in a variety of different service areas, including banking, marketing, IT, business strategy and financial controls.
There is no set method for becoming a management consultant, however, a business degree, MBA, commercial experience and strong communication skills are all good to have, as are keeping up to date with all the latest management trends and news.
Finding work as a management consultant contractor
Finding work outside of agencies can be a challenge, and there is no one solution that will work. It’s very much a case of trying a combination of methods, the wider you spread your net the better chance you have.
First things first, before you even start looking for a contract and approaching companies, you will need to ensure that you have an impressive CV to showcase why you are the best person for the job.
Make sure that your details are up to date, and that the information is relevant to the contract you are looking at. Highlight your skills and use industry buzzwords.
Most importantly, check your CV for any grammatical errors and ensure it is clear and concise. We’ve compiled a list of our top tips on how to put together an impeccable CV.
Some (almost) free suggestions on how to market yourself as a contractor:
- Set up your own website – Set up your own website – This can complement your CV well if executed well. Ensure your website is rich in information about the services you offer, the areas you cover and your contact details.
- Job sites – Upload your CV onto job websites. Many jobs aren’t advertised, so recruiters search for likely candidates with the best experience and skill fit. As you can imagine, a recruiter will want to keep costs down on their side and find a suitable candidate as swiftly as possible.
- Look on specialist contractor and management consultant websites – news feeds from these types of websites are a great way of finding all the current jobs, as well as finding out how your particular industry is developing.
- Contacts – Be sure to optimise your existing contacts as well as building a base of new contacts. Potential clients are everywhere, so don’t just focus on business networking but discuss your services in a social capacity as well.
For more helpful hints and tips, visit our finding work as a contractor page.
All you need to start a limited company
Discover all the intricacies of contracting through a limited company with our free downloadable guide.
What’s in the guide?
- Understanding legislation – what is IR35 and what could it mean for your business?
- Maximising your expenses – find out what business costs you can expense through your company.
- Making your business a success – a look at how to manage your time, market yourself and make your business a success.
How to work as a management consultant: limited or umbrella
Although trading through your own limited company is the most tax-efficient way of working, this isn’t always the best route for everyone. For example, if you have a short-term contract which is less than £25,000 per year, it may be worth thinking about working through an umbrella company.
By working through an umbrella company, you essentially become an employee of the umbrella. This means that you pay the same contributions as a permanent employee, plus you also have to pay employers National Insurance at a rate of 13.8% (2019-20).
By trading through your own limited company, your take-home pay will typically be higher than if working through an umbrella company. Visit our contractor take-home pay calculator for an accurate day rate figure.
Limited company advantages
- A tax-efficient way of contracting
- Access to the Flat Rate VAT scheme, an incentive that can bring in additional income for those consultants that claim very few expenses
- You have complete control over your financial affairs, there’s no need to wait on a third party to retrieve your money
- You can claim on a much wider range of expenses than if you were working through an umbrella company
- The financial and paperwork side of the business only takes a few minutes per month
Limited company disadvantages
- There will be some paperwork involved, however, an accountant will be able to help you with this
Umbrella company advantages
- It’s easy to use. You simply enter your timesheet and expense details and wait to be paid
- You won’t have the burden of filling out paperwork
- Income Tax deductions and National Insurance contributions are made before you receive your money, so you don’t need to worry about having to pay out any more for tax
- Very useful for those who are contracting for the first time, before entirely committing to the lifestyle
Umbrella company disadvantages
- You will be relying on the umbrella to collect your money from the end client, and then pay this to you
- As this type of contract is very similar to working as a permanent employee, it is the most expensive way of contracting as you pay full Income Tax and National Insurance
For more information on choosing which route is best for you, we’ve compared both structures in our guide.
How to set up your own limited company
Setting up your own business is a quick and easy process:
- Your first step is to choose your company name
- You will then need to form your limited company. Our limited company formation service is £125 plus VAT, which includes the following: help organising your business bank account, registering the company for VAT, and advice on the optimum share structure of your company
How can we help…
After forming your limited company, your next step is to appoint an accountant.
It’s tempting to use a local accountant who is convenient for you, however, they may not specialise in consultants. For over 23 years, SJD Accountancy has specialised in providing tax and accountancy advice to over 15,000 limited company contractor, freelancer and consultant clients.