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.
Top tips for finding work
Something to remember – finding work outside of agencies can be a challenge and there is no one ‘magical thing’ that will work, it’s very much a case of trying lots of things, the wider you spread your net the better chance you have, however spending all day on LinkedIn which might seem rewarding, may not yield the results you expect.
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 everything is up to date and that there’s the only information that is relevant to the contract you are looking at – you don’t necessarily need a seven-page CV unless the value of your skills warrants seven pages. Highlight skills that will make you look like an attractive contractor to work with and use industry buzzwords.
Most importantly, check for any typos, use correct grammar and make sure that it is short, to the point and well organised with a clear structure. For more information on writing an impeccable CV, read our: Top CV Tips guide.
Some (almost) free suggestions on how to market yourself as a contractor:
- Set up your own website – Consider your website your interactive CV. Pouring as much information onto your website will make you more favourable to search engines, and more visible to those potential clients looking for a management consultant with your particular traits. Ensure your website is information rich about the services you offer, the areas you cover and contact details.
- Job sites – load your CV on job sites, most jobs aren’t advertised, instead, recruiters trawl through the back-ends of job sites and job boards looking for likely candidates with the best experience and skills fit, they also do this with LinkedIn. As you can imagine a recruiter will want to keep costs down 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.
- Social media – We’ll be honest, it’s doubtful that you’ll be able to find work on Twitter or Facebook. It’s not a bad idea to follow a few Groups on LinkedIn but you’ll mainly find that groups are made up of other consultants and recruiters but not many end clients, however providing you have the time, it really can’t hurt.
- 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.
Think about anyone you’ve worked with in the past, or met through someone else, and consider whether they could be potential clients. Track these people down and get in touch (LinkedIn is good for this). Picking up the phone can be daunting but is a fantastic way of getting instant feedback on your business. Remember – if the person you’ve called isn’t a potential client, they may know someone who is.
For more helpful hints and tips, visit our Finding work as a Contractor page.
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 (sub-three months), which is less than £25,000 per year, it may be worth thinking about working through an umbrella company instead.
By working through an umbrella company, you essentially become an employee of the umbrella, which means that you pay the same contributions as a permanent employee plus also have employers National Insurance to pay which is 13.8% (2013).
By trading through your own Limited company you could potentially take home around 75% – 80% of your contract value – visit our contractor take-home pay calculator for a more accurate figure – whereas working through an umbrella company could mean that you only take home approximately 60% – 65%.
Limited company advantages
- A most 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 – 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 is not difficult – our clients on average spend around 15-20 minutes per month completing a simple excel spreadsheet.
Limited company disadvantages
- There will be some paperwork involved, however, an accountant will be able to help you with this should you have any concerns or questions. This paperwork shouldn’t take up any more than 15-20 minutes of your time a month.
Umbrella company advantages
- It’s easy to use – you simply enter your time-sheet and expense details to the umbrella and wait to be paid.
- You won’t have the burden of filling out paperwork, and all tax and NI is automatically deducted before you receive your money, so you won’t need to worry about having to pay out any more for tax.
- Very helpful for those who are giving contracting a go 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 PAYE, Tax and NI.
How to set up your own Limited company
Setting up your own business is a fairly quick and easy process:
- Firstly you will need to have your company name decided – you can check if your company name is available using our free company name checker.
- Then you will need to form your Limited company. This will take you no more than five minutes on SJD’s website with your company formed within a few hours.
- SJD’s company formation package is £125 plus VAT, which includes; help organising your company bank account, registering the company for VAT and PAYE 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.
We offer an all-inclusive fixed fee accountancy package with prices starting from £120 + VAT per month. Check our packages for more detail. This includes:
- Year-end accounts*
- Corporation tax
- Payroll Bureau
- Dividend administration
- Dealing with HM Revenue and Customs and Companies House
- Quarterly VAT Calculations
- Support with Annual Returns
- Personal Taxation
- Access to your own dedicated accountant* for all help and advice
- Free bookkeeping software