How to start a consulting business
What it costs, what you file, what it earns and what ends most of them. Every number below is cited to where it came from.
No government or peer-reviewed source publishes a startup cost range for a consulting business, so no figure is quoted here. The hardest part is an unpredictable pipeline.
What it costs to start
No primary source publishes thisNo primary US source publishes a consulting-specific startup cost range; SBA's official guide gives categories and no dollar figures, and the only credible general anchor is the Census Annual Business Survey finding that 24.1% of new US employer businesses started with under $5,000 and 50.9% with under $25,000, a solo consultancy typically sits at the bottom of that distribution because entity formation, professional liability insurance and business development effort dominate, with no premises, inventory or equipment of consequence.
What you have to file
Licensing is set by state, county and city, so this is what the category tends to require rather than a list for where you live. The state pages below carry the filing detail for each of the 50.
- Business entity registration with the state Secretary of State (LLC or corporation), or a DBA / assumed-name filing
- IRS Employer Identification Number (EIN)
- State and/or city general business licence or tax registration where required
- There is NO general federal or state licence to call yourself a 'consultant', the SBA's federal licensing list covers agriculture, alcohol, aviation, firearms, wildlife, fisheries, maritime transport, mining and drilling, nuclear energy, broadcasting and oversize vehicles, none of which touch generic consulting
- Domain-specific licences that DO bite: giving investment advice for compensation requires registration as an Investment Adviser with the SEC or a state securities regulator (Form ADV); insurance and securities work requires state producer/representative licences; engineering, architecture and land-surveying consulting require a state PE/RA licence; immigration and legal advice are restricted to licensed attorneys or accredited representatives in most states; and consulting that touches protected health information requires HIPAA Business Associate Agreements
- Voluntary credential (not a licence): Certified Management Consultant (CMC) from the Institute of Management Consultants USA
- Professional liability / errors & omissions (E&O) insurance, usually the coverage clients actually contract for, and commonly demanded at $1M/$2M limits in master services agreements
- General liability insurance and/or a Business Owner's Policy; cyber liability cover if handling client data
- Workers' compensation, unemployment insurance and (in some states) disability insurance if you hire employees
- SAM.gov registration and a UEI if you intend to contract with, or subcontract under, the US federal government
- State sales tax registration in the states that tax consulting or information services, treatment varies materially by state, so check the relevant Department of Revenue
What the margins look like
IRS Statistics of Income data for Tax Year 2022 nonfarm sole proprietorships show 'Management, scientific, and technical consulting services' with $34,693,630 thousand of net income on $70,651,823 thousand of business receipts, a 49.1% net margin, the highest of the five business types covered here and roughly 2.5x the 19.7% average across all US nonfarm sole proprietorships. As with all sole-proprietor figures this includes the owner's own compensation and is not comparable to a corporate net margin.
Whether demand is growing
Growing
Growing: BLS projects employment of management analysts to grow 10% from 2025 to 2035, described as much faster than the average for all occupations, with about 94,100 openings projected each year over the decade.
How big the market is
14% of US management analysts are self-employed, out of 1,077,100 employed in the occupation in 2025, and the occupation's median pay was $101,860 in May 2025, the highest of the five business types covered here.
The part that ends most of them
An unpredictable pipeline. The Federal Reserve's 2026 Report on Employer Firms (2025 Small Business Credit Survey, 6,525 respondents) found 'reaching customers and growing sales' to be the most commonly reported operational challenge among small employer firms; for consultants this compounds because delivery time and selling time compete for the same person, producing the feast-or-famine cycle. Note this is the general small-business finding, not a consulting-specific measured statistic.
Before you start
- What it will cost you, since the numbers above are the category and not your version of it
- Sole proprietor, LLC or S corp, what actually differs, with no recommendation
- What your state wants filed, read from the state's own pages
- What you have to sell to break even, which decides whether the margin above matters
- Which way you actually work, if the choice between these is really a choice about you
A different business
Compare all twenty side by side
SideKix, “How to start a consulting business”. https://sidekixhq.com/how-to-start-a-consulting-business.html
Questions people ask
How much does it cost to start a consulting business?
No primary US source publishes a consulting-specific startup cost range; SBA's official guide gives categories and no dollar figures, and the only credible general anchor is the Census Annual Business Survey finding that 24.1% of new US employer businesses started with under $5,000 and 50.9% with under $25,000, a solo consultancy typically sits at the bottom of that distribution because entity formation, professional liability insurance and business development effort dominate, with no premises, inventory or equipment of consequence.
What licences do you need for a consulting business?
Typically: Business entity registration with the state Secretary of State (LLC or corporation), or a DBA / assumed-name filing; IRS Employer Identification Number (EIN); State and/or city general business licence or tax registration where required; There is NO general federal or state licence to call yourself a 'consultant', the SBA's federal licensing list covers agriculture, alcohol, aviation, firearms, wildlife, fisheries, maritime transport, mining and drilling, nuclear energy, broadcasting and oversize vehicles, none of which touch generic consulting; Domain-specific licences that DO bite: giving investment advice for compensation requires registration as an Investment Adviser with the SEC or a state securities regulator (Form ADV); insurance and securities work requires state producer/representative licences; engineering, architecture and land-surveying consulting require a state PE/RA licence; immigration and legal advice are restricted to licensed attorneys or accredited representatives in most states; and consulting that touches protected health information requires HIPAA Business Associate Agreements. Licensing is set by state, county and city, so the exact list depends on where you operate.
What profit margin does a consulting business make?
IRS Statistics of Income data for Tax Year 2022 nonfarm sole proprietorships show 'Management, scientific, and technical consulting services' with $34,693,630 thousand of net income on $70,651,823 thousand of business receipts, a 49.1% net margin, the highest of the five business types covered here and roughly 2.5x the 19.7% average across all US nonfarm sole proprietorships. As with all sole-proprietor figures this includes the owner's own compensation and is not comparable to a corporate net margin.
Is demand for a consulting business growing?
Growing: BLS projects employment of management analysts to grow 10% from 2025 to 2035, described as much faster than the average for all occupations, with about 94,100 openings projected each year over the decade.
What is the hardest part of running a consulting business?
An unpredictable pipeline. The Federal Reserve's 2026 Report on Employer Firms (2025 Small Business Credit Survey, 6,525 respondents) found 'reaching customers and growing sales' to be the most commonly reported operational challenge among small employer firms; for consultants this compounds because delivery time and selling time compete for the same person, producing the feast-or-famine cycle. Note this is the general small-business finding, not a consulting-specific measured statistic.