Setting up your own consulting firm
- Henk Herkink
- How to
- 12 September 2021
- Edited 21 September 2023
- 8 min
- Starting
You have specific expertise in a particular topic, and a growing number of people are turning to you with their questions. When does consulting stop being a hobby, and when does it become a professional business? And what are some of the permits, taxes, and other business issues you will be expected to manage? This article contains essential practical information on establishing yourself as a consultant.
There are a number of issues all business owners must consider, including a trade name, insurance policies, administrative records, and registration with the Chamber of Commerce. Below we have summarised some of the issues that are relevant when you start your own consulting firm.
- Rates
- Marketing
- Location
- Training and permits
- Financial consultant
- Confidentiality and the GDPR
- Risks
- Legal form
- Employment Relationships Deregulation Act (Wet DBA)
- Taxes
- General information for new business owners
- Taking action
Rates
Setting the right rates can be tricky, as your rates depend on the type of work you do/services you provide, your client, the duration of the project, and the sector in which you operate. Steep rates could potentially put off your customers, while keeping rates too low will mean you are selling short yourself and your abilities.
The correct rate depends on your business expenses, taxes, and your desired income. Read how you can set your hourly rates and find out how your competitors determine their rates.
Patries Baijer from Baijer Mediation has five years of experience as an independent consultant. As she explains, associates from your professional past might tell you they will keep you in mind when it comes to assigning projects, but more often than not they do not honour these promises. “As soon as you set yourself up as an independent contractor, they will need to pay for services you may have provided free of charge before. You should believe in yourself and in what you have to offer, and protect yourself from these types of disappointments. While people may not be aware of it yet, you do have something valuable to offer. You can make a difference with your knowledge, experience, and through yourself.”
Take yourself seriously: you are running a business, not a ‘side gig’.
Marketing
How do you convince people to become clients? Your own network can play an important role in the first orders. You can also find clients in other ways. To determine how to bring your service to the attention of your target group, it helps to make a marketing plan. Baijer: "You cannot have everyone as a customer. Consider for whom you can add value. If there is a target group that does not suit you, send it to your competitors." Speaking of your competitors, "Think of them as colleagues. It is better to see them as collaboration partners. You can learn from each other and maybe even work together."
It is smart to start working on your online findability, even if your assignments initially come mainly from your own network. You can use various social media for this, for example. Regularly show what you are working on or respond to current topics. "Make sure your LinkedIn is in order, that the information about you is correct. People rely on that. Use social media that suits you and your target audience. In business terms, LinkedIn in particular is an appealing network. To reach individuals, Instagram, for example, is more suitable. Do not rule out any form of social media, promotion or acquisition in advance. Work on promotion and a network." And very important according to Baijer: "Also, call your business a business straight away. Never use the words 'little company'. Then you take so much power out of what you do. Take yourself seriously."
Location
Many consultants start their business by working out of their home. Remember to check the terms and conditions with your local authority. If your plans comply with the zoning , a notification that you are starting a business from your home is generally sufficient. If you intend to remodel your home or attach advertising signs to the outside of your home, you must apply for an environmental permit .
You can also choose to rent a business space for your consulting firm, for example in a multi-company building (in Dutch). Read all about starting a business at a location that is right for you. Check with your local authority to see whether your business activities comply with the zoning plan for the city or town where your business is located.
Training and permits
There are no specific training requirements for most counselors: experience, knowledge and your authority are often enough for clients to hire you as a consultant. Umbrella organisations, including trade and industry (in Dutch), may require that you have completed the requisite training if you would like to join them as a member.
Financial consultant
If you provide clients with advice on a specific financial product, such as pension insurance and mortgages, you will be required to undergo training and obtain the necessary qualifications. The College Deskundigheid (Financial Services Expertise Board, in Dutch) advises and supports the Minister of Finance on competence under the Dutch Financial Supervision Act (Wet op het financieel toezicht/Wft). The College Deskundigheid Financiële Dienstverlening is responsible, among other things, for developing examinations and exam questions, providing advice on training and educational standards and for supervising examination institutions specialising in the Financial Supervision Act. Providing advice on financial products is permitted only if you have been issued a permit by the Netherlands Authority for the Financial Markets (Autoriteit .
As soon as you set yourself up as an independent contractor, they will need to pay for services you may have provided free of charge before.
Confidentiality and the GDPR
As a consultant, you will be dealing with personal or business data. While you are not bound by professional secrecy and confidentiality – such as physicians, psychologists, or lawyers – but you often are from a moral perspective. A consultancy process generally benefits from confidentiality between the consultant and their clients. You can agree on the terms when signing the contract with your client. You and your client can also set out the terms in a nondisclosure .
As a business owner, you are required to comply with the GDPR: what does it mean for you?, which provides how to manage and process personal data.
Risks
It is important that you protect yourself against any risks to which you might be exposed as a business owner, including both personal risks and business risks. However, you should make an assessment of the business risks to which you are exposed and how you can mitigate these through insurance or general terms and .
Not everyone can be your client, so you should determine who might be able to add value.
There are some occupations for which professional liability is required, including financial consultants. Some clients may also require that you take out insurance before taking on a new project.
You must take out business liability to cover potential personal injury or damage to client property.
KVK Insurance Check
While some insurance policies are compulsory, others are simply practical and convenient. Which ones do you need? The KVK Insurance Check (in Dutch) helps you choose your insurance products.
Legal form
When launching a new business, most consultants choose the legal form eenmanszaak (sole proprietorship). As a natural person (individual), you are then the only person who is responsible and liable for the business. You can always change the legal form at a large stage by converting your business into a private limited company (besloten vennootschap/bv).
‘Freelancer’ and ‘independent contractor’ (zzp – zelfstandige zonder personeel) is not a legal form, but rather a term indicating that you are working, but not in a formal employment relationship (job).
Employment Relationships Deregula tion Act (Wet DBA)
If you have private clients, it is pretty clear that you are a business owner, since you are providing a service. But what if your client is a business? In that case, it is important to avoid the appearance of an employment relationship, particularly if you will be working with the client for an extended period of time. You and your client will need to show the Dutch tax authorities the nature of your employment relationship.
A question frequently asked to the KVK Advisory Team is: can you still be classified as a consultant even if you have only one client? In order to find an answer to this question, you must complete the ‘When am I considered an (in Dutch) check of the Dutch tax authorities.
If you are certain that you are not in employment and that your relationship is therefore that of client/service provider, you can have this documented in a model agreement in order to rule out any kind of employment relationship. The website of the Dutch tax authorities contains a number of model (in Dutch) for different types of situations and sectors/industries.
Check the validity of the model agreement. All model agreements are valid for five years from the date the agreement was approved by the Dutch tax authorities; you will find this date stated at the top of the model agreement. Only the party who drafted the model agreement is able to extend the validity. You can also draft your own model agreement, although you will first need to submit this to the Dutch tax authorities for assessment.
It is only by doing that you can find out if running your own business is really for you.
The purpose of the DBA Act was to provide clarity about the employment relationship between clients and self-employed professionals, but the act is not living up to expectations. New laws and regulations are currently in the pipeline; until they are enacted, the current rules will apply. Keep up-to-date on the DBA Act: changing legislation
Taxes
As a consultant, you will have different types of dealings with the tax authorities. The two main types of taxes you will be required to pay are VAT (sales tax) and income tax.
VAT
Consulting services are subject to a VAT rate of 21%. You will generally file your VAT returns once every quarter, during the month following the end of the quarter.
Tip: download the VAT Alert (in Dutch) offered by the Dutch tax authorities to remind you when to file VAT returns.
If your revenue exclusive of VAT is less than €20,000, you can choose the Small Business Scheme . You will not calculate VAT in this case, but will also not be able to reclaim VAT on your expenses. The advantage is that you only need to maintain and update limited VAT records and are not required to file VAT returns. You should also take into account who your clients are, and whether they agree to this as well. If they are business owners too, they cannot deduct VAT from your services and products when filing their VAT returns, because they have not paid any VAT.
Income tax
All the money you receive from clients qualifies as revenue, and you are entitled to deduct all your expenses from this amount. What remains at this stage is your profit, and you pay income tax on this amount. In addition to your VAT returns, you will also need to file income tax returns once a year. The deadline for filing income tax is 1 May of each year.
General information for new business owners
In addition to the above, new business owners might also have to deal with the following:
- writing a business plan
- keeping financial records
- alternative rules for part-time entrepreneurship
- choosing a business name
- registering with the Chamber of
Taking action
Baijer has a valuable tip to share: you do not need to do everything alone. “You will find a lot of people around you to provide input. While it is great to get advice, you shouldn’t change around your plans every time you talk to someone new. It is only by doing that you can find out whether running a business is really for you.”
Only by doing it will you find out if entrepreneurship is really for you
