Starting A Software Consulting Business

Technology and business often go hand in hand. When you’re part of the business world, having a strong grasp of systems and software can be extremely beneficial no matter what industry you’re part of. Businesses tend to have websites, apps and ecommerce functions that require some form of software development and understanding. 

However, if a business really wants to level up and ensure their software is working for them, they might opt to hire a software consultant to help optimise their performance on the technological front. After all, having effective and efficient technology can make a world of difference when you’re running a business. 

That’s where software consultants come in. A good software consultant has the ability to help a business maximise the potential of their software. If you’ve always liked the idea of starting your own business and have the right background, then starting a software consulting business could be a promising venture for you. 

Even though starting your software consulting business is an exciting step, it’s important to go into it prepared with all the right legal protections. Let’s explore this in more detail. 

What is Software Consulting?

The word ‘software’ can be applied in a lot of different contexts, so what exactly is software consulting? To narrow it down, software consulting commonly refers to the practice of advising clients on their software systems and the best way to improve it.  

It’s pretty different from software development, where a developer has a more hands-on role in the design, research and building process of software. A software consultant’s task can range from introducing new ideas, to helping implement better methods. Any kind of consulting always refers to a pretty broad scope of work – it’s always a good idea to determine what areas and tasks your software consulting  business will focus on, that way your clients will know what they’re getting from the start.  

How To Become A Software Consultant  

To become a software consultant, you need to be highly skilled and experienced in your chosen area of focus. This means you’ll need to have the appropriate qualifications and training to be able to start your own software consulting business – remember, no one wants advice from an inexperienced rookie! 

How To Start A Software Consulting Business: A Legal Guide 

When you start a software consulting business, it’s important to go in as prepared as possible. It’s always a good idea to have a business plan ready. A business plan doesn’t need to be anything fancy (unless you want it to be) but rather something that contains your financial planning, business goals, marketing strategy and anything else important in one place. 

Even though things can change quickly once you start running your business, having a plan can help you stay on track. Plus, if you’re thinking of raising capital for your software consulting business, then you may need to show your investors a business plan (more on this later). 

Once you’ve got a well-thought out plan in place, you can start the process of registering your software consulting business. 

Register Your Software Consulting Business

Registering your business involves knowing the kind of legal structure you want your software consulting business to have. There are three types of business structures that are most commonly chosen in the UK: 

• Limited company
• Partnership
• Sole trader

All three are different from one another, so here’s what you need to know:

A limited company offers the most legal protection. Registering a limited company does take more time and effort, as you need to adhere to the regulations set out by Companies House. However, once a company is registered, it will be a legal entity on its own. That means the company will be able to do things like own property, earn a profit, run-up debt and be involved in legal matters which is great for limiting your personal liability. When running a company, you need to be prepared to do some upkeep, like annual reporting. 

You might be getting into business with a partner and therefore, setting up your company with them. Along with the usual process of registering a company, it’s wise to start your partnership with some important legal documents like a Partnership Agreement. This can help keep both partners and the business protected by covering important matters like management, profit share and termination of the partnership. 

Another business structure you may opt for registering is a sole trader business. Starting your software consulting business as a sole trader is a pretty simple process however, it’s important to keep in mind that being a sole trader offers very limited legal protection. There will be no legal separation between you and your business, meaning you will be personally responsible for everything that happens with it. 

Get The Right Legal Agreements For Your Software Consulting Business 

When you start your software consulting business, you’ll need to assess what legal agreements you will need to protect your business. This means, taking a look at the potential risks and seeing what options there are for minimising them. This can be a lot to try and do on your own, so enlisting the help of a legal expert can really pay off! 

A few legal agreements to consider are: 

Consultancy Agreements: This is the main agreement you’ll have with your clients covering matters like scope of work, obligations, key dates, payment and termination. This is an important contract, as it ensures both parties are on the same page.  

Privacy Policy: A privacy policy is important to have on your business website, especially if you’re going to be collecting information of your website users. In that case, you are legally required to have one. A privacy policy lets others know what is being done with their data, allowing more transparency and trust. 

Website Terms and Conditions: Protecting your website is crucial, as there’s a lot of risks when you’re online. A Web T&C’s can help limit your liability and establish controls, making it much easier to  navigate the online world of business. 

Employment Agreement: If you’re going to be expanding your team and hiring staff, don’t forget to have a legal agreement in place with them. It’s important for both parties to establish their rules and expectations so the relationship can be off to a good start, which is always better for the business. 

Any Other Legal Considerations For Starting A Software Consulting Business? 

Aside from protecting your business, other legal considerations involve being legally compliant with any relevant laws that impact your software consulting business. For instance, as a business offering a service to customers, you’ll need to be aware of your obligations under UK Consumer Rights Act. The CRA prohibits any conduct that is misleading, deceptive or unfair – it’s important to make sure your practices don’t breach their regulations. 

As a small business, you’re also under the protection of the CRA. For example, if you engage in contracts with bigger businesses, there are certain rights and protections you’re entitled to. 

Next Steps 

Starting a software consulting business is an exciting way to share your expert skills and experience with others, however it’s important to have the right legal protection for your business before you begin. To summarise what we’ve discussed: 

• To become a software consultant, you need expertise and qualifications
• A well-prepared business plan is good to have when starting a consulting business
• Registering your consulting business involves choosing a legal structure: limited company, partnership or sole trader
• Limited companies offer the most legal protection, though they require more effort to set up 
• You’ll need legal agreements for protection, such as consultancy agreements, privacy policies, website terms and conditions and an employment agreement 
• Starting a software consulting business is exciting but requires proper legal planning for the best chance of success 

If you would like a consultation on starting a software consulting business, you can reach us at 08081347754 or [email protected] for a free, no-obligations chat.

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