Consulting LLC

Protecting Your Personal Assets

For business owners who serve as consultants, protecting personal assets like a house, car, savings, and brokerage accounts is typically crucial to their operations. By forming a Limited Liability Company (LLC), consultants can separate and protect their personal assets from the debts and obligations of their business.

Where Are Taxes Paid?

Generally, in determining whether or not a consulting company must file tax returns or pay taxes to a particular state, the state considers the connection, or "nexus," that the company has to the state.  In making such a determination, states typically consider factors such as the frequency and magnitude of services the company provides in a particular state or for clients in a particular state, or whether the company has a physical presence in a particular state, such as employees who conduct business activities or an office located in that state.

Where to Form an LLC

When choosing their state of formation, consultants should consider many factors, including where their company intends to do business. Many business owners form their LLC in the state where their company conducts, or intends to conduct, the majority of its business. It is also prudent to evaluate the cost of forming the company in the state, the tax laws and business laws of the state and whether it will be necessary for the company to qualify to conduct business in one or more other states. A company may also have to obtain a separate business license to conduct business in certain states or municipalities.

About Business Insurance

We find that many of our consultant customers purchase and carry business insurance to provide liability and other protection for their business. Consultants often conclude that personal or homeowners insurance will not provide sufficient protection for even a small, home-based consulting business. Issues such as whether it is beneficial for the company to obtain business insurance, the type of insurance to obtain, and the appropriate amount of insurance coverage will vary significantly based on the activities of the consulting company.