Want to be a Consultant? Here’s What You Should Consider
Thinking about getting into consultancy? Read this article to understand the different legal considerations you should make first.
There are many legal considerations that a person has to make when working as a consultant. People often fail to understand all of these considerations, and the impact that may come with them. Below, we break down these different considerations, and how these can impact you.
Relationship to clients
This is arguably the most important legal consideration a consultant has. As a consultant, you may be working either as an independent contractor, or an employee for a business. Understanding this distinction is important, and impacts your tax and lifestyle choices.
Impacts on tax
As an independent contractor, you will be responsible for managing your own tax. Furthermore, you are not entitled to paid leave or sick days if issues arise, and it is likely that you don’t have anyone to cover your work.
In contrast, as an employee, you will have certain benefits. Your tax is likely taken out weekly by your business, and you will be entitled to paid leave. In addition, if you need time off your work, it is the company’s responsibility to manage the work in the interim.
Professional indemnity insurance
Occasionally, your work may somehow negatively impact a client or their business. Whilst not intentional, it is likely the client will come after you for remedies. Professional indemnity insurance protects you in the event this occurs. Available to independent contractors, it’s an important legal consideration to ensure that you’re not at risk.
General liability insurance
It’s possible that you create an accident whilst working in your role as a consultant. Whilst not related to your advice, your accident may still leave you liable for damages. General liability insurance will protect you in these circumstances, ensuring that you’re protected in a range of areas.
If you’re an independent contractor, you’ll be responsible for your own superannuation funds. It’s important to look through the various options available to ensure you’re as prepared for your future as possible. Furthermore, whilst the future may seem a long time away, proper planning is essential.
As seen above, there are numerous legal considerations to have when working as a consultant. To ensure your business succeeds, it’s fundamental to ensure that you’re as well protected as possible. If you’re struggling with any of these legal considerations, a business lawyer may be able to assist.
Kyle currently works in the content team as a legal intern for Lawpath. He is in his third year of a Bachelor of Laws with a Bachelor of Psychology (Honours) at Macquarie University.