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Benefits and Pitfall of owning you own consultancy

AIPM run excellent lunchtime sessions through the Women in Project Management (WIPM) speakers included:

  • Tim Scanlan Hopgoodganim lawyer

  • Therese Brockhurst – consultant for Board / advisor committee

  • Dane Van Heerden – Company Secretary and advises on how to win business

  • Elaine Roberts – Seasoned Consultant and trainer & assessor in Project Management

Tim Scanlan

Advised that how you set up your consultancy as a legal entity is very important, set up and structure should be discussed carefully with your lawyer, there is no ‘one size fits all’ and you need to consider

  • Tax

  • Risk and liability

  • If there is potential for future investment with other parties

  • If you will have a business partner

Structure and set up

The most common structure is the pty ltd with shares owned by a trust.

If you opt to be a sole trader, then you are personally responsible for any liabilities incurred.

The risk of going into business with a colleague can be mitigated with a shareholder agreement which ensures that you discuss the issues in advance and agree the course of action which should take place in the event of certain decisions.

Agreements with clients

Clients often provide their own terms and conditions, sometimes you are not in a position to negotiate your own or you just want to win eth business but always be clear on what you’re signing up to and perhaps get some of the riskier contracts reviewed.

Look for personal guarantee statements which may make you personally liable even if you are a pty ltd. (this gets negated).

Obligations out of your control

e.g. if you need to engage a 3rd party and they let you down then you are on the hook to your client, therefore get a proper agreement in place between yourself and the 3rd party.

Broad indemnity can be capped, do you have the correct insurance in place, ask your insurer to review your contracts to make sure you are covered.

Termination rights