How to Set Up a Consulting Business in the UK

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In the last few years, we’ve seen a huge number of people move into consulting in a bid to improve their work-life balance, achieve greater professional flexibility, and enjoy the financial benefits of being in full control of their income.

UK consulting businesses accounted for £14.4 billion in revenue in 2021, but this figure skyrocketed in recent years, hitting £18 billion just 12 months later, while today the UK’s consulting industry is worth around £20.4 billion.

This trend has also been supported by a growth in ‘microconsulting’, where professional services (often in the form of advice or business guidance) are provided remotely for short-term projects. The difference between microconsulting and traditional consulting is that it is typically task-focused, allowing end-clients to access experts on a more flexible pay-as-you-go basis.

So, if you’re thinking about setting up a consultancy business and taking advantage of all the benefits that come with it, read on to find out what you need to know before getting started, what you’ll actually need to do, and how Hoxton Mix can help.

9 Things to Know Before Starting Your Own Consulting Business in the UK

Setting up a consulting business in the UK is an exciting and challenging time, especially if this is the first time you’re starting your own business or don’t know anyone whose experience you can learn from.

Before getting started, there are nine things you really need to know.

1. Your Area of Expertise

First things first, you’re going to need a solid foundation in the area you aim to specialise in. Having experience and a strong reputation in your field is a great start, but there are ways to enhance what you offer and build on what you already have. 

A degree or relevant certification like the Certified Management Consultant (CMC) or Chartered Management Consultant (ChMC) awards is a good start, but to actually be successful at acquiring clients, you’re going to need a reputation, reviews, and references of the work you’ve done previously from senior stakeholders, colleagues, or clients. Tools like Senja, an easy way for self-employed individuals to gather social proof, build trust and display testimonials—can fast-track your ability to prove yourself outside of PAYE roles.

Once you’ve acquired the necessary skills and have gathered recognition of previous achievements, identify gaps in your niche. Find where you fit in and evaluate how to use your expertise to solve problems. Additionally, your role as a business consultant is more than showing up when clients call. It goes as far as exhibiting excellent management, communication, and analytic skills.

2. Undertake market research

You might think you have a great idea for a consultancy business, but does the market agree with you?

One of the first things you should do is to undertake market research to determine whether what you’re planning to do is actually in demand. Have you identified a genuine niche or is the market already saturated?

You can do this research work manually by speaking to business contacts and interviewing the sorts of businesses you’d want to work with, but there are also dedicated market research tools you can use, for example, Ahrefs (which will require a subscription) and Google Trends (which is free to use). Many of these also offer free trials, which will reduce the amount of money you need to invest to get a proof of concept before taking your idea forward.
Top tip: You can even test the market with paid ads targeted to your audience and see how people react and measure the engagement for real-time data validation of your idea.

3. Your business goals

Setting business goals ensures that you have an objective you're working toward. Unfortunately, many startups set unrealistic goals or simply fail to set the right type of goal. To make sure you’re setting objectives that are achievable, you want to ensure they’re SMART. That is, specific, measurable, achievable, relevant, and time-bound.

While there are other templates to follow, the SMART framework ensures that your objectives are attainable within a specific period. With realistic goals and proper implementation, you stand a higher chance of achieving success.
Top tip: make sure you have your elevator pitch ready, giving you a succinct way to articulate who you are, what you do, and what your goals are.

4. A detailed business plan

Over 30% of businesses without business plans fail within their first three years, demonstrating how important a business plan is for the success of your consulting business. 

A business plan helps you to visualise what you do, why you do what you do, and how you intend to achieve your goals and sell your services. In addition, it highlights some considerations to keep in mind when starting a consulting business, such as feasibility studies and financial projections.
Top tip: keep refreshing your business plan as you grow, pivot, and hone in on your core product or service offering. Consultancies need to be flexible and adapt to their markets and client needs.

5. Budgeting and financial management

Poor financial management and planning is one of the main reasons that startups fail, so if you’re starting a consulting business in the UK you’ll need a clear blueprint of what you need to invest in and how much you plan to spend. For a consultancy business, this will include hardware and software expenses, business insurance, professional services, and operational costs.

A professional accountant, experienced in working with consultants, will help a lot in this respect. We’ll cover employing an accountant for your business further later in this article.
Top tip: In the digital age, many of your processes can be managed by inexpensive tools.  You can also get great introductory offers to these tools by signing up for other products; for example, Hoxton Mix offers free business banking, discounts on accounting, and other business software when you sign up.

6. Fee structure

Working as a consultant will typically enable you to earn more than if you were employed, but you still need to ensure you’re pricing yourself competitively relative to your experience level and the market as a whole.

When deciding on your fee structure and pricing level, you have to make sure you’re covering all of your expenses, as well as turning enough profit.

A typical consulting business uses one or more of these fee structures:

• Hourly rate: You charge clients based on the number of hours you consult for them. While the hourly rate does not give a structured income stream, it allows for flexibility, multitasking, and more job opportunities. 
• Project fees: These are usually fixed prices for a clearly defined scope of work. Although the amount of money you’ll earn is limited to what you agree with the client, projects do provide a guaranteed income that can make revenue forecasting easier.
• Retainer fee model: This system allows you to charge your clients in advance and will typically be related to a set number of hours worked in a given time period.

Top tip: You can get creative with how you charge out your services, including offering a discounted rate for a performance-related bonus, which will show your commitment as you are taking on some of the risk. You can even offer your services at a discounted rate with a promise of a larger payout when the business meets specific goals. Just make sure you are clear, concise, and formalise any agreements.

7. Business structure

Before you launch your consultancy business, you’re going to have to choose a legal business structure that you declare to the HMRC and the government, and there are four options for you to choose from:

• Sole trader: Registering as a sole trader is the easiest way to get started. In this structure, you are the business, meaning you don’t have to register a separate business entity with Companies House. However, this means you’ll be liable for all of your business’s debts, meaning your personal and family assets could be at risk if you get into financial difficulty. You can find out more about how to register as a sole trader in our blog.
• Limited Liability Company (Ltd): Unlike when you register as a sole trader, a Limited Liability Company is a separate legal entity, meaning your personal assets are protected in the event of the business struggling financially. This requires you to register with Companies House as well as HMRC, and this must be done before you start offering services.
• Partnership: A partnership works in the same way as registering as a sole trader, but with two or more partners that share responsibility for the business, including any losses and expenses.
• Limited Liability Partnership (LLP): An LLP is a business structure that protects the personal assets of some or all of the company directors in the same way as Ltd companies with a single director.
• Public Limited Company (PLC): A PLC is a type of business that is traded on a public stock exchange, allowing the company to raise capital from a wide pool of investors. This isn’t likely to be an option for your consultancy, and it’s typically only large corporations that go public. However, you can read about the advantages and disadvantages of a private limited company in this article.

The business structure you choose may depend on other factors, like the type of consulting you do, the size or projected size of the consulting business, and other factors in your business plan. For someone leveraging their full-time job to do consulting as a side hustle, consider registering as a sole trader. Still have questions? Find out more about how to register a company in the UK here.
Top tip: you can change your business structure as you progress and things like revenue and resources grow.  This means you don’t have to commit to a specific company format immediately if you are just testing things out.

8. Marketing and client acquisition strategy

When you launch a business consulting firm, the amount of clients you work with will vary from time to time—but how do you continually feed the pipeline for new work?

Developing a clear marketing and client acquisition strategy is essential for any startup consulting business looking to establish credibility and build a steady pipeline of work. 

The first step is to ensure your business is easy to find and trust online. A professional website will act as your digital storefront, clearly outlining your services, showcasing your expertise, and including strong calls to action. You can also consider adding client testimonials, case studies or a blog to demonstrate your insight and build authority in your field. This might sound expensive, and indeed developing a bespoke website can be, but getting started with a template site is affordable for most startups. There are tools available to check the availability of domain names, like NameCheap and Name.com, so you can see if what you want is available.

Social media will also play a crucial role in raising awareness and attracting potential clients. Choose platforms relevant to your target audience – LinkedIn is a must for most consultants, while X (formerly Twitter), Instagram, or Facebook may be worth considering depending on your niche. Create a consistent posting schedule and share content that highlights your expertise, such as tips, industry news, or success stories.

At the same time, explore other marketing tactics such as networking events, partnerships or speaking opportunities to help build your profile. Above all, be clear on who your ideal client is and tailor your messaging and outreach accordingly. 

A well-defined strategy, combined with a strong online presence, can help position your consulting startup for sustainable growth.
Top tip: You will always find certain things easier to do than others, and client acquisition is new to most people. It is critical to your success, so regularly block out dedicated time to manage this area and grow your capabilities. It is crucial to your success, so get good at managing it.

9. Regulation and compliance

From lawsuits and financial penalties to industry disqualification, more than 50% of businesses face the consequences of non-compliance with regulations every year. 

One of the most common causes of legal trouble for consultants in the UK is data loss and security breaches that may result in financial implications or reputational damage for the client. 

So, if you’re getting started as a consultant, regulatory compliance should be one of your top priorities, regardless of the sector you want to operate in. 

Meeting relevant legal and industry standards not only protects your business from fines, reputational damage or legal action, but also builds trust with clients. Depending on your area of expertise, you may need to comply with regulations around data protection, financial conduct, health and safety, or professional accreditation.

Demonstrating compliance–through clear policies, up-to-date documentation, and, where relevant, insurance or certifications–can reassure prospective clients and give your startup a competitive edge.
Top tip: by using the Hoxton Mix, you can help manage the compliance requirements with the HMRC through reminders, document management, workflows, and letting HaiRo, the AI agent, flag key things, including invoices, payments, and urgent mail.

How to Register as a Consultant in the UK 

Now you’ve got an understanding of the initial steps to getting started as a consultant, let’s take a look at what you actually need to do to get off the ground and stand out from the competition.

Inform the HMRC about your business

You must notify the HMRC within 3 months of starting your tax accounting period if your limited company is within the charge of Corporation Tax and is now active. The best way to do this is to use HMRC's online registration service. To sign in, use the company's Government Gateway user ID and password from the previous section.

As part of registering your business, you will need to have a valid UK address - PO Boxes aren’t allowed to be used as a business address any longer, but there are now easier and better options. You can use an alternative virtual office address to help with privacy, create a prestigious virtual office location, and to help manage your physical post. We will dig into this some more later in the article.

Choose a business name and register it.

Decide and register your business name with Companies House — the government organisation charged with registering and dissolving LLCs in the UK. During the business consulting listing process, you’ll need to provide the following:

• A ‘certificate of incorporation’ that confirms your company legally exists and shows the company number and date of formation.
• At least three pieces of personal information about yourself and your shareholders or guarantors, for example: town of birth, mother’s maiden name, father’s first name, telephone number, National Insurance number, and passport number.
• You must register by mail if you do not want to use ‘limited’ in your company name.
• You must also create a Government Gateway user ID and password for your company when registering your consulting business. If you are employing staff, you must also register for PAYE to tell HMRC you’re employing staff (including yourself if you’re the only director).

Registering your business consultation enterprise (AKA company formation) in the UK costs between £12 and £40. However, there could be a slight change in pricing if you choose other methods like third-party agencies or using company filing software.

Obtain a business address

If you’re setting yourself up as a limited company, you’ll need a business address. Note that this will be publicly available information on the Companies House website, which, for most consultants, rules out using their home address for a UK business. However, office space can be incredibly expensive and not always something that you will need to invest in. With this in mind, opting for a virtual business address is often the best option for consultants when they first start out. 

Virtual offices are genuine physical locations, which means you can use them to register your new company (unlike with PO Boxes), without the related overheads of having an actual office. This not only protects your privacy at a significantly lower cost, but also ensures your new business has a more professional image compared to if it were registered to a residential address.

Virtual office addresses from Hoxton Mix are available for as little as £19 per month, while also providing complementary services like mail handling and forwarding.

Get Insurance for Your Business

Whether you are working remotely from home or consulting from an office space, having the right business insurance policy is important when you want to open a UK consulting company. In 2022, 44% of small to medium businesses had no insurance, meaning that over 2.4 million businesses in the UK were working without insurance policies.

Although there’s no legal requirement to insure your consulting business, if something goes wrong and you’re liable for financial losses incurred by a client, you could face legal costs that ruin your business. If you’re a sole trader, your personal assets could also be at risk. Below are a couple of insurance options you should consider:

Public Liability Insurance: Protects business owners against claims that result in legal proceedings, typically in the event of personal injury or property damage. Public liability insurance will cover the cost of these expenses, including any compensation you have to pay.

Professional Indemnity Insurance: This type of insurance is designed for individuals or companies that provide professional services to clients. It will cover the cost of compensation and legal fees if you’re accused of providing negligent services or advice that leads to losses or damages to a client.
Hiscox is one example of an insurance provider that offers a wide range of policies designed for startups as well as established businesses.

Accounting Checklist

This is a key area for you to consider and manage, as done well, this can save you a lot of money. Done badly, it can result in more than just a loss of earnings, whether you do it yourself or use an accountant and bookkeeper.

Working with an experienced accountant who understands the consulting sector can provide a lot of value. 

Beyond handling your bookkeeping and annual returns, a good accountant will act as a strategic partner, offering tailored advice on everything from business structure and allowable expenses to VAT registration and cash flow management. If they have a proven track record of supporting consultants, they’ll be familiar with the unique challenges and opportunities you’re likely to face and can help you make informed financial decisions from the outset.

As your business scales, your accountant should grow with you, advising on tax planning, investment decisions, and how to remain compliant while increasing profitability. They can also support you in areas such as hiring staff, managing pensions, or setting up systems to track project income and costs more effectively. 

If you’re unsure about what you need from them, many accountants offer a free initial consultation, giving you the chance to ask specific questions about your situation, including queries around tax efficiency, pricing models or future growth plans. 

Choosing the right accountant early on can save you time, reduce risk, and provide peace of mind, allowing you to focus on doing what you do best—building client relationships and delivering your services.
Top tip: using the Hoxton Mix virtual office solution includes document management and workflows, which means your account and bookkeeper always receive relevant information that is sent to you in the post. 

Consider The Hoxton Mix as Your Trusted Partner

Hoxton Mix is a UK business's go-to virtual office, document management, and mail forwarding service provider. If you are ready to take the bold step to set up a consulting business in the UK, trust Hoxton Mix to provide you with a virtual office address that will streamline your business registration process, protect your privacy, and enhance your credibility with prospective new clients.

Ready to explore alternatives to your usual PO box? Discover our virtual office solutions starting from £0.63 a day.

Have questions? Contact us via live chat, call 020 3475 3374, or email help@hoxtonmix.com.

FAQ

How long does it take to set up a consulting business in the UK?

Getting started as a business consultant can take you anywhere from a few weeks to several months, depending on your financial situation, the complexity of the business you're planning to start, and other factors.

How to register as a consultant in the UK online?

If you’re starting out as a sole trader, you’ll simply have to register with HMRC for self-assessment by 6th October, following the completion of your first tax year (5th April).

What certification do I need to start a consulting business in the United Kingdom?

Although you don’t require a specific certification to get started—particularly if you have a long proven track record of delivering results for clients—you’ll benefit from either a Certified Management Consultant (CMC) or Chartered Management Consultant (ChMC) award. These are internationally recognised professional awards that can establish your credibility in the sector.

Can I register as a consultant in the UK online?

Yes. You can register as a consultant in the UK online through the Companies House portal. You can also use third-party agents or company filing software recommended by the UK Government—all online.

Do I need a physical address to launch a business consulting firm in the UK?

Not necessarily. You can choose between a physical or virtual address provided by Hoxton Mix. A virtual address offers you the benefits of a physical address without the high costs associated with leasing dedicated office space.