How to start a consulting firm in India

A consulting practice has almost no licensing burden. What it has instead is a tax position that is easy to get wrong, and contracts that decide whether you get paid.

Structure

One consultant, no staff, domestic clients: a proprietorship with an Udyam registration is enough to open a current account and invoice properly. Two or more principals: an LLP gives limited liability without company compliance, and the partnership agreement is where you settle profit share before it becomes an argument.

Choose a private limited company only if you expect to raise money or bring people in on equity. A consulting firm rarely does either.

The GST trap

The services threshold is twenty lakh rupees of turnover in most states, and ten lakh in special category states. But the threshold is irrelevant the moment you invoice a client in another state. That is an interstate supply of services, and it makes registration mandatory from the first invoice.

Most new consultants have out of state clients in their first month. Assume you will need GST, and register before the first invoice rather than after.

Contracts and getting paid

• Put scope, deliverables, payment schedule and a termination clause in writing before starting
• Register as an MSME on the Udyam portal, which brings statutory protection on delayed payments from buyers
• Invoice with the correct SAC code and the right place of supply, because errors there cost the client their input credit
• Track advance tax if your liability for the year will exceed ten thousand rupees

Protect the practice name with a trademark in class 35 or class 42 depending on what you sell. Consulting brands are cheap to register and expensive to lose.