What Costs Are Associated With Consulting Companies?

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Computer equipment, Internet service and IT help are all costs consultants incur.
Computer equipment, Internet service and IT help are all costs consultants incur. (Image: David Sacks/Lifesize/Getty Images)

According to Entrepreneur, United States businesses spent more than $12 billion on consultants in 1997. A consultant is a person who is an expert in a specific field who advises individuals and companies in that field. Anyone can become a consultant, but a good consultant knows the industry in which he is consulting.

Fixed Costs

If you are securing a building for your consulting business, your fixed costs will include rent or mortgage payments and property taxes. You will also be required to pay for utilities, telephone and Internet service, which do not change, no matter how many sales you have. Maintenance of the building and equipment is also a fixed cost. Fixed costs also include all your initial outlays, including office equipment and furniture. You will need a business license that must be renewed each year. You must carry insurances for yourself, your business and your staff, including health, disability, liability and life insurance.

Variable Costs

Variable costs change as sales increase or decrease. In a consulting business, salaries, expenses and office supplies are included in variable costs, because an increase in sales requires more employee billing time and additional use of printers and paper for brochures and plans. If you are not on an unlimited long-distance plan, long-distance calls will increase your variable costs. Variable costs also include shipping and postage expenses. You will pay taxes on your profits.

Other Expenses

If you are not doing your own accounting, this will be an added expense. You may acquire legal expenses. Whether you hire someone to work on your marketing or you market your company yourself, there will be advertising expenses. If you attend trade shows, professional meetings or conferences, you will incur travel expenses. Cleaning expenses may also be incurred if you are not cleaning your own building. When you entertain new clients, meals will be an expense. To remain well-versed on industry trends, you will subscribe to industry trade publications. Your bank may also charge you fees, depending on your account type and the payments you accept.

Qualifications

Some consulting opportunities may require specialized licensing. For instance, individuals who consult in information technology may be required to get certifications and licenses to prove they are qualified to work on and give advice about those businesses. You may be required to take courses and tests to acquire your qualifications. Even if you are qualified and licensed, you may need to take intermittent courses to learn new industry trends and strategies. Consultants should also belong to professional organizations, such as the National Society of Fund Raising Executives for fund-raising consultants, and these organizations may have yearly membership fees.

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