Sapna is a content writer at Sprintlaw. She has completed a Bachelor of Laws with a Bachelor of Arts. Since graduating, she has worked primarily in the field of legal research and writing, and now helps Sprintlaw assist small businesses.
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At some point, most organisations need some kind of outside help. Even organisations like not-for-profits require some guidance, so they can function at their best and achieve their goals.
However, not-for-profits are distinctively different from other kinds of businesses. For example, they won’t have the same goals as a profit driven business. Therefore, it doesn’t make sense to apply business principles to a not-for-profit organisation.
For this reason, not-for-profit consultants exist. A not-for-profit consulting business can come in and share the same vision and purpose as their clients while providing a valuable service to society.
If starting a not-for-profit consulting business is something you’ve been thinking about, then you’re in the right place. However, before you take that first leap – it’s important to start your not-for-profit consultancy business with the right legal protections in place.
What Is A Not-For-Profit Consultant?
A not-for-profit consultant is someone that gives advice to not-for-profit organisations. Their expertise is often aimed at helping these organisations achieve their full potential by making their systems, processes, management and communication more effective.
How Do You Become A Not-For-Profit Consultant?
There’s no specific degree or linear career trajectory to make it as a not-for-profit consultant. In most cases, a not-for-profit consultant will have the relevant education and experience which has allowed them to gain an expert understanding of the not-for-profit industry. Due to this, they are able to help other not-for-profit organisations achieve their goals. If you're thinking of becoming or hiring a not-for-profit consultant, it’s important to ensure the right knowledge and experience has been attained first.
What Is The Difference Between a Fundraising Consultant and a Not-For Profit Consultant?
Often, a fundraising consultant and a not-for-profit consultant get mixed up. It’s understandable because they’re almost two sides of the same coin. A fundraising consultant will naturally focus exclusively on the fundraising aspect of running a not-for-profit business. However, a not-for-profit consultant generally offers advice on the different aspects of running a not-for-profit. This can include fundraising but also things like management, communication, finances, expansion and more.
Every not-for-profit consultant will have their own areas they specialise in. As not-for-profit consulting covers a pretty broad range of services, we recommend deciding on the ones you wish to focus on and ensuring you properly communicate the scope of your services to your clients – that way there’s no misunderstandings.
How Do I Start A Not-For-Profit Consulting Business?
The first step in starting your not-for-profit consulting business is getting your business registered. Every business in New Zealand needs to be registered. However, the registration process you go through will be determined by the legal structure you choose for your not-for-profit consulting business.
There are three common types of legal structures that business owners tend to register their businesses as:
- Sole trader
- Partnership
- Company
Each of these have their own drawbacks and advantages. You’ll need to think about the time you're willing to invest, the risks that are appropriate for you and your business's goals before committing to one structure. It’s a pretty important choice, so here’s what you need to know about each legal structure.
Sole Trader
When you register a not-for-profit consulting business as a sole trader, you’ll find the process to be relatively simple and quick. To register as a sole trader, you just need to get in touch with Inland Revenue and tell them about your new business plans. You can also choose to get an NZBN – but this part is optional. Once that’s all done, you’ll be all set to run your not-for-profit consulting business as a sole trader.
However, the disadvantage of being a sole trader is that your business is personally attached to you. Without any kind of legal separation between you and your not-for-profit consulting business, there’s very limited legal protection. You’ll be liable for the whole business which can be detrimental if something goes wrong. Furthermore, a sole trader business structure can put limitations on your business if you plan on growing and expanding it in the future. If your not-for-profit consulting business is a serious business venture, then a sole trader structure isn’t recommended.
Partnership
A partnership is somewhat similar to a sole trader structure, in terms of the registration process and legal protection. With partners, every single one will need to get in touch with Inland Revenue and have the option of applying for their own NZBN.
In a partnership, all partners will be personally liable for the not-for-profit consulting business as well. In this case, we always advise taking the additional step of securing the rules of the partnership with the appropriate legal documents, such as a Partnership Agreement.
Company
If your not-for-profit consulting business is a serious business endeavour with long-term goals, then setting up as a company is recommended. Even though registering a company is a little more time consuming and complex, you ultimately end up with something that is a legal entity on its own. This means, the company isn’t legally attached to you personally as it’s able to earn a profit, have debt, own property and more. As a result, you’ll have less liability and more legal protection.
Often, people get intimidated by the process of registering a company as it requires compliance with Companies Office's rules and regulations. Moreover, running a company means you’ll have to keep up with a few ongoing obligations such as annual fees and reporting duties. However, a legal expert can make this process much easier. They can help sort out things like your shareholders, directors and company governance while making sure you understand your legal duties when running a not-for-profit consulting company. Overall, a company structure is able to provide much better legal protection and set’s your business up for its potential growth in the future, which is always worth the extra effort.
Are There Any Laws That Will Impact My Not-For-Profit Consultancy?
When starting your not-for-profit consulting business, it’s not just the regulations around registration you need to think about. There’s also going to be other laws your business will need to follow. The specific regulations will depend on your business operations and even where you live (i.e regional laws) so it’s essential that you do your due diligence and find out what laws your business needs to comply with.
We know this can be a lot to try and keep up with – which is why it’s a good idea to chat with a Regulatory Compliance expert. They can tell you about the necessary regulations your not-for-profit consulting business needs to look out and provide guidance on how to abide by them.
A few regulations that might impact your business include:
Get in touch with one of our legal experts today for more information.
Do I Need Any Legal Agreements For A Not-For-Profit Consultancy?
Yes, getting your business set up the right way and ensuring it’s legally compliant is a great start. However, having legal agreements in place can keep your business protected for a long time to come.
Contracts and other legal documents aren’t just a boring formality. Rather, they provide much needed clarity, professionalism, solutions, risk management, enforceability and security. Contracts are an essential part of running your not-for-profit consulting business, so it’s best to invest in some good ones. A few legal agreements you might think about getting for your not-for-profit consulting business include:
- Consultancy Agreement
- Privacy Policy
- Website Terms and Conditions
- Employment Agreement
- Shareholders Agreement
Our legal experts can help determine what agreements your not-for-profit consulting business will need and cater them to suit your specific needs.
Next Steps
A not-for-profit consulting business can be an exciting venture, however it’s crucial to invest in the right legal instruments and abide by the correct legal processes. This way, you will be able to give your business a strong start.
- Not-for-profit consultants help organisations, especially not-for-profits, improve their systems, processes, management and communication for better effectiveness
- There's no specific degree or career path for becoming a not-for-profit consultant; relevant education and experience in the industry are crucial
- Not-for-profit consultants differ from fundraising consultants, as they provide advice on various aspects beyond fundraising, such as management, communication, finances, and expansion
- To start a not-for-profit consulting business, the first step is business registration, with three common legal structures: sole trader, partnership and company
- Sole trader registration is quick but offers limited legal protection; partnership also involves personal liability for partners, requiring a Partnership Agreement; registering as a company provides more legal protection and potential for growth but involves compliance with rules and ongoing obligations
- Various laws, including data and privacy laws, employment regulations and consumer law, may impact not-for-profit consultancy businesses, necessitating compliance and understanding
- Legal agreements like Consultancy Agreement, Privacy Policy, Website Terms and Conditions, Employment Agreement, and Shareholders Agreement are essential for a not-for-profit consulting business to provide clarity, professionalism, risk management, and security
If you would like a consultation on your options moving forward, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.
Sapna Goundancontent writer
