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Starting Consulting Engineering Firm (yes, another thread)

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fitz2395

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So I’ve read through a few of these threads and so far they’ve been helpful, but figured why not revive the topic for 2021.

I’m a mechanical designer at an architectural engineering firm and I mostly design $50mil+ buildings. Central plants, convention centers, high profile government buildings...stuff I couldn’t touch as a one man firm. I love that technical stuff, so I’m not leaving my day job. But we don’t do work in the residential market, so I figure I could start a side gig there. I’m thinking maybe 20hrs of work every 2 weeks or so, max.

First of all, I understand I need to register a Certificate of Authorization. Can I just do that and get straight to work?

Do I need to officially register an organized business? I assume the answer is yes. I understand LLCs remove personal asset risk, so I like the idea of that.

Insurance – do I need it? If so, what kind? Since I’ll just be producing residential HVAC plans from my kitchen table for someone else to install, general liability insurance doesn’t really seem to apply. However, professional liability insurance, or errors and omissions insurance, does seem to apply. But given my limited work volume of maybe $30k/yr, would it be more economical to just risk my low volume side gig getting wiped out by a lawsuit rather than paying insurance premiums? After all, I’m not, nor will I be relying on these profits for a living.
 

ruggercsc

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  1. Make sure you current firm allows you to moonlight
  2. Check with your board on firm/branch license requirements
  3. Check with your Secretary of State on business license requirements
  4. Check with your municipality if they have any license requirements
  5. Insurance is your choice but I would not do anything without it.
 
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civilsurvey

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A llc or corporation will not shield you from personal liability. Lawyers will sue right through the corporate armour and sue whomever stamped the drawings
 
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A llc or corporation will not shield you from personal liability. Lawyers will sue right through the corporate armour and sue whomever stamped the drawings
This is what I thought. My boss always told me that unlike contractors who can close an LLC overnight and open under a new name, Engineers are personally liable until they die.
 

dsp002

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How about pricing? How does one set services/prices for a starting Engineering firm?
 

civilrobot

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@dsp002 Well, I've reviewed a lot of engineering invoices in my lifetime. Basic template:

1. hourly rate - what is your time worth? $85/hr? $100/hr? $125/hr? probably depends on your area. In my area, $100/hr is normal but I'm in a major city
2. OH&P (overhead and profit) - includes your markup, insurance costs, office expenses, mailing, data costs, etc.
3. subconsultant costs - sometimes you have to incorporate a licensed PTOE, or geotechnical testing, etc

Hope this helps.
 

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