How to Start an Electrician Business

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About two-thirds of all the electricians in the US work for somebody else. They work for firms that are connected with contractors. Of the remaining one-third, most of them are also employed by a firm or company.

But 10% of the electricians are self-employed. Do you want to own your own electrical contracting business? We’ll get you…connected.

The Electrical Business Industry in 2023

In 2023, there are about 667,000 electricians in the US according to labor statistics. From 2020 through 2026, the electrical business is predicted by market analysis to grow by nearly 9%.

Do the math – and if you’re going to do electrical work, you should be good at math – that means there will be 67,000 new jobs for electricians. Experts figure there will be 60,000 new jobs and about 7,000 jobs created by expected retirements of working electricians.

Why You Should Start Your Own Electrical Business

Why should you start your own electrical company?

  1. The money is good.
  2. The cost to start an electrical business isn’t awful; the average cost to start is $20,000.
  3. Electrical businesses are diverse and there are many options for business focus. In addition to the ongoing need for maintenance in existing housing, experts predict a rise in new construction. The electrical industry is pivoting to more need for experts in solar and wind technology. Potential customers for electric vehicles need expert electrical services to install an electric car charging station at their residences.
  4. Qualified electricians are always in high demand.

how to start an electrician business

How to Start an Electrician Business in 10 Simple Steps

Are you ready to start your own electrician business? A new electrical business will be successful if you follow steps that are similar for anyone starting a new business.

The typical path to an electrical contractor business starts with education. If you’ve been lucky, getting your high school diploma included the opportunity to complete technical training in construction-related fields, including electrical work. Another path could take you to a two-year technical school.

You could also apprentice. Programs are offered through several national organizations, including the International Brotherhood of Electrical Workers, National Electrical Contractor Association, Independent Electrical Contractors, and Association of Builders and Contractors. To search for apprentice programs in your area, go online to the national website.

Here are ten steps to get you on the way to your successful electrical business.

1. Choose what Type of Electrical Contracting Business to Start

Many people starting an electrical business begin in residential electrical services. There are also more specialized types of electrical work, such as commercial work, which may include work with instrumentation and fiber optics.

2. Research Other Electrical Contractors in Your Area

Look at other electrical contractors in your area for two reasons:

  • To get a sense of what type of competition for work you’ll face from local businesses.
  • To find a person or company who will hire you as an apprentice, so you can learn more about the business with on-the-job training before launching out as your own boss.

3. Get the Necessary Permits & Licenses for Your Electrician Business

If you graduate from a trade school, you’ll most likely get a certificate and/or associate degree. Even with a degree, all those prospective electrical business owners must take an exam to get become state-licensed electricians according to government regulations. The test is called a Journeyman electrician licensing exam and you’ll need to pass that to get your electrical contractor license.

You may also be required to take the city and/or county tests; you can find out at your county clerk’s office. Continued training, work experience and certifications may eventually lead you to become a master electrician. Master electricians are an elite group.

You’ll need to obtain a business license, which you can typically get from your state. Licensing may also be required by your county and/or city, depending on local regulations.

4. Determine the Target Market for your Electrical Business

Electrician businesses can be general or specific. For example, you may want to specialize where the need is strongest – such as in the electrical vehicle home charging business for residential customers. Or you may prefer new construction work as a subcontractor for a contractor. If you live in an area with generally old housing and dated electrical systems, you may focus on maintenance, both for residential electrical wiring customers and commercial customers.

5. Write a Business Plan for Your Electrician Business

A business plan is important when you’re starting an electrician business, for yourself and for your future financial needs. The basic plan includes an executive summary, where you describe the business structure, focus, and future plans. You’ll also need to include your plan for marketing strategies and growth.

The plan is extremely important because it may someday be part of submittals for small business loan requests. It should be professional, and also updated annually to include documentation (tax returns) about the business. Your business name should reflect the serious nature of electrical jobs.

6. Choose a Legal Business Structure and a Business Name

Most electricians operating their own businesses choose the limited liability company or LLC. That way your personal and business assets are kept separate. Your personal assets may include your home and personal vehicle.

7. Sort Out Your Business Finances and Open a Business Bank Account

Your equipment costs to get started can be as low as $1,000 for a small electrical business but on average are about $20,000. Stock would include electrical supplies such as wiring, electrical boxes, cover plates, etc., which can be purchased by the job.

Before starting an electrical business, you’ll need certain electrical equipment tools, such as voltage indicators, insulated screwdrivers, wire cutters and strippers, a multi-function tester and battery-operated tools (since you’ll be turning off the electricity when you’re working).

If you’re going to operate from a brick-and-mortar business location, obviously your costs will be higher with a mortgage or lease.

You’ll need to separate your personal and business accounts, so you’ll need an account solely for your business. Same with credit cards; you’ll need a business credit card only used for business purposes. To make tax time easier, purchase accounting software.

8. Get Electrician Business Insurance

A professional electrician needs general liability insurance, but that alone isn’t enough. If you’ll be using your personal vehicle or a business vehicle for work, you’ll need commercial auto insurance. Electrical installation is basically a mobile business, with you bringing tools and supplies to work sites.

There are other types of add-on insurance that may apply to you. For example, you may want to add business interruption insurance, which can help you pay the bills if you can’t work due to a natural disaster, or vehicle accident.

To save money, you can often group liability insurance, plus the add-on insurances you need, under one policy called a Business Owner’s Policy or BOP.

9. Register Your Electrician Business for Taxes

Get an EIN, or Employer Identification Number.

10. Build Your Electrical Business Website and Market Your Electrician Business

Use social media platforms and a business website as basic marketing tools. You may also attend trade shows in the contracting industry, which are great opportunities for networking. These 14 electrician apps can also give you an idea if you want to create your own app.

Final Words

The cost of starting entrepreneur electrical companies is low. There’s a growing need for licensed electricians. But you can learn more about how to start a business: step-by-step guide as well as how much does it cost to start a business.

Start an Electrical Business FAQs

How Much does it Cost to Start an Electrician Business?

Nationally the average to start a small business is about $20,000.

Is an Electrical Business Profitable?

Yes. On average in the US a sole proprietor nets about $60,000 in that small business.

Is it hard to start your own electrical business?

An electrician needs specialized training and licensing, superior math skills and the ability to perform physical labor.

How do I write an electrician business plan?

There are basic components, such as the executive summary, business description, financial projections, marketing, and sales plan. It’s part of submittals for small business loans. There are business plan templates available online.

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Lisa Price Lisa Price is a staff writer for Small Business Trends and has been a member of the team for 4 years. She has a B.A. in English with a minor in journalism from Shippensburg State College (Pennsylvania). She is also a freelance writer and previously worked as a newspaper circulation district manager and radio station commercial writer. In 2019, Lisa received the (Pennsylvania) Keystone Award.