How to Start an Electrical Business: 9 Steps to Success

1. Get the required training and state license

The electrical industry is highly regulated, which is why you’ll need to be a certified master electrician to run your own electrical business in most states. 

However, training and licensing requirements do vary from state to state and even city to city. 

For example, electricians in Massachusetts require a license to perform any electrical work, and it must be renewed every three years. Electricians in Texas also require a license to work on electrical jobs, and it must be renewed annually.

Check with the National Electrical Contractors Association to see what certifications are required for your region.

Pro tip: If you’re just getting started, join an apprenticeship program first. This helps you get work experience alongside a journeyman electrician or master electrician.

READ MORE: How to become a certified electrician in the U.S. (State-by-state guide)

2. Secure funding to start your business

Starting an electrical business can be expensive. It can cost anywhere between $5,000 and $25,000 to get your business set up. Most startup costs include tools and equipment, large expenses like company vehicles, and advertising for your services.

Unless you’re sitting on a large savings account, you’ll need to get a loan or funding from a third party investor before you’re ready to launch.

Luckily, there are a few options available to start your electrical business:

• Apply for a small business grant through your local government
• Get a small business loan from your bank
• Ask family, friends, or angel investors to invest in your business

3. Create your business plan

To help you secure funding for your new electrical business, you’ll also need to create a documented business plan to share with potential investors or lenders. A business plan document offers a brief summary of your plans, goals, and structure.

4. Get set up: registration, business license, insurance

There are a few administrative steps you’ll need to complete before you start working with customers. Each step in the list below ensures that you’re operating your business legally and safely.

Choose a business structure

Before you can register your electrical business, decide what business structure is best for your operations. For small electrical businesses, these are the most popular options:

• Limited liability company (LLC) – For electricians, registering as an LLC protects your personal assets just in case you run into legal trouble or if you are ever sued for damages.
• Sole proprietorship – If you’re starting a business alone, register as a sole proprietorship. This gives you complete control over your business and assets.
• Partnership – If you’re starting your business with two or more corporate partners, you’ll want to register your business as a partnership.

Register your business name

Pick an electrical company name that’s professional, unique, and memorable. Then, register your business with your regional government. 

Pro tip: To check if your business name is available, Google [NAME + LOCATION] or run a quick search in your country’s trademark database.

Get a business license

Check with your local city or state to see what licenses or permits you’ll need to operate your electrical business.

Insure your business 

Electrical work can be dangerous. Get the right electrical insurance to protect your business and your customers. Then speak to your insurance provider to discuss what coverage you’ll need for the electrical services you offer.

The types of business insurance you may need include:

• General liability insurance: Protects you from claims involving bodily injuries, property damage, or personal injuries caused by your business operations or products.
• Commercial automobile insurance: Covers vehicles used for business, protecting against damage to the vehicle and liability for accidents involving business vehicles.
• Workers’ compensation insurance: Covers medical expenses and lost wages for employees who are injured or become ill as a result of their job.
• Professional liability insurance: Protects businesses against claims of negligence, mistakes, or inadequate work as it relates to professional services.
• Equipment insurance: Covers repair or replacement costs of business equipment that is damaged, stolen, or lost.
• Property insurance: Protects the physical location of a business and contents (like furniture, inventory, and equipment) from risks such as fire, theft, and natural disasters.

Many local insurance agents can provide or help you shop for policies that offer adequate coverage at a price you can afford. If you’re not sure where to start, ask for referrals from other small business owners in your area.

5. Set up your business accounting

Open a business bank account to keep your personal assets separate from your company’s assets. By separating your financial records from the start, you’ll save money and hassle when it’s time to report your taxes.

A streamlined accounting tool like Quickbooks Online keeps your business finances organized, while helping you manage important processes like payroll.

Investing in electrical contractor software like Jobber that syncs with Quickbooks Online makes the accounting process even easier, and you can see everything (including work schedules) in a central spot.

6. Purchase electrical tools and supplies

Stock your electrical van with the right electrician tools and equipment to get the job done. Here’s what you need to purchase before your first job:

• Voltage tester: Checks if electrical circuits are live
• Wire cutters: Cuts electrical wires safely
• Electric drill and screwdrivers: Drill holes, tighten screws, and loosen more quickly
• Pliers: Grips, bends, or cuts wires and other materials
• Fish tape: Guides wiring through walls and conduits
• Flashlight: Illuminates dark work areas
• Level: Ensures surfaces are perfectly horizontal or vertical
• Tape measure: Measures distances and dimensions accurately

To save yourself from running to a hardware store before every job, stock up on other electrical supplies like:

• Electrical tape: Insulates and protects electrical connections
• Solder wire: Joins electrical components by melting and bonding
• Cotton buds: Cleans small areas and components
• Solder flux: Improves solder flow and adhesion
• Solder wick: Removes excess solder from joints
• Freezing spray: Cools components quickly for testing
• Flux cleaner: Cleans off solder flux residue
• Kapton tape: Insulates and protects sensitive electronics
• Single-core wire: Rigid wire for straightforward electrical connections
• Multi-core wire: Flexible wire made of multiple strands
• Wire wrapping wire: Thin wire used for circuit board connections

7. Learn how to price your electrical services

Knowing how to estimate electrical work will help you quote faster, win more jobs, and grow your electrical business. The tips below will walk you through the process.

Choose what electrical services you’ll offer

Make a list of the types of services you plan to offer. For example, if you’re targeting Make a list of the types of services you plan to offer. For example, if you’re targeting residential customers, your services may include:

• Doorbell installation
• Wiring a new outlet or switch
• Installing an electric car charging station
• Installing a video surveillance system
• Installing a new electrical panel
• Removing knob and tube wiring

Then jot down the materials you’ll need to complete each job. Determine your hourly rate, and calculate your profit margin.

Pro Tip: To make sure your pricing is competitive, check online to see what other electricians in your service area are charging. 

READ MORE: Pricing strategies for service business: everything you need to know

Build an estimate template

Creating an estimate template will speed up your estimate process and help you win more work, faster.

Your electrical estimate template should include:

• Your business name, logo, and contact information
• Your customer’s name and contact information
• An estimate number
• A breakdown of the electrical services you’ll be providing
• An approximate cost for the services
• How long the estimate is valid for

Sending estimates to your customers quickly can help you secure more work and keep your schedule full. 

Jobber lets you build customer-friendly quotes in minutes, price jobs perfectly, and automate your quote follow-ups so you never leave work on the table.

8. Get your first electrical customers

Investing in marketing will help attract new electrical leads—but you don’t have to spend a ton of money to get new customers through the door.

Here are a few marketing strategies to help you get new electrical leads:

• Build a brand for your electrical company by designing a logo, picking company colors, and ordering business cards and uniforms.
• Use website builders (like GoDaddy) to create a website for your business that lists your services, tells people where you work, and makes it easy for potential customers to request work.
• Set up your Facebook Business page to connect with new customers 
• Use Google’s Local Service Ads to advertise your electrical contracting business to clients in your area
• List your business on lead generation websites like Thumbtack, Angi, or HomeAdvisor to get more electrical leads.
• Start a customer referral program that gets happy customers to find new leads for your business.

READ MORE: Electrician advertisement: how to advertise your business

9. Hire electrical contractors and grow your business

If you’re struggling to keep up with new quotes and are turning down work, it’s probably time to hire an electrical contractor to help grow your business.

To find qualified contractors to join your team, you’ll need to write an electrician job description that includes:

• Job title
• Position summary
• Responsibilities
• Qualifications
• Salary and benefits

Then compile a list of interview questions that test the candidate’s electrical knowledge and how they would handle specific situations. This will give you a better understanding of their skillset, on-the-job experience, and work values.