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How to start an electrical business
Thinking of turning your skills as an electrician into a business? Find out how to get started.
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If you have finished your apprenticeship or have experience working as an electrician, launching your own electrical business can be a rewarding next step. From legal documents to marketing and how much to charge, here is your guide to setting up your new venture.
What is an electrical business?
An electrician business is responsible for installing and maintaining electrical wiring and equipment. As an electrician, you can work on residential and commercial buildings or on construction sites.
How to start an electrician business
Follow this step-by-step guide to help you launch an electrician business:
- Pick your target market. Depending on your expertise, you may specialise in residential electrical work, commercial electrical work, construction electrical work or emergency electrical work.
- Develop a business plan. Come up with a business plan that outlines your expected income and expenses, market research and sales plan. As part of the business plan, you will also need to figure out how much you need in upfront costs and how much to charge customers.
- Apply for a licence. One of the most important steps in setting up your own electrician business is applying for an electrical contractor licence. You should check with the relevant state and territory authority about what qualifications and experience you'll need before applying for a licence.
- Get insurance. Some states require you to take out Public Liability Insurance in order to be eligible for a licence.
- Create a business name and logo. A business name is the name your electrician business trades under. You should choose a business name that is consistent with the image you want to communicate to customers. Make sure you check to see if the business name is available and register with the Australian Securities and Investments Commission (ASIC). As well as a business name, you may also use graphic design tools and services to design a logo that you can use to market your business.
- Consider loan options. Depending on the savings you have and the equipment you need to buy upfront, you may need to apply for a business loan or a personal loan. For new electrician businesses, a business loan might not be an option.
- Choose the right business structure. It's important to get your business structure right from the start, because it may complicate your tax obligations if you change your business structure later. Some electricians may start a business as a Sole Trader because it's a simple and cost-effective option, but there are other business structures available too.
- Consider your legal requirements. You may want to set out your agreement with customers in writing, so if anything goes wrong you are protected. If you hire subcontractors or employees, you will also need a separate contract to set out the terms and conditions of their work.
- Market your services. Your marketing strategy will depend on your target market. Do you want to subcontract to contractors in the building industry? Then you will need to connect with your existing contacts in the industry. Do you want to advertise your services to residential and commercial clients? Then you may need to invest more in logo and branding, and actively promote your services on platforms like Airtasker and hipages.
Courses, qualifications and licences
Before you start your business, you need to make sure you have received proper training and experience as an electrician to work independently.
There are many pathways to becoming an electrician. Generally, electricians need to complete an apprenticeship which usually lasts four years. You may also be required to complete a Certificate III – Electrotechnology Electrician. The average fee for the course is $14,500.
After this is complete, you need to obtain an electrical licence so you can work unsupervised. Depending on the state or territory you are in, there are different government offices responsible for licensing:
State | Website |
| Queensland | WorkSafe |
| New South Wales | Fair Trading |
| Victoria | Energy Safe Victoria |
| South Australia | State Government |
| Western Australia | EnergySafety |
| Tasmania | Department of Justice |
| Australian Capital Territory | Environment and Planning |
| Northern Territory | Electrical Workers and Contractors Licensing Board |
In some states, you need to get insurance cover before you can apply for a licence. In Queensland, Western Australia, Victoria and Tasmania, you cannot apply for a licence unless you have proof of insurance, whereas in other Australian states it is not a requirement.
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Equipment and software needed to start an electrician business
You'll need a few different tools and equipment to start your own electrician business. This includes:
- Electrical tapes
- Insulated pliers
- Insulated screwdrivers
- Cable cutters
- Wire strippers
- Safety knives
- Spanners
- Voltage testers
- Hex keys
- Claw hammers
- A vehicle to get to and from jobs
You may also need software to keep track of your business. They include:
- Job management software such as AroFlo and Ascora
- Accounting software for bookkeeping and invoicing
Loan options for an electrical business
Depending on the level of your savings and the equipment you need to buy upfront, you may need to get a loan to start your business.
Our guide on small business loans can help you figure out which option is the best for you. Keep in mind some lenders will require you to have been operating the business for at least six months to a year, while other lenders will require a minimum annual turnover of at least $100,000.
If you're just starting your business, you may need to think about getting personal loans instead. Before you apply, always make sure you're able to afford all repayments, including any additional fees or charges.
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How to structure your electrician business
Before you set up your business, you need to decide how you will structure it. We've written a full guide on business structures here, but the following is a summary of the types to consider:
- Sole Trader. This is the most common type of business structure for electrician businesses. A Sole Trader manages all the aspects of their business themselves, which also means taking sole responsibility for any legal aspects, as well as handling any profits, losses, credit and debts yourself.
- Partnership. A Partnership is a legally binding contract between a group or an association. This group of people share income, profits, losses and responsibilities. It is relatively more expensive to set up than a Sole Trader.
- Company. A Company is a large entity which is run and managed by its directors. Companies are regulated by the Australian Securities and Investments Commission (ASIC). In a Company, directors are liable for debts and losses.
Do I need any legal documents?
You may need a few different legal documents to start your business and engage with customers.
- One of these is your Terms and Conditions, which dictates how you work with customers and what you are and aren't responsible for. It's standard to provide Terms and Conditions when you provide a client with a quote. It will specify such things as the services you will provide, your fees, payment terms and consumer guarantees.
- Employee or Subcontractor Agreements. If you take on additional staff, you will need to set out important aspects of their work including their hours, pay rates, superannuation, employee and employer obligations, and termination.
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Other registrations and taxes
- Registration: When you start a business in Australia, you need to register for an Australian Business Number (ABN) and goods and services tax (GST). You either register online for these or call an agent to set them up for you. If your business has a gross turnover of $75,000 or more yearly, you must register for GST – otherwise it is optional.
- Taxes: The taxes you pay will depend on your business structure. As a Sole Trader, your taxes will be based on your income. However, you can deduct any costs you used to invest in the business. In a Partnership, you have to pay two types of taxes that depend on your income and profits. You are required to file Partnership tax and individual tax returns. Companies need to lodge Company tax returns.
How much do I charge my customers?
You can charge a fixed fee or hourly fee depending on the nature of the job. Most residential electricians will charge customers a flat callout fee plus an hourly rate which is often calculated in 15 minute increments.
If you're charging an hourly rate, prices tend to range between $60 and $150 an hour according to hipages. Research the rates of your local electricians to make sure your hourly rates are competitive.
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How you find customers will depend on your expertise and target market. If you intend to work as a subcontractor on construction projects, it will be essential to connect with your existing contacts in the building industry, but you won't need to invest too much in a logo and branding.
On the other hand, if you are targeting residential and commercial clients, you may need to invest more in your marketing by following these steps:
- Create a website. Building an online presence is essential, so make sure you invest in a website. You can create your free website at a number of online platforms such as WordPress or wix.com.
- Create business profiles on social media. You can also grow your customers through social media, so make sure you set up relevant social channels such as Facebook.
- Join trade services platforms. Online marketplaces are also great places to find jobs. A few examples include Airtasker, hipages and Oneflare.
- Advertise to your desired customers. Find out where your customers are and then consider paying for advertisements to target them. For example, if you know that your desired customers are searching for electricians on Google, you may consider paying for Google Ads to target them with an offer. On the other hand, if you want to target your local customers, you may consider printing off flyers or magnets and dropping them off.
Frequently asked questions
Where should my electrician business operate?
As an electrical business is a mobile business, it's a good idea to set geographical boundaries defining how far you will travel. Think about where your competitors operate, and where the new builds and renovations are so you can focus on the growth opportunities.
Do I need insurance?
You should get insurance to protect your business. One to consider is Public Liability Insurance which covers you if your customers sue you for causing personal harm or damage to their property during work. In some states, you also need Public Liability Insurance to be eligible for an electrical contractor licence. Read more about how Public Liability Insurance works.
How much can I make with an electrical business?
How much income you can generate will depend on the state you're in, the size of your business and the type of services you provide. According to trade insurer Trade Risk, electricians on average earn $91,000 a year.
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