Starting an electrical contracting firm after becoming a licensed electrician is a popular choice.
While it isn’t tough to progress to becoming an electrical contractor, there are a lot of steps to follow. Our handy tutorial is designed to help you out along the way.
State Regulations
You must first establish that you are eligible for a license in your state before starting your own electrical contracting business.
Although you may believe that completing your electrical apprenticeship is sufficient, this is not the case in all Australian states.
For example, in Queensland, you must what is categorized as a ‘qualified technical person,’ which is basically your trade qualification. You’ll also need to be ‘qualified business person,’ an accolade you’ll receive after completing the required course. How long is electrician school? Not as long as you might think, compared to many other professions.
Setting up a Legal Entity for Your Company
There are several options for structuring your new electrical contracting company.
The sole trader is the cheapest choice. Because you can register for your own ABN and GST registration directly with the government, the fee could be zero.
You’ll still have to pay if you’re planning to trade under a business name, but the cost is low, and it can be done online.
A Pty Ltd company structure is preferred by many electrical business owners. This alternative is slightly more expensive. You can do it yourself on the internet, but it will cost you money. Your accountant will be able to assist you with this.
The advantage of the company form is that it provides additional asset protection because the firm is a separate entity, unlike a sole trader, who is regarded as a single entity.
A family trust arrangement is a less prevalent alternative. From the perspective of tax planning and asset protection, there may be advantages here.
Before making any decisions concerning your business structure, we strongly advise consulting with an accountant, as getting it wrong can be costly to correct afterwards.
Commercial Insurance
It may be tempting for a new electrical company to save money by skipping out on commercial insurance, but this is not a good idea.
To get your electrical contracting license in most Australian jurisdictions, you’ll need to have public liability insurance.
Not only is public liability insurance required for your license in most states, but many worksites will also demand all contractors and subcontractors to have their own insurance before working on site.
When you’re self-employed, you need to think about income protection in addition to public liability.
When you work for someone else, you get sick leave and workers’ compensation, but when you work for yourself, you’re on your own. You cannot earn if you are unable to work.
Accounting
While you may not require the services of an accountant at this time, it is still a good idea to hire one if you do not already have one.
An accountant can advise on the optimal structure to start with and provide further information on critical issues like cash flow.
You may also want to hire a bookkeeper. While you can do it yourself with the help of software like Xero, having a professional handle the accounting for you can save you hours per month.
If those hours might be better spent on the tools or bidding on new jobs, hiring a bookkeeper is a good idea.
Marketing
Starting an electrical contracting firm is great, but if you don’t bring in work, you won’t be around for long.
In 2022, there are a wealth of marketing strategies at your disposal to market your electrical company. The days of listing your business on Yellow Pages are firmly behind us.
We now have a plethora of choices, particularly in the online world.
Paid search, such as Google Ads and Facebook ads, are also quite popular among electrical companies, but it is not always inexpensive.
Experimenting with different methods of marketing can be entertaining, but it can quickly consume your time and money.
If you don’t have the appetite or the background knowledge to study your marketing options adequately, it might be worth hiring a professional to come up with some marketing ideas for your new electrical company.
Going into business for oneself can be terrifying in many ways, but it can also be financially and personally gratifying.
Starting your own electrical contracting business may be one of the best things you ever do if you get the basics right at the outset and maintain putting in the hard yards while learning everything you can.
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