Most people starting an electrical contracting business have several years of experience as an electrician working for other organisations, but you may also look to start up a business with a qualified electrician as a partner – teaming up business skills with the professional know how. Even if you’re planning to specialise offering some general electrical services can be a good idea and once you’ve decided on those services you can start getting the basic admin of starting a new business underway.

The process of setting up an electrical business can be broken down into 9 simple steps:

• Researching your target audience.
• Checking out who your competition is.
• Choosing a name for your business.
• Making sure you and your team cover all the skills needed.
• Writing a business plan.
• Working out where your finance will come from.
• Choosing a business set up.
• Joining relevant industry associations.
• Registering as a limited company.

Legislation

You don’t need a licence to trade as an electrical contracting business, but you should consider joining a relevant trade association to gain the credentials your customers will want to see. There are a number of options available to you, including the Electrical Contractors Association (ECA for England and Wales), SELECT (Scotland’s Electrical Trade Association), the Electrical Training Trust (ETT for Northern Ireland), as well as others such as the NICEIC and ELECSA.

There are also many regulations that you’ll need to follow as an electrical contractor. For instance, all new electrical work carried out in England and Wales must comply with the Building Regulations – Part P. This is legally enforceable and can be achieved by following the British Standard BS 7671 ‘Requirements for Electrical Installations’ also known as the 17^th Edition of the Wiring Regulations, published by the IET (Institute of Engineering and Technology. These cover low voltage electrical installations as well as microgeneration and solar photovoltaic systems.

You’ll need to check the legislation applicable to you when you’re setting up, but for certain types of work you may also need to comply with:

• Health & Safety At Work Act 1974 (HSWA)
• Electricity At Work Regulations 1989 (EAWR)
• Provision and Use of Work Equipment Regulations 1998 (PUWER)
• Electricity Safety, Quality & Continuity Regulations 2009 (ESQCR)
• Construction (Design & Management) Regulations 2007 (CDM)
• Construction (Health, Safety & Welfare) Regulations 1996 (CHSW)
• Control of Substances Hazardous to Health Regulations 2002 (COSHH)
• Personal Protective Equipment At Work Regulations 1992 (PPEWR)
• The Waste Electrical and Electronic Equipment Regulations EU Directive 2005 (WEEE)

Your portable electrical equipment, such as drills and cable detectors, will also be subject to the requirement to have Portable Appliance Testing (PAT) every two years.

As an employer you also have an obligation to comply with Health and Safety legislation from the Health and Safety Executive (HSE).

You’ll also need to take out employer’s liability insurance if you employ staff and have public and products liability insurance too. These will protect you and your business if a member of the public becomes ill or is injured as a result of the work that you do.

Qualifications needed

Of course, if you’re not planning to do electrical work yourself you won’t need electrical qualifications, although they can help in understanding the business. If you’re carrying out electrical work you’ll need to be a fully qualified electrician.

There are a number of qualifications that you should look into including:

• Diploma in Electrical Installation.
• BS7671: 2008 – Certificate in the Requirements for Electrical Installation.
• Certificate in the Building Regulations for Electrical Installations In Dwellings.
• Certificate in Inspection, Testing, Design and Certification of Electrical Installations.
• Certificate in Electrical Technology Engineering.
• Code of Practice for In-Service Inspection and Testing of Electrical Equipment.

Finance

If you’re already an electrician you may have many of the tools and equipment that you need to carry out your work. You’ll also need a secure and reliable van or similar vehicle to get you to your customers’ locations.

Your average earnings are likely to be around £30,000 a year, but you’ll need to take your business costs into account too. These include:

• Business premises – although these may not be needed if you’re starting a small business.
• Fixtures and fittings for your business premises.
• Utilities and services for your business premises.
• A secure and reliable business vehicle.
• The tools and equipment you need to carry out your work.
• Any qualifications and training you may need.
• Your insurance – electricians carry a higher risk so seek out a specialist insurer.
• Fees payable for accreditation and registration to trade bodies.
• The costs of employing staff.

You may also need to take on the services of a professional accountant, particularly if you’re contracting to the construction industry, where you’ll need to take the Construction Industry Scheme (CIS), with your tax being taken at source, into account. And remember to register for VAT if your turnover is above the threshold.

Setting up your electrical business as a limited company

When you’re starting up your electrical contracting business as a limited company you’ll also need to register with Companies House. This can be a quick and easy process with the help of a formations agent. When you choose The Formations Company it can take as little as three hours and with the special discounts we’ve negotiated, it can cost you less than the price of your Companies House registration fee.