So you want to start an electrical business in the UK. That’s awesome!
Maybe you’ve been working for a different business and you’ve decided it’s time to go it alone or perhaps you were based abroad and want to make a life in the UK.
Whatever your reasons, in this comprehensive guide, we’ll walk you through what you need to do to get started.
Making the decision to start out on your own and commit to starting your own business is a big decision, so even getting that far is a significant first step.
The next stage to think about is what kind of electrician business you want to be. Like it or not, setting up as just another business among many, is unlikely to be enough for you to succeed.
Instead, you should come up with a unique angle that will make your business stand out.
Consider the customer's point of view, if you’re just one business amongst many, what reason do they have to give you their custom?
Instead, think about what will make you stand out. What do customers value? What has made previous businesses you have used or worked for impressive?
Whatever it is, pick an angle or a niche and make it a part of your business's brand.
Here are some examples of electrical businesses that have done just that:
Website: https://www.artisanelectrics.co.uk/
Website: https://nippychecks.com/
Website: https://littlemisselectrical.co.uk/
When deciding how to approach your business, find an angle that works for you. It need not be as out there as Nippychecks but having a clear definable selling point is an important part of establishing a successful business that can attract the right customers.
Commercial, Industrial, Domestic
It’s important to define where you are focussing your expertise.
While you are deciding what your USP will be, you should also consider what type of electrical work and therefore what type of customers you want to go after. This will inform how you market your business and how you define your whole branding.
As a business that focuses on commercial projects, you will work in settings such as offices, retail stores, restaurants, and other businesses. You will often need to comply with commercial building codes, which may differ from those applicable in domestic settings.
Finding commercial work often involves networking with local businesses, real estate developers, and commercial construction companies. Joining a local business network or trade association can also be a good way to find opportunities.
As an industrial focussed electrical business, you will work on larger more complex electrical systems that can be found in industries such as manufacturing, oil and gas, or power production.
Safety and compliance requirements in these settings can be extremely strict, and industrial electricians often need additional training and qualifications.
Typically, industrial work is found through specialised job boards, staffing agencies focused on the industrial sector, or directly through companies in relevant industries.
Usually the most common type of work for those looking to start their own electrical business.
Jobs range from small tasks like repairing a broken outlet to larger projects like rewiring an entire house.
While the scale of the work is often smaller than in commercial or industrial settings, domestic electricians need to have excellent customer service skills and a good understanding of residential building codes.
Work can be found through advertising to homeowners, networking with local real estate agents and homebuilders, or listing services on platforms like Checkatrade or MyBuilder. Word-of-mouth recommendations can also be very effective.
Choosing the right business structure is a crucial step when starting an electrician business. The two most common structures are as a sole trader or as a limited company.
As a sole trader, you are the business, there is next to no separation between you and the company.
This means there's less bureaucracy and paperwork compared to other business structures, with fewer reporting requirements and lower set-up costs.
However, there are several drawbacks.
The most significant is personal liability. As a sole trader, there's no legal distinction between you and your business, meaning you're personally responsible for any business debts or legal issues.
This structure can be risky, particularly in an industry like electrical work, where the potential for costly accidents and issues exists.
If you go down this route make sure you use the right insurance, something we will cover later in this article.
Key points:
The primary benefit of working as a limited company is the separation of personal and business finances, meaning you only have limited liability. This means that your personal assets are protected if your business encounters financial difficulties or legal issues.
Another advantage is in how your business is perceived, with limited companies usually considered to be more professional.
Operating as a limited company can give clients and suppliers more confidence in your business. It can also provide more opportunities for tax efficiency through strategies such as salary and dividend payments.
However, running a limited company comes with greater administrative responsibilities.
You'll need to comply with more stringent reporting requirements, including annual accounts and confirmation statements. There are also additional costs associated with these requirements, such as accounting fees.
If you go down this route, making use of job management software such as Payaca is a good idea, as it will make managing these processes much easier.
Key points:
If you're planning to scale and grow your business, a limited company is typically a more flexible option.
Limited companies can issue shares to raise capital, and it's easier to bring in additional shareholders or transfer ownership of the business. While a sole trader can hire employees and grow their operation, the opportunities for expansion are generally more limited.
A crucial part of setting up a new business is coming up with a thorough business plan.
In this plan, you should break down exactly what your business is about, working out important information such as where you're going to get your customers, what prices you’re going to charge and what your profit margins are going to be.
You need to have a clear vision with definable actionable steps that will allow you to achieve that vision. Remember in many of the steps along the way, you will need to present your plan to others and prove that your goals are achievable.
You are already off to a good start just by reading this article. Following the steps and key points in this article will allow you to start to come up with a comprehensive plan of how you’re going to put your plan into place.
There are a few steps you need to take and tick off to register your business in the UK. These steps vary slightly depending on whether you are starting as a sole trader or a limited company.
An important part of setting up your own electrical business, whether as a sole trader or as a limited company, is choosing the right company name.
When doing this it’s important to consider two key factors: domain availability and personal accountability.
Before you settle on a company name, first check that the domain name is available so that you can use it for your website. The last thing you want is to choose a company name only to find that you can’t create a website that matches it.
You can use Google Domain Finder to check if a name is available.
Bear in mind that if you choose a company name based off your personal name, whether that be Eric’s Electricians or Smith Family Electricians - whatever your name is - then your identity is directly tied to that company.
Down the line, if you want to sell the business or step away from running it, you may find it more challenging if it uses your name. Furthermore, any negativity (or positivity) around that company will be directly tied to you.
This doesn’t mean you shouldn’t use your personal name, but it’s important to understand the reasons you may not want to.
Setting up as a sole trader technically counts as becoming self-employed. This means that you do not need to officially register your business name. The only requirement is that you do not include the following endings:
Once you’ve decided on a name, you can trade under that name and you should use it for all official paperwork including invoices and letters.
What is required, is that you register for tax payments, something that can be done online via the UK government's official website.
More information can be found on this in the tax section of this article.
Registering as a limited company can be done online with Companies House, the UK's registrar of companies.
This can be done either directly or through a company formation agent.
The registration process will require you to provide several details:
You will need to create the 'memorandum of association' (a document signed by all initial shareholders agreeing to form the company) and 'articles of association' (written rules about running the company agreed by the shareholders, directors and the company secretary).
The online process will guide you through creating standard articles.
The cost of registering a company online is £12. Once paid, the company is usually registered within 24 hours.
After the company is registered, you’ll get a ‘Certificate of Incorporation’. This confirms the company legally exists and shows the company number and date of formation.
You then have three months from the date of incorporation to register for Corporation Tax. You'll need your company’s Unique Taxpayer Reference (UTR) for this, which you should receive within a few days of your company being registered.
As with registering your business, sorting your tax varies slightly depending on whether you create a sole trader business or a limited company.
You'll need to register with HMRC to ensure you're paying the correct Income Tax and National Insurance.
This can be done online through the UK government's official website. When registering, you'll need your National Insurance number and the date you started (or will start) your sole trader activities. This date is known as your accounting date.
During the registration process, you will enrol for Self Assessment, which is a system HMRC uses to collect Income Tax.
Registration needs to be done as soon as possible after you start your business, but the absolute deadline is the 5th of October in your business’s second tax year.
Once you've registered, HMRC will send you a letter with your ten-digit Unique Taxpayer Reference (UTR). You will need your UTR for future correspondence with HMRC, including when you submit your Self Assessment tax return.
As a sole trader, you are required to keep records of your business's sales and expenses. You will also need to keep records of your personal income.
You pay Income Tax on your business profits (after allowable expenses have been deducted). The rate of tax you pay depends on your total income for the tax year, which runs from 6 April to 5 April the next year.
As a sole trader, you need to pay two types of National Insurance:
The rates for these classes can change, so you should check the latest ones.
If your turnover is more than the VAT threshold (which as of the tax year 2022-23 is £85,000), you must also register for VAT.
You can voluntarily register if your turnover is less than the threshold, which can be beneficial in certain situations, such as if you want to reclaim VAT on your purchases.
You need to report your income to HMRC by completing a Self Assessment tax return every year. The deadline for submitting this is usually by 31st January following the end of the tax year.
Each financial year, you must prepare a Corporation Tax return (Form CT600) and file it with HMRC. This must be done online. The return will show how much Corporation Tax your company owes based on its profits.
If your company's VAT-taxable turnover is more than £85,000, you will also need to register for VAT. Visit the UK Gov page for instructions on how to pay this.
If your company employs staff, you'll need to set up a PAYE scheme with HMRC for Income Tax and National Insurance contributions. This needs to be done before the first payday.
For details check out this guide on the UK gov website.
If you are a director of a limited company, you will usually need to complete a Self Assessment tax return for your personal income. Details are included under the sole trader tax section.
Whether you’re operating as a sole trader or you intend to run a limited company you will require insurance.
There are some levels of insurance that are legally required and there are others that are recommended. We have broken them down for you.
As an electrician sole trader in the UK, there are several types of insurance you should consider to protect yourself, your business, and your customers:
If you employ any staff, even on a casual basis, you are legally required to take out employers’ liability insurance.
This covers you if an employee gets injured or becomes ill because of the work they do for you.
Though not a legal requirement, this type of insurance is very important.
It covers you if a customer or a member of the public suffers an injury or property damage because of your business. As an electrician, where your work could potentially cause harm or damage, this insurance is particularly important.
This insurance covers you if a client suffers a financial loss as a result of work you have done for them. For example, if you gave bad advice or made a mistake in your work.
Although this isn’t legally required it is recommended.
Again, not a legal requirement, but as an electrician, it’s a good idea to have.
As an electrician, you likely rely on specific tools and equipment to perform your job. Tools and equipment insurance can protect these from theft, loss, or damage.
Also known as "contractors all risk insurance", this insurance covers you for the cost of repairing or redoing work in progress that's damaged by an insured event like a fire, flood, vandalism, or theft.
Personal accident insurance can cover you if you suffer from a serious injury or illness and you're unable to work. It could provide a weekly payout while you're recovering or a lump sum payment if you're permanently disabled.
Alongside getting your business registered and sorting your insurance, you also need to think about how you're going to run your finances.
Even if you are starting out as a sole trader you should always ensure that you separate your personal and business finances. Although this isn’t a legal requirement for sole traders, your life will be far easier with a separate account.
So, how should you go about setting up a separate business account?
Setting up a business bank account follows a similar process to setting up a personal business account. To open a business bank account, you'll need several documents and pieces of information. These will likely include:
A good place to start might be to approach the provider you are already banking with personally as you already have an established relationship with them.
Some other key points to bear in mind when deciding which bank to choose are the following:
Will your business receive payment in the form of cash or cheque?
It is important to check if your business bank account provider accepts these deposits. A lot of the newer online-only banks don’t offer these features nor have branches to deposit cash. It might be worth looking at accounts with one of the high street banks such as Barclays, HSBC or TSB.
Check what software/accounting integrations any new business account comes with.
Some accounts now come with a suite of software that helps you run your business such as creating automatic invoices, logging expenses or managing payroll if you have employees. This can save a lot of time and hassle. Tide’s business account offers a range of accounting software.
Look out for any promotions when looking for a new business bank account.
Banks are keen to get your business and will often run promotions. HSBC is currently offering a £100 Amazon gift card for successful applicants. Other banks run free trials for a limited time and Tide, a bank aimed at new small businesses offers free limited company registration.
Check your credit score
If you have bad credit, there are a number of business bank accounts that are tailored towards those with a poor credit history. The accounts might be limited in features and come with a higher fee but you may find yourself more likely to have your application accepted. Cashplus’s business account is a good example for those with bad credit.
For more information on how to pick what bank to go for, check out Finder's comprehensive guide, comparing different bank accounts.
Starting a new business can be expensive and unless you’ve got the initial capital saved up, you will need to look for ways to raise some upfront money.
Typically starting a new electrical business will cost you around £5000. That includes everything from initial registration fees, through to marketing and tool purchase. It may cost slightly more or less depending on what you already have in place.
To raise this money, there are a few different places you can go.
In the UK, the government offers loans from £500 up to £25,000 to help new businesses get off the ground. These loans are government-backed and use fixed-rate interest, set at 6%.
However, do bear in mind that this type of loan is technically an unsecured personal loan, not a business loan.
To apply you’ll need to prove you’re a UK resident and you must be over 18.
Remember you are not guaranteed to be given the loan. You will need to prove you have a solid business plan with reasonable projections of your earnings. Other details such as your credit score will be checked and you may even be interviewed before the loan is granted.
Once you are approved, you will be required to repay the loan over a period of 1 to 5 years. There are no application or early repayment fees.
For more information see applying for a start-up loan on the UK Gov website.
Most banks offer small business loans for companies trying to start up. Approach your bank or the bank you are opening your business account with and ask them what kind of loans or funding they have available.
There are different types of loans available such as term loans, business lines of credit, equipment financing, invoice factoring, and merchant cash advances. Speak to a professional to get advice on what is the best loan for your business.
These investors are entrepreneurs and business people who invest money in promising businesses. Unlike traditional loans, these investors are usually more flexible and willing to put their money where a bank might not
Usually, this funding goes towards high-growth potential businesses, so this route may be most suitable for those envisioning a broader scope, such as building a sizeable electrical contracting firm or introducing innovative services in the electrical trade sector.
Also remember that in return, an investor usually asks for a share in the company's equity. This means sharing ownership and potentially some decision-making control.
Crowdfunding works in a similar way to how you’d raise money for a charity or a sponsored event. You set up a page, with some compelling information about your cause, what you’re doing and why people should invest and then you share it around.
If people want to support you, they’ll donate money towards your project. As well as being a good way to raise funds it’s also a good chance to work on your social media engagement and how to promote a campaign.
The other benefit is that in most cases you don’t need to pay the money back as the money works as donations. Most forms of crowdfunding involve receiving straight donations or you providing perks and rewards (perhaps some free electrical advice) in return.
In some instances, if it’s equity-based crowdfunding or peer-to-peer (P2P) lending, then you will need to repay the investors either in the form of shares or as you would a standard loan.
To crowd-fund, you can easily set up an online campaign on a platform like Kickstarter or GoFundMe, and people can chip in to help you hit your cash target.
You can also consider other forms of investment such as appealing to friends and family or making use of savings. The other option is to start off with a skeleton operation, perhaps working on the side of a full-time job and borrowing equipment and tools from friends in the industry.
You can then build some capital from small-scale jobs.
Once you’ve sorted out getting your electrical company set for business you can now think about finding customers.
It might be that you already have potential customers lined up, perhaps from working at a previous company or via your personal network. But even if this is the case it’s still important to have a plan in place to attract new customers and grow your business.
The best way to find and attract new customers is by using marketing. This approach works by promoting your business online and in person, increasing brand awareness and attracting potential customers to use your services.
This form of marketing is done online. To implement it, you will first need to set up your own business website. We cover how to do this and some of the great benefits of using a website in our article on service business websites.
With a website, you can direct traffic from your marketing strategy to custom landing pages where customers can book your electrical services or contact you for more information.
You will also need to set up a Google business page which allows your company to be displayed on Google Maps. This is important for accumulating positive reviews and building your local reputation. You can find out more about this in our blog on marketing for electricians.
Along with this, you should start thinking about your social media strategy. It’s important you have a business Facebook page where customers can reach you, but you should also consider other platforms such as Instagram, LinkedIn, YouTube and even TikTok.
By creating unique and targeted content on these platforms you can reach new audiences and build a strong reputation. It’s a chance to create a business that matches your unique selling point and can allow you to build an ideal customer base.
We give some examples of how to do this in our marketing for electrician's blog.
Not all your marketing needs to be done online, physical adverts can also be very effective. Consider placing ads in the local paper and printing flyers that can be left in popular locations like bus stops, newsagents and hairdressers.
You should also look at getting some eye-catching branding on your van. This effectively works as a moving billboard, so think about having clear, concise, memorable information on the van. A QR code with a link to your website might also be a good idea.
Partnerships are a great way of finding new customers. By establishing relationships with other local businesses you can create a symbiotic relationship that benefits both of you.
Try contacting other related businesses in the area you want to operate in. For example, you might want to reach out to local plumbers or letting agents.
Another good idea is to leave your details at local builder merchants or ask the staff about other businesses that go there. Let them know you’re starting up and encourage them to share your information.
This is a government-approved initiative that allows individuals and enterprises in the building services sector, including electricians, to self-certify that their work complies with the Building Regulations.
This can be a helpful way of finding new customers as not only does it provide a level of assurance of quality for your business, but it also means your details are saved on the Electrical Competent Person Register, allowing potential customers to search and find your business.
With your business up and running and customers beginning to come in, you need to make sure you have a good supplier you can go to source the electrical materials you need.
There are a few things you should think about when doing this:
At Payaca we’ve partnered with Williams suppliers, meaning you can get all your materials lists and item data directly within your account.
Williams are a reliable supplier and a good place to start if you don’t know where to go, but even if you don’t go with them the material data can be helpful for building material lists quickly.
We’ve got a blog on material management covering everything you need on this topic.
As new customers start to reach out, you need to think about how you’re going to process these enquiries. If you’re a one-person business dealing with even a small number of customers can quickly become overwhelming.
The best way to deal with this is to set up a job management system that integrates with your website. This will allow you to automatically import new leads from your website or other channels and process them in an organised and coherent manner.
Payaca offers a great solution for this allowing you to embed a customised booking page on your site or via email. Any new customers are then transferred into your Payaca account where you can set up automated communications and easily progress them through your unique sales pipeline.
As someone starting a new business, there are so many great features that will make your life so much easier. Explore our website or check out our Youtube channel if you want to find out more about how Payaca can help.
If you’ve not written a quote before then there are a few key ingredients you need to include.
Any quote should clearly break down the different requirements of the job including:
Aim to lay it out as neatly as possible and present the information in a clear and logical format.
To help you with this, consider signing up to Payaca. With this software, you can easily build market-leading quotes.
You can create set templates that allow you to create your quotes very quickly. You can also add multiple choice and optional extras within the quote which allows you to sell more on each job.
When it comes to deciding on your prices, it’s always a good idea to familiarise with what other electrical businesses are charging in your target area. This will give you a good guide.
When deciding what to charge you should also consider your target demographic. If you’re offering a high-end service and you’re serving wealthy customers you can afford to charge higher.
Essentially your prices should be reflective of the customers you serve and the projects you are working on.
This is just a brief explanation of how to set your prices, for a full breakdown of how to decide what to charge read our article on how to price a job.
As you start to accumulate new customers you need to make sure you have a good approach on how to handle them.
Some customers are easy to deal with and some are not. It may be that the difficult customers are not worth your time, but that is something for you to work out as you go.
It’s important to have a clear understanding of what your customer service policy is and how you are going to manage communications.
It’s important to be as clear and helpful with customers as possible. This means having good communication channels and replying promptly to queries. You should aim to put customers at ease and avoid using highly technical language.
Once again software such as Payaca makes this far easier for you by allowing you to send automated communications and customised messages, allowing you to offer premium customer service even with a small team.
We have written a separate article on this topic, outlining how to improve your customer communication and keep your clients happy.
With your business set up and customers coming in, you’re off to a good start. However, don’t neglect your long-term planning.
It’s easy to dismiss planning for the future as something you can deal with down the line, but the decisions you make early on and the processes you put in place at the start can have a big effect on how your business develops into the future.
This is another reason for a good business plan. By putting in place the structures that allow your business to grow sustainably, right from the get-go, you make it far easier once you have a large established business.
This is why we recommend investing in things like good CRM and job management software and targeting the right customers according to your vision.
If you haven’t considered these and other factors early on, then scaling your business becomes far harder. Plan for the future. Keep everything organised and structured even when it doesn’t seem like you need to, as you will be grateful for it down the line.
Good luck.
Check out our other articles on how to found businesses in the skilled trades:
- How to start a plumbing business
- How to start a cleaning business
- How to start a pest control business
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