As an electrical contractor, you may be considering what the next step in your career will be. Starting your own electrical business might be it. Small business owners have more freedom when it comes to how they work, where, and the clients they take. It also comes with a lot of responsibility, as you will be in charge of every aspect of your business.
There are requirements to start an electrical business in Pennsylvania. As rules change on a regular basis, make sure you’re up to speed on all the current requirements. Here is a general outline of what you may need to do to start your own electrical business. We’ll also share some useful resources with you.
1. Register the name of your electrical company
You can register your electrical business’ name with the Pennsylvania Department of State. This helps protect your business name and keep others from using it (along with trademarks and copyrights that you can file separately).
If you’re having trouble coming up with a name for your electrical business, you might just use your own name.
2. Choose a legal framework for your electrical business
There are different business entities available for small businesses. These include:
- sole proprietorship
- limited liability company
- partnership
- corporation
Further information on the business entities that are available and why they mean for you are available on the Department of State’s website.
3. Get your electrical firm a business license
A business license is essential to open any business in Pennsylvania. You will need to file paperwork with the state and pay a fee to receive a license. More information on this process is available on the PA Business One-Stop Shop website.
4. Set up a company bank account
You’ll need to create a bank account specifically for your electrical company that is registered under your new business name. This helps you keep your business finances separate from your personal finances, which will make things easier when it comes time to file your taxes.
5. Educate yourself on taxes and consider an accountant
Your electrical business may need to charge our clients’ state or local sales tax. Research the requirements in your area to understand how much tax you will need to apply to work estimates, quotes, and final invoices.
Filing your own business taxes is another step you will eventually need to take. If your electrical company is relatively small, you might be able to file your own taxes. However, as your business expands, you may need to hire an accountant to assist you.
6. Make sure you have business insurance
Electricians must register as a contractor with the state of Pennsylvania, and you must have liability insurance to do this. You may also need Workers’ Compensation insurance if you have even one employee. There are also other types of insurance, such as coverage for your tools or business interruptions, that you might also consider.
7. Apply for a contractor’s license
You will also need to register as a contractor. According to Pennsylvania law, your registration number must be included in all advertisements, contracts, estimates, and proposals you use in the state. There is a fee for registration, and it must be renewed every two years. You will receive a certificate as well as your official Pennsylvania Home Improvement Contractor number.
8. Make sure you’re covered by health insurance
Because you’ll be self-employed, you’ll need your own health insurance. If you have employees, you’ll need a plan that also covers their medical needs.
9. Other licenses, certificates, and permits
There are other miscellaneous licenses and registrations that you may need to work as an electrician in Pennsylvania. These may include a city license to work in specific areas of the state and special licenses for doing specific types of repairs or installations.
Once you’ve taken on a job, you may need to apply for permits before work can begin.
Starting an electrical business in Pennsylvania could be a good way to have more control over your work life. While you’re building your business, consider electrical insurance coverage to help protect your business.
