Electricians offer essential services, so they’re always in demand. After a few years experience in the industry, many sparkies start their own electrical contracting businesses. Self-employed electricians often make more than their conventionally employed peers — and they can set their own hours, too. But what do you need to be an electrician in the UK?

We’ll begin this guide with a short primer on business planning, and then we’ll cover the logistical and legal aspects of starting a UK-based electrical contracting business. Finally, we’ll show you how to use an intuitive app to simplify your business accounting.

  • Get a license
  • Write a business plan
  • Register with HMRC
  • Open a business current account
  • Get insurance

Get a license

If you’re already licensed as an electrician, you can move on to the business planning stage right now. If you’ve previously worked as a domestic installer but haven’t yet obtained an official license, you’ll need to get an industry-recognised level 3 certification. Examples include:

  • City & Guilds or EAL Level 3 (NVQ) Diploma in Electrotechnical Services (Electrical Maintenance)
  • City & Guilds or EAL Level 3 (NVQ) Diploma in Installing Electrotechnical Systems & Equipment (Buildings, Structures and the Environment)
  • City & Guilds Level 3 Diploma in Electrical Installations (Buildings and Structures)

One of the best ways to get qualified is to complete an electrical engineering apprenticeship. This can take between two and four years, and involves hands-on work and college study. To sign off your own electrical work in England and Wales, you’ll also need to join a Part P scheme; in Scotland, you’ll need to become an Approved Certifier for Construction.

Write a business plan

Before you do anything else, write a business plan. If you’re raring to go, this might seem like an inconvenient extra step — but it’ll help you get started on the right foot. Most business plans include these seven sections:

  1. Executive summary: A short business description, a list of your electrical services and a definition of your target customers. 
  2. Business overview: A description of your company, an explanation of your business structure and your mission statement.
  3. Market analysis: A list of your competitors and an analysis of the market you operate in.
  4. Products and services: A detailed description of the electrical services you provide, and why you’re qualified to offer them to consumers.
  5. Marketing strategy: A rundown of your marketing strategy, including your marketing budget.
  6. Operational strategy: A breakdown of all the things you need to run your business on a daily basis, including tools and financial requirements. 
  7. Financial strategy: An income statement, a balance sheet and a cash flow statement.

Register with HMRC

As a business owner, you’ll be responsible for paying taxes and National Insurance contributions directly to HMRC. To this end, you’ll need to register with HMRC as a sole trader, an LLC or a partnership. 

Sole trader

Most small businesses in the UK are sole proprietorships. In fact, sole proprietors made up 59 percent of all businesses in the private sector in 2020. Registering as a sole proprietor is quick and easy — you simply apply for Self Assessment via the government portal. You’ll need to pay Self Assessment tax returns every year, and you’ll make payments on account to cover taxes six months in advance, too.

Limited company

If you register as a limited company, like 34 percent of other businesses in 2020, you’ll keep your personal finances and your business finances separate. You’ll choose an official business name and file your articles of incorporation with Companies House. The paperwork associated with limited company ownership is fairly involved. Limited company owners have to file corporate tax returns and pay corporation taxes every year, and they also have to file accounts with Companies House.

Partnership

If you want to go into business with another person, you can form a business partnership. Partnerships made up just 7 percent of all businesses in the UK in 2020. As a partner, you’ll share losses, expenses and other responsibilities with the other business owner. You’ll track income and expenses — a lot like a sole trader — and file a partnership return with HMRC every year.

Open a business current account

If you don’t already have a business current account, now’s the time to set one up. If you’re a sole trader, your company and personal finances are legally one and the same — but a business bank account can help you keep expenses separate. 

A Countingup business current account includes helpful accounting tools, which can make it easier to gauge how your business is doing. You can generate real-time profit and loss (P&L) statements and keep track of billing anywhere, any time.

Get insurance

You don’t have to get insurance to work as an electrician, but it’s a good move anyway. Public liability insurance can protect you if you — or someone else — get injured on a job site, or if you accidentally damage a property.

Many electricians also get speciality equipment cover to protect against tool theft or damage. Another option is business interruption insurance, which can help you maintain an income if you can’t work for an extended period of time.

Keep on top of your business finances with Countingup

As a newly self-employed electrician, you’ll have lots to do. Over time, you’ll grow your business and get involved in a range of projects. It will also be important to keep your personal and business finances separate, as well as keeping organised records to save hours of time on bookkeeping admin.

That’s where the Countingup app comes in. Countingup is the business current account that comes with free accounting software. With one simple app, you can categorise your expenses, capture receipts when you buy supplies, create customer invoices on the go and get cash flow insights to help you make business decisions. To learn more about Countingup, click here.