One of the great advantages of learning a trade is how seamlessly you can transition into becoming your own boss. Once you have completed your electrical training and got some work experience under your belt, you might be thinking of striking out on your own as a self-employed electrician.
Starting your own business can be very exciting, but also daunting. We’ve created this guide to get you off on the right path.
But first, you might want to ask yourself...
Is self-employment right for me?
Self-employment gives you significantly more freedom than working for someone else, but it also requires you to shoulder a lot of risks and responsibilities. It’s certainly not for everyone, so do think carefully before you decide to go it alone.
Before making a final decision, consider whether you have what it takes to make it on your own. Certain core electrical qualifications are a must, of course, but a self-employed electrician also needs:
- Good organisation. Being your own boss means managing your own workload. You’ll have the freedom to work whatever hours you like, but you’ll also need excellent organisation skills and good judgement of your own time management. You’ll also be responsible for all of the admin associated with running a business, such as invoicing and insurance, so this should also be factored in.
- Good money management. As a self-employed electrician, your income is likely to fluctuate, especially in the early days. When you’re employed by someone else, you typically have a set salary with holiday pay built in and sick pay when you get ill. When self-employed, you only get paid when you’re working, so you will need to manage your money carefully in order to account for holidays and times when you’re unable to work. Of course, the flip side is that you will potentially be able to achieve a far higher income once you have established yourself as a reliable electrician-for-hire.
- Good marketing skills. With no customers, there’s no business! Electricians are constantly in demand thanks to the UK's ongoing trade skills shortage, but even so, a bit of marketing nous is necessary to get a brand-new electrical business up and running. You’ll need to find ways to get yourself noticed and hired; this can be hard when you’re only just starting out, but by building up a great reputation, you should find that your past customers begin to help out via the most elusive and effective marketing tool of all: word of mouth!
While there are challenges to going self-employed, the advantages can hugely outweigh the drawbacks if you get off on the right foot and leave your customers happy with your work.
How to register as self-employed
The first step is to let HMRC know that you’re now running your own business. HMRC makes this fairly straightforward—it’s simply a case of gathering some personal information, registering online and receiving your unique tax reference (UTR).
Be sure to make a note of important dates for filing tax returns. HMRC take their deadlines very seriously and will fine you for missing one, even accidentally.
You’ll also need to consider whether you want to register as a sole trader or set up a limited company. Each option has pros and cons that you’ll need to weigh up when making your decision:
Sole trader
PROS
- Straightforward setup, so it’s easy to get started
- Can claim business expenses
- Easy tax return process
CONS
- Unlimited liability—if something goes wrong, you are personally liable, so your personal assets may be at risk
- Getting access to business finance can be more difficult
- As your earnings rise, the tax rates become less favourable because your entire net income is subject to income tax rules
Limited company
PROS
- Limited liability—limited companies have their own legal identity, so only the company assets are liable if something goes wrong, not your personal assets
- Profits are subject to corporation tax and you pay yourself a salary, rather than paying income tax on everything your company makes
- Easier access to finance than sole traders
- A greater range of expenses and deductions are available
CONS
- You must register your limited company with Companies House, and your company information will be searchable online
- Far more paperwork, deadlines and fees
- More likely to require an accountant due to increasingly complex paperwork and tax returns
Becoming self-employed: other things to consider
- Start-up costs. There are costs associated with starting your own business, so these will need to be accounted for. For example, as a self-employed electrician, you’ll need your own vehicle and your own tools in order to reach clients and complete each job.
- Insurance. You may need a number of different insurances to protect yourself, including public liability, personal indemnity and, if you choose to employ other people, employers’ liability insurance.
- Mortgage contract / tenancy terms. If you’re running the business out of your own home, you’ll want to make sure you’re not breaking the terms of your mortgage contract or tenancy agreement.
- Business bank account. If you’re starting out as a sole trader, you may be able to use your personal bank account initially—but you’ll soon want to switch to a business bank account to make it easier to track your incomings and outgoings. If you set up a limited company, the company itself will need a bank account through which to do business.
- Accounting system. The earlier you set up a system for recording your incomings and outgoings, the better. You’ll also need a system for organising and storing any receipts and invoices.
How to decide on an hourly rate
As a self-employed electrician, it’s entirely up to you how much you want to charge for your work. You may want to do a bit of market research and find out what other sparks tend to charge for the type of work you offer—once you’ve got a ballpark idea of the going rate, you can set your own price tag accordingly.
Bear in mind that, whether you bill customers by the hour or charge a day rate, you’ll only get paid for hours actually worked. In other words, when you’re sick or on holiday, you’ll have no money coming in at all. Additionally, you’re also responsible for all your business costs, including insurance and tax.
You should take all of this into account when deciding how much to charge your customers. Consider your desired annual income, determine how many hours you are realistically likely to be able to work each week, then allow for holidays and sickness plus any costs.
Other factors that can affect what you charge include:
- Experience and reputation. More experience and a good reputation will mean that people are willing to pay a higher price to secure your services.
- Extra skills. The energy market is evolving, with renewables becoming ever-more prominent. The wider your skill set, the more jobs you’ll be able to do and the higher you can charge for your services.
- Location. Where your customers are will affect what you can realistically charge them. Rates in London, for instance, tend to be higher than elsewhere.
Again, checking out what your competitors charge can give you an idea of what your rates should be—but be sure to take into account their experience and the range of services they offer.
How to promote your business
Selling oneself can be uncomfortable for a lot of people, but it’s essential if you want to succeed as a self-employed tradesperson. You’ve got to get noticed to get hired (and paid!).
Here are some ideas to get started:
- Online marketplaces and directories. Many people head to websites like Checkatrade and Rated People when they need an electrician, so it’s a good idea to establish some sort of presence in those places. This will make it easier for potential customers to find and connect with you.
- Search engines. Set up a Google Business Profile and get verified on Bing Places for Business. That way, your business has a chance of showing up in the search results when a potential customer types in something like ‘electrician near me’.
- Social media. The average person in this day and age spends a lot of time on social media, and it’s often their first port of call when they need information or some kind of service. The key is to choose the right social media platform(s) for your business. You probably want to get noticed by customers who are local to you, so platforms with localising features are best. Facebook pages are likely to be more effective than Instagram, for example.
- Your own website. Social media is renting space on someone else’s website. It can be a great way to reach new people, but having your own website in addition to a social media presence will add legitimacy to your business and give potential customers confidence that you’re the real deal.
- Visual branding. It’s a good idea to decide on a logo for your electrical business, as this will serve as visual branding that you can put on your website, your social media profiles and your van. Consistent branding can go a long way to getting your business to stick in people’s minds, just in case they find themselves in need of an electrician. You may need to hire someone to design your branding for you, but the good news is that you can legitimately count this as a business expense.
- Word of mouth. This is the gold standard of marketing, because it’s your customers doing your advertising for you—and we generally trust recommendations from our friends and family over other types of marketing. Unfortunately, it’s also the hardest to get! The only way to benefit from word of mouth is through consistent good work and building an excellent reputation over time.
Be sure to keep up with the latest industry standards
One last thing: as a professional electrician, you’ll want to keep on top of the latest industry developments in order to make sure your work is in line with current standards. The best way to do that is by joining an association such as the Electrical Contractors’ Association (ECA).
You should also keep in touch with the place where you did your electrical training. They will advise you on when it is necessary to refresh your qualifications. Even better, they may be able to help you gain additional certifications in order to broaden your skill set, stay ahead of the competition, and keep up with the UK’s ever-evolving electrical needs.
Here at Access Training, for instance, we offer a range of courses for the experienced electrician who wishes to add more strings to his or her bow. Examples include:
Whether you’re a beginner looking to earn your core electrical qualifications or an experienced electrical worker thinking of going solo, Access Training can provide the courses and the career support you need. Get in touch today or use the links below to find out more.
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