How to Start an Electrical Business in 2026: Complete Guide

Electrical work is essential, skilled, and well-compensated. Every new construction project, renovation, and smart home installation needs licensed electricians.

Average electrical business owner income: $70,000-$150,000/year

This guide covers everything you need to start a successful electrical contracting business.

Step 1: Get Licensed

Electrical licensing is among the strictest of all trades—for good reason. Electrical work can be dangerous.

Typical Licensing Path

State Variations

Requirements vary significantly by state:

• Some states: No state license required (local only)


• Most states: Journeyman minimum to work independently


• Contractor license: Required to own a business in most states

Check your state's electrical licensing board for exact requirements.

Exam Preparation

Electrical exams are based on the National Electrical Code (NEC):

• Study the current NEC book thoroughly


• Take practice exams


• Consider exam prep courses ($200-$500)

Step 2: Register Your Business

Choose business structure

- LLC (recommended—liability protection is critical for electrical work)
- S-Corp (for higher income, $80k+)

Register with state

- File LLC paperwork
- Get EIN from IRS
- Apply for contractor license

Open business bank account

- Required for LLC protection
- Keeps personal/business finances separate

Step 3: Get Insurance

Electrical work requires strong insurance coverage:

Required:

• General liability: $1M minimum ($800-$2,000/year)


• Workers compensation: Required with employees


• Commercial auto: For service vehicle

Highly recommended:

• Professional liability (E&O): Covers faulty workmanship claims


• Tools coverage: Electrical tools are expensive

Insurance costs for electricians are moderate compared to other trades but still significant.

Step 4: Buy Tools and Equipment

Essential Tool Kit ($4,000-$8,000)

Testing equipment:

• Digital multimeter (quality matters)


• Voltage tester


• Circuit tracer


• Receptacle tester


• Clamp meter

Hand tools:

• Lineman's pliers


• Wire strippers (multiple gauges)


• Screwdrivers (insulated set)


• Fish tape


• Conduit bender


• Knockout punch set

Power tools:

• Drill/driver (cordless)


• Rotary hammer


• Oscillating tool


• Reciprocating saw

Service Vehicle ($10,000-$35,000)

• Used cargo van or truck: $10,000-$20,000


• New: $30,000-$35,000


• Van organization system: $1,000-$3,000

Step 5: Set Your Pricing

Service Call Pricing

Larger Projects

Pricing Strategy

• Flat rate is better for customer experience


• Know your hourly rate ($75-$150/hour) for estimating


• Material markup: 20-30%

Step 6: Marketing Your Electrical Business

Free Marketing (Start Here)

Google Business Profile

- Essential for "electrician near me" searches
- Photos of your work (before/after)
- Collect reviews from every customer

Referral network

- Partner with general contractors
- Connect with real estate agents
- Network with other trades (plumbers, HVAC)

Paid Marketing (Scale Up)

• Google Local Service Ads: $20-$60 per lead


• Google Ads: Target emergency searches


• Nextdoor: Local recommendations

Specialization Opportunities

Consider specializing for higher margins:

• EV charger installation: Growing rapidly


• Smart home/automation: Premium pricing


• Solar: Requires additional training


• Commercial: Higher job values

Step 7: Get Your First Customers

Week 1-4 Strategy

Tell your network you started a business

Reach out to contractors you worked with

Post on local Facebook groups

Set up Google Business Profile

Offer referral bonuses ($25-$50)

Building Contractor Relationships

Residential electricians often get steady work from:

• General contractors (new construction, remodels)


• Property managers (rental maintenance)


• Real estate investors (flips, rentals)

One good contractor relationship can provide consistent work.

Step 8: Set Up Systems

Phone System

Electrical emergencies require fast response:

• Power outages


• Sparking outlets


• Non-functional circuits

Options:

• Call forwarding: Free but requires you to answer


• Answering service: $200-$500/month


• AI service (Fixly): $1/booking, 24/7 coverage

Set up Fixly →

Software

• Invoicing: QuickBooks, Wave (free), or FreshBooks


• Scheduling: Google Calendar or Jobber ($50-$200/month)


• Payments: Square or Stripe for card payments

Startup Cost Summary

First Year Timeline

Keys to Electrical Business Success

Safety first — Your reputation depends on safe work

Answer calls — Electrical emergencies need fast response

Build contractor relationships — Steady work source

Get reviews — Critical for trust (electrical is high-stakes)

Stay current — NEC updates every 3 years, technology evolves

Electrical work is skilled, respected, and in constant demand. Build your reputation on quality and safety, and you will have customers for life.

Never miss an electrical call with Fixly →