starting business help, where to start?

[T-Rope]

hello there! im taking my masters test, and would like any an all advice, on how to start an electrical business! i have no idea where to start! im in wyoming, for what thats worth, an would at the least be able to work at commercial facilities, industrial being the end goal, but i wont start there as i know theres a lot more involved working for oil n gas. my main concern are just requirements needed that companies require, an how to go about any of this lol. im literally lost about all of this, but im determined as hell, so any and all help would be greatly appreciated!

 

[__dan]

Get set up with an accountant first so you can start keeping track of all the expenses / deductions. You can probably start expensing everything for the business even before having the masters license. You would have expenses getting to that point. Falling behind on filing your deductions would be one of the usual fatal mistakes. That and undercapitalization.

Oil and gas is a great target market. Always a lot of money there (more than usual now I'm sure). Two years at community college, math, programming, couple of accounting classes, should put you where you need to be. Big difference between having some good formal education, a Business Law class, and trying to wing it.

In this economy, winging it is also a good bet.

Get set up to protect yourself and be ready to pull the plug quickly when you get that vibe.

 

[__dan]

Got a nice insight from a long time contractor. I'm trying to remember if he said business is about doing what the customer wants done, or, maybe he said business is about stuffing money in your pocket when you get a chance. Possibly it was the latter insight I caught from him, IDK. I recall stuffing some money in my pocket with him.

 

[zbang]

Lots of info in older threads in this forum....
Get a lawyer to set up a corporation/LLC; you want to have a separate business from your personal life.
Get an accountant to set up the books, and you might as well use something like quickbooks online to make it easier.
Get the Nolo Press book on starting and running a small business.
Consider one of the online expense-tracking sites, like Expensify, and use it religiously (track everything).

But...
You may be better off "renting" your license to an established business than trying run your own- depends on how much you like the bookkeeping, marketing, and all the other stuff that makes a business a business.

 

[Paultrium]

The first thing that you need is good management. You don't need if you had a simple manager who walks around and talks nonsense, knowing that he is not directly responsible for the product.
It would help if you had a leader who would first build the company around himself and then let it go in free-swimming. This leader should be an expert in change and transformation because these are the things that will bring success to the company. This change is the key to developing and looking for new horizons for the company. These people can feel the change and use it and take advantage of it.

 

[petersonra]

I hope things work out for you but understand a couple of things.

First, the vast majority of small businesses fail. Depending on the line of work it can be as many as 95% of businesses fail within 5 years. It just happens. People blame it on various factors but as often as not the guy running the businesses ultimately to blame.

Secondly, most people running small businesses statistically make less or about the same as they would working for someone else. Not a universal thing but for the amount of effort it takes to run your own business to just make the same amount of money or even less than what you could make working for someone else is not real palatable to me. People will claim they're all kinds of tax benefits or other real or perceived benefits, and those exist for some people. Personally I don't see the ability to deduct tool or vehicle costs from my taxes as that big of a deal as I don't really want tools or vehicles anyway.

As others have mentioned, pay somebody competent to help you set up your business. A good business lawyer can save you a lot of grief for a few hundred dollars up front, as can a good accountant. Don't skimp on this kind of help. You can't do this kind of stuff yourself nor can you substitute legal or accounting advice you get for free from random people on the internet.

Lastly have a plan for keeping your business going for a year or two with no profit. Literally. Very few businesses make any actual profit their first year or two. If you don't have the finances to keep yourself going for a year or two while you get the business on a sound financial basis, your chances of failure are very very high.

 

[infinity]

As others have mentioned, pay somebody competent to help you set up your business. A good business lawyer can save you a lot of grief for a few hundred dollars up front, as can a good accountant. Don't skimp on this kind of help. You can't do this kind of stuff yourself nor can you substitute legal or accounting advice you get for free from random people on the internet.

Bob hit the nail on the head. Find competent professionals and pay them to guide you. A good attorney and accountant are a must especially given the liability aspect of electrical work. Also register your own domain name and setup a website. Don't use Instagram or Facebook because believe it or not, not everyone is on those platforms, besides that you want complete control of your content. Lastly don't be surprised if you're working 70-80 hours a week and are making little to no profit for the first few years.

 

[kwired]

Your attorney' accountant's, etc. if you use them should be guiding you on how to get set up with different things.

Some things that you should expect to encounter is of course organizational setup of corporation, LLC, proprietor....basic accounting and how to set up to make it easier for income tax filing time.

Things that you may not think about that they hopefully bring up or can come up at some point:

Registration for a Federal Employer ID - if you are a proprietor and have no employees you don't necessarily need one - your SSN is usable anywhere you would otherwise use a FEIN

Registration with state department of Labor - may not apply everywhere, but chances are there is some equivalent agency you will need to register with, especially if you employ others, you will likely have to file unemployment tax returns of some sort with them. They will catch up with you eventually if you don't do it and demand you file past returns and pay whatever tax would been due plus penalties.

Payroll taxes if you have employees

Sales taxes - even if you don't have to collect and remit sales tax, many times you still at least need to be registered with said tax agency and file paperwork with them that indicates your operation is in a position that it doesn't need to collect and remit such taxes. Some cases you maybe tax some things but not others as well. They will also eventually catch up with you if you don't do it so just check into it from the beginning and make sure whatever you are doing is the right thing to do.

Insurance - general liability, coverage for your tools and equipment, make sure you know what is or is not covered - if you rent say a backhoe or scissor lift it may not be covered by your equipment policy, rental places often offer insurance or some even require you purchase it unless you can show your regular policy covers it.

Insurance - workers comp - if you have employees, or maybe even coverage to include yourself if you are set up as an employee of the company.

Setting up yourself or even your spouse as a paid employee can allow you to pay employee benefits to you or your spouse, a big one is health care insurance and expenses. Probably best to talk to your accountant on how to proceed with any of this.

You can take major depreciation amounts as deductions on income taxes particularly when you first start up a business, and then as you purchase tools, equipment, vehicles, etc. That helps reduce taxable income, but if you borrow money to purchase such things it does add to your debts so don't go overboard with purchasing things just to reduce income tax, sooner or later you have to pay either taxes or loans, or some of both- keep it balanced to what you need to keep operating.

Something else you might run into, might vary in different places as well, is that stuff you take depreciation expenses on for income tax, often wil be subject to a local "personal property tax" or similar. If that applies they also will eventually catch up with you if you haven't been filing it.

 

[Eddie702]

And the worst mistake is not charging enough. You need to charge about 3x what you want to pay yourself. You may be better off working for someone else for a while.

One way would be to find an owner of a business who wants to retire in a few years, and you could buy him out over time and have his experience to fall back on for the first few years.

 

[Hv&Lv]

This advice^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^


For want its worth, I’ve had two fail…
both were my fault In the end, regardless of economy in the 80s

 

[rt66electric]

I worked for the other guys until the age of 34 or so......

I spoke with some of my fellow journey that made the switch to "contractor"...... A friend gave me the best advice.- stay a one man show, or, a small tight crew,-- He said " I got 15 guys now .. but.. not making any more money" I too busy chasing employees and fixing their mistakes to do any work or make more money.

Cultivate good customers and do quality work.

develop a niche

be the GOTO guy to fix it right.

The only way to make money the way the laws are written is to either go big and do million dollar jobs, or stay small.

 

[JoeNorm]

I worked for the other guys until the age of 34 or so......

I spoke with some of my fellow journey that made the switch to "contractor"...... A friend gave me the best advice.- stay a one man show, or, a small tight crew,-- He said " I got 15 guys now .. but.. not making any more money" I too busy chasing employees and fixing their mistakes to do any work or make more money.

Cultivate good customers and do quality work.

develop a niche

be the GOTO guy to fix it right.

The only way to make money the way the laws are written is to either go big and do million dollar jobs, or stay small.

This is my plan. Staying small. There is actually very little overhead if you do so. Order per job for awhile while you save money.

It must really depend on your area. Demand is so high where I am it will be hard to fail. Unless the economy takes a serious turn and then who knows what happens.

 

[petersonra]

This is my plan. Staying small. There is actually very little overhead if you do so. Order per job for awhile while you save money.

Staying small has the major disadvantage of having to compete with everyone else who thinks they can run a business without overhead expenses. The reality is that you still have marketing, sales, accounting, and administrative expenses even when the owner performs those tasks himself. They just reduce the amount of contracting work the owner can do and charge for, or add to the number of hours the owner works for free.

It must really depend on your area. Demand is so high where I am it will be hard to fail. Unless the economy takes a serious turn and then who knows what happens.

I think people are going to be in for a shock the next year or so as the economy takes a huge dive.

 

[kwired]

Staying small has the major disadvantage of having to compete with everyone else who thinks they can run a business without overhead expenses. The reality is that you still have marketing, sales, accounting, and administrative expenses even when the owner performs those tasks himself. They just reduce the amount of contracting work the owner can do and charge for, or add to the number of hours the owner works for free.


I think people are going to be in for a shock the next year or so as the economy takes a huge dive.

Economy effects different areas and different industries, trades, practices, etc. at different times.

There is almost always a need for service work in all types of occupancies, new housing builds never seem to go away though the number being built goes up and down based on other economic factors.

I'm surprised there is as much activity as there is with building supplies pricing like it is, but at same time lenders are still lending money. If they stop qualifying as many people for loans that will slow things down some.

Agriculture is big factor where I live. Ag economy isn't great, but isn't horrible either. It kind of drives other business types in the area as the Ag people need other goods and services, and those other goods and services need some of each other as well.

 

[Jerramundi]

Keep your head down until you have the means to fight back. There are some serious sharks out there and they will cross lines for a dollar that you would never even think possible. Free market competition isn't the honorable Olympic sport that you might think or hope it is. It's dirty and if you're not ready for them when they come for you, you will sink like a stone.

 

[ramsy]

Staying small has the major disadvantage of having to compete with everyone else who thinks they can run a business without overhead expenses.

Including side-working JW's sitting on wait lists half the year, handypersons, and GC laborers that molest electrical without doing taxes, licenses, workman's comp., or advertising. They have no administrative overhead, take cash on the barrelhead, and the majority of volume for owner-builder permits, which indemnify the AHJ.

AHJ's indemnified by owner builders limit their inspection mandate to code compliance of accessible locations, and can furlough licensed specialty inspectors during funding crisis. The replacement entry-level combo inspectors are jacks of all, masters of none, can lack multiple-language skills, or familiarity with other regulatory / enforcement issues.

These AHJ combo inspectors walk among illegals, passing owner-builder renovations that bury unqualified-construction defects behind walls, with too many appliances tied to one fuse, or energized plumbing. The defects remain undeclared when properties are flipped for re-sale, unless later uncovered by qualified persons capable of code-compliant repairs, or uncovered during insurance claims. Cancelled insurance policies and non-renewal is standard industry practice that leaves ignorant buyers with no legal standing.

The reality is that you still have marketing, sales, accounting, and administrative expenses even when the owner performs those tasks himself. They just reduce the amount of contracting work the owner can do and charge for, or add to the number of hours the owner works for free.

Qualified persons capable of code-compliant construction or repairs, not afraid to advertise, can avoid the owner-builder business, with commercially-managed property that demands more qualified assurances for investor indemnity, albeit inundated by contractor hacks & illegals who invite liability upon themselves.

The end result is low bidders remain exploitable in every market niche, and everybody can demand indemnity except home owners, who must bear all liability and furnish the orifice for final exploit.

 

[petersonra]

First off, authorities having jurisdiction don't require indemnification because for the most part you can't sue them.

As for people without insurance, workman's comp, and other common expenses that normally are paid for by most businesses, are expenses that self-employed people often skip because they have no money to pay for it. A lot of self-employed people don't even have health insurance because they get it through a spouse or some other means without having to pay for it, or they just go without because they know if they get hurt the hospital isn't going to let them die.

There is only so much work in the commercial field, and when times are tough, as it will be in the not too distance future, the margins will drop to being razor thin.

Right now everybody has it pretty lucky, but it's probably going to get pretty ugly.

There is this claim that insurance companies are canceling policies left and right. I have not heard of a single case of that ever happening. It's true that most insurance companies have minimum standards that they require your property to meet before they will ensure you but as for canceling them because there is some trivial problem with the electrical wiring, just doesn't happen. How would they find it in the first place? It's not like they're sneaking into your house at night looking for Jack leg grounds.

 

[ramsy]

First off, authorities having jurisdiction don't require indemnification because for the most part you can't sue them.

Here's one of several AHJ's demanding Owner-builder indemnity since 2010. PDF also attached if link breaks.

 

[ramsy]

There is this claim that insurance companies are canceling policies left and right. I have not heard of a single case of that ever happening. It's true that most insurance companies have minimum standards that they require your property to meet before they will ensure you but as for canceling them because there is some trivial problem with the electrical wiring, just doesn't happen. How would they find it in the first place? It's not like they're sneaking into your house at night looking for Jack leg grounds.

Policies are cancelled for legal cause as described in prior link. Cause for non-renewal is found during claims, fire-marshal or other reports. I've seen it done right over the phone, for a toilet leak that caused water damage, without any insurance adjuster coming on site. Excluding anything not specifically covered, or entire claims for construction defects, additions not permitted, or remodels not approved by the insurance carrier is also common practice.

The simplest example of property insurance not covering fire hazards or fire-code violations, is missing smokes, or equipment installed in violation of its listing, typically by unqualified persons.

You wouldn't be in business very long with a contractor service warranty that covered DIY tampering with all your work. Insurance is not in the business of covering DIY or remodel hazards either.

 

[kwired]

As for people without insurance, workman's comp, and other common expenses that normally are paid for by most businesses, are expenses that self-employed people often skip because they have no money to pay for it. A lot of self-employed people don't even have health insurance because they get it through a spouse or some other means without having to pay for it, or they just go without because they know if they get hurt the hospital isn't going to let them die.

A one man show doesn't need workmans comp nor does he have to pay his share of payroll taxes, unemployment tax etc. and he might just have lower overhead expenses in general compared to a company with even just one or two employees. General liablilty - that possibly is required in many places. Here you must have at least $300K general liability (might even be more, that is what it once was, many often have at least a million anymore though) or you can't file for permits. You can keep renewing a license just to keep from having to test again to get it back, but you can't file permits without current certificate of insurance at proper coverage level on file with the AHJ.