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Planning to start your own electrical business can be an exciting process with great potential. There can be a host of possible advantages to having your own business, like having greater autonomy and flexibility. Also, the potential to grow your own venture and eventually build your own team is exciting. However, it can be tricky to work out where to start. This article explains:

  • the different requirements to working as an electrician in New Zealand; and
  • your options to structure and kick off your exciting new venture. 

Be Fully Qualified as an Electrician 

An essential starting point before starting your own electrical business is to become fully qualified as an electrician. Being fully qualified means that you can register to perform electrical services. Likewise, you can demonstrate to clients that you have all the skills and experience necessary to do the work they need.

To become fully qualified, you will need to obtain the New Zealand Certificate in Electrical Engineering Theory and Practice (Trade) (Level 4). This is a lifetime qualification and allows you to work as an electrician in New Zealand. This certificate reflects a lot of work and learning, and typically concludes an apprenticeship under another electrician or electrical business. This process can take 3-4 years. However, you can complete this more quickly by staying on top of your studies and attending extra training. 

The advantage of an apprenticeship is that you can learn on the job while also earning money. The additional learning and development (not learned on the job) are intended to supplement your existing experience and skills. All of this experience is a fantastic base for you to start your own electrical business eventually.

Decide How You Want to Structure Your Business

As a fully qualified electrician, you have different options to structure your electrical business. Your main options include:

Each of these options has its own pros and cons. Most electricians are comfortable operating as sole traders, where they do not have the administrative costs and other burdens of running a full company. Being a sole trader is a great way to get started as an electrician, particularly while you are still building up clients and your own reputation. A partnership is another option if you are interested in going into business with someone else or a few other people.

However, if you plan to grow your electrical business and take on investment or a larger staff, it may pay to think about starting a company. Companies:

  • offer limited liability;
  • are more accepted by banks and investors; and
  • generally are easier to grow and scale than a sole trader. 

Prepare to Track Your Business Expenses and Tax Obligations

Finally, when thinking about starting your own electrical business, you should consider setting up a system to track your business expenses and tax obligations. Thinking about these at an early stage will save you pain and hassle (and maybe a big tax bill) later on in the piece. As a starting point, make sure to keep receipts and generally track the expenses you are incurring in your new electrical business. You should be able to claim those expenses back when you pay tax at the end of the financial year, but you will need evidence of what your purchases are and how much was spent. 

You should also be aware of your tax obligations. As a sole trader, your business profits will be considered personal income. On the other hand, as a company, you will pay company tax, and it may be more complicated to work out your tax as you will need to pay yourself. 

Additionally, you should be aware of your GST obligations. If you earn at least $60,000 in a 12-month period, you will need to register for GST and make sure you pay the correct amount. These are all critical topics to discuss with an accountant when starting up your electrical business to ensure you are doing things the right way. 

Key Takeaways

It is a great option to start your own business as an electrician in New Zealand. There are a few key steps to doing so. The first and most time-consuming is becoming fully qualified as an electrician and obtaining the right certificates and registrations needed to practice. You should then spend some time thinking about what you want out of your business and how to structure it. Beginning as a sole trader is a good option, and you can later transition into a company if you choose. Finally, you should be aware of your tax obligations and start to track your business expenses. 

If you want to know more about starting your own electrical business, including where to begin and how to structure your business, contact LegalVision’s business lawyers on 0800 005 570 or complete the form on this page.

Frequently Asked Questions

Do you need to be qualified to be a registered electrician in New Zealand?

Yes, you do. You will need to obtain the New Zealand Certificate in Electrical Engineering Theory and Practice (Trade) (Level 4). This is a lifetime qualification that allows you to register as an electrician. 

How do you get the New Zealand Certificate in Electrical Engineering Theory and Practice?

Usually, this process involves an apprenticeship of 3-4 years, though it can also take longer. Being an apprentice means a lot of learning on the job, and you get paid while completing the program. After fulfilling the various requirements of your apprenticeship, you will get the New Zealand Certificate in Electrical Engineering Theory and Practice (Trade).

Do you need to pay GST if you run an electrical business?

Yes, like other businesses, you will need to register and pay GST if your turnover is over $60,000 per year.

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