As more and more people look for renewable energy sources that are also cost-effective, solar power has become increasingly in demand. If you have a passion for renewable energy sources and sustainability, a business manufacturing, installing, and repairing solar panels can be extremely lucrative.
The purpose of this article is to show you how to register, open, and operate your own solar power business. We'll go over the requirements you need to meet to open up your business and tips to be successful.
Licensing and Certifications
A majority of states require solar installers to obtain a license as an electrical or plumbing contractor to install photovoltaic (PV) panels (i.e., solar energy conducting systems). Some states also have other specific licenses that solar installers must obtain.
For example, solar panel installers in Texas need a Texas Electrical Contractor's License (TECL) from the Texas Department of Licensing and Regulation (TDLR), while solar panel installers in California need a C-46 license from the Contractors State License Board (CSLB). Be sure to research the licensing requirements in your state before getting started.
There are also different voluntary certifications that you can get. The North American Board of Certified Energy Practitioners (NABCEP) is one of the best resources for becoming certified in solar panel installation and repair. While certifications aren't typically required by law, having certified installers can set your business apart and give you access to certain state incentive programs and rebates.
Making a Plan and Gathering Resources
Your solar company will be doing things like installing, servicing, and repairing solar panels. On average, you'll be able to charge prices between $15,000 and $25,000 for panel installation for a home. However, solar panels can greatly reduce a client's energy costs and electricity costs over time.
Your pricing might be even higher if you have commercial clients or if you install high-quality, durable products like monocrystalline panels. Panels can also be more expensive if they're "off-grid" as opposed to "grid-tied." Off-grid means that only the owner can use the energy from the panels and they're not connected to a solar power grid.
You have a few choices for your target market. It's possible to install solar panels on most residential homes and businesses. In fact, some environmentally conscious communities work together with their homeowner associations to install solar panels for their whole neighborhood.
The cost of opening up a solar power business can vary greatly depending on the avenue that you choose. You'll need capital to do things like buy inventory and equipment and hire employees. You might even choose to franchise under an established company.
If you're starting your own company, startups should have significant money to cover upfront costs. This can be even greater if you need a factory to manufacture your own solar technology. If you don't want to manufacture your own solar products, you can partner with an original equipment manufacturer (OEM). An OEM will build the parts of your panels for you.
Here are a few things you might need to get started:
- A licensed crew
- Vehicles (trucks for transportation)
- Harnesses for working on roofs
- Solar pathfinders
- Solar panel software
Because starting a solar business requires such a large amount of capital, you'll most likely seek investors for extra funding. Solar investors aren't just going to knock on your door, though. It's up to you to organize your business ideas for them. Before they buy into your company, investors will want to see your business plan.
Your business plan shows who your company is and how it will bring in profits. Some things your business plan will include are:
- An executive summary that briefly sums up your entire plan
- An explanation of what your company does
- A market analysis to show where your business fits in
- A list of your stakeholders and owners
- Your plan for conducting business
- Your funding requests and how you'll use the money
Making Your Business Official
In addition to getting all your resources ready, you'll have to register your business with the state where you're located and bring in customers. The next few sections will go over the process for forming your business structure, advertising your services, and performing day-to-day administrative tasks.
Registering Your Company
The type of business structure you choose will have an effect on your tax liabilities, as well as the vulnerability of your assets. Legally, sole proprietorships and partnerships are no different than their owners. In a limited liability company (LLC) or corporation, your assets are protected if your business goes under.
Although sole proprietorships and partnerships are the least complicated types of businesses to register, they might not be ideal for your solar power business. Solar panel system installation is a service job with a fair amount of risk. You don't want your assets on the line if an employee gets injured and decides to sue you.
You'll have to start a corporation if you plan on publicly trading your company. Corporations give you the highest degree of asset protection, but they're double-taxed. Owners have to claim income on a tax return for the corporation and on their personal tax returns. LLCs protect your assets and give you pass-through taxation (income appears on the owner's personal tax return), but they won't let you sell shares of your company to the public.
Usually, you're not required to register your solar power business with the federal government. You only have to register with your state, which can be done by submitting registration to your secretary of state.
While you don't have to register your business with the federal government, it's wise to register or trademark your company name if you plan on doing business outside your state in the future. Visit your secretary of state's office and county clerk to make sure your business name isn't being used in your state.
Different business locations may require you to have different licenses or permits. For example, going door to door can be a great way to spread the word about your solar panel business in residential areas. Some states, like Florida, require you to get a peddler's license to solicit in neighborhoods, though.
Accidents happen, so it's wise to have adequate insurance to protect your business if unforeseen events occur. Below are a few types of insurance that are useful for solar power companies:
- General liability insurance to cover things like injury and property damage claims against your installation business
- Property and equipment insurance for things like tools, your factory (if you have one), and your merchandise (solar panels)
- Auto insurance for company vehicles
It's also crucial that you understand state and federal tax laws. This will help you stay in compliance and even market your business more effectively. The federal investment tax credit, also known as the solar tax credit, lets clients deduct 26% of what they pay to install solar panels.
Certain states also have additional tax credits which can make your business more attractive to consumers. California's Solar Energy System Property Tax Exclusion ensures that new homes with solar panels and homes that add new solar panels won't see an increase in their property taxes through 2024.
Marketing Online and In Person
For businesses today, it's essential to have a quality website to promote your company and reach your target audience. Sites like Squarespace can help you build your own website without any coding knowledge whatsoever. If you'd like to have a professional make your site, you can use talent networks like Upwork to find skilled developers.
Consider creating an original logo for your company that will help consumers remember you. You can use companies like Tailor Brands to create appealing yet appropriate logos for your business. You can visit the USPTO website to trademark the logo you create.
You also need to advertise on social media. Social media sites are great tools to showcase your brand's mission and personality. Posts with images and videos that show the environmental effects of solar energy can be a positive way to connect with eco-conscious consumers.
Display your business contact information clearly on your website and social media pages, along with a call to action like "Contact us" or "Call for a free estimate." You can also offer things like referral discounts to get new customers.
Managing Your Administrative Processes
It may not be an exciting part of your business, but accounting and administrative processes are essential for making consistent profits and improving your bottom line. There are several types of accounting documents you'll need for your business. Skynova's accounting software makes it easy to manage deposits, payments, and everything else.
Solar power companies have to create documents like bids, invoices, estimates, and receipts for several jobs. Skynova's free business templates can make organizing and sending these documents quick and simple. You can also send them over the cloud and be alerted when a customer responds to them.
Handle Your Business's Accounting With Skynova
The solar power industry is booming. Now is a great time to start a solar panel business. Getting into the industry requires a large amount of capital and a lot of planning, though. If you have the right resources in place and run your company strategically, you'll have the opportunity to grow your business and make a substantial profit.
One of the best things about solar energy is that it's good for the environment. What isn't good for the environment is excessive paperwork. Take a look at how Skynova's software products can help business owners like you handle accounting processes online.