Going out on your own: journeyman to electrical contractor

To become an electrical contractor, you need the license your state requires to contract (usually a master or contractor license, or a licensed qualifier), liability insurance, workers' comp once you hire, and enough work lined up to cover the slow months. The rules vary a lot. Kentucky requires a $1,000,000 general liability policy for an electrical contractor license; Missouri's optional statewide license requires $500,000. About 7% of electricians are self-employed, per BLS.

01Should a good journeyman go out on his own?

Go out when you have the license, the customers and six months of cushion. Stay on the tools if what you want is the money, not the business.

One national electrical contractor told us: "If you're a good journeyman electrician, you're never going to be an employee for the next five years." He said it while talking about how fast good hands get called away. Either way you read it, a good J-man has options, and his own shop is one of them.

Most stay on a payroll. The Bureau of Labor Statistics counts 7% of electricians as self-employed, against 66% working for electrical contractors (BLS, Electricians). The other way to get paid what you're worth is to move to a shop that pays it. Where a journeyman can go next maps every lane, including the ones that keep a W-2 check.

02The license steps, state by state

Every state that licenses contractors sets its own hours, exam and insurance rules, and some leave it to cities, so start with your board.

Four examples, as of 2026:

Sources: Kentucky KRS 227A.060; Missouri Office of Statewide Electrical Contractors, FAQ; Oklahoma Construction Industries Board, electrical contractor; Colorado State Electrical Board. Confirm current rules with your board before you file anything.

What the table shows:

• The hours stack. Most states want years beyond the journeyman card before you can contract. Kentucky's master is double the journeyman's 8,000 hours. If you're early in your card, start logging and documenting hours now. Is a master license worth it covers the hours in more states.
• Insurance is a license requirement, not an extra. Price general liability and workers' comp before you price your first job.
• Local rules still matter. Missouri's statewide license is "optional, not mandatory." In states that don't license at the state level, cities and counties do. See states without a statewide journeyman license.
• Some states also want a business and law exam on top of the trade exam. Ask your board.

03Side work: check this first

Side work without a contractor license, a permit and insurance is illegal in most licensing states, and it's the fastest way to lose the card you have.

In Oklahoma, for example, the board's own path says a journeyman works "for an active, licensed Electrical Contractor" to earn the hours for the next license (Oklahoma CIB, electrical journeyman). A journeyman card usually doesn't let you contract or pull a permit on your own. Rules differ by state, so read yours.

The money risk is bigger than the fine. On a 2025 Mike Holt Forum thread about side work, one poster described a hand who had swapped a subpanel and some lights in a house that later burned. He had "no insurance no bond," got pulled into the lawsuit, and the poster said it was "going to cost him around 76k" (Mike Holt Forum, Side work). That's one story, not a statistic. It's also the story every contractor tells.

Your current boss matters too. On the same thread, a contractor said a few side jobs for family were one thing, but a licensed hand "advertising for side work, he wouldn't be my electrician for very long." Advertising makes you his competition.

If side work is how you want to test the waters, get licensed and insured for it first.

04The money: what changes when you leave the W-2

On your own, you pay costs your employer used to cover, and you don't get paid until your customers do.

Taxes. As a W-2 hand, you pay 7.65% for Social Security and Medicare and your employer pays the other half. Self-employed, you pay the full 15.3% self-employment tax (IRS, Self-employment tax).

Worked example (our math, for illustration): say you'd make $83,200 on a W-2 ($40 an hour x 2,080 hours). Your share of Social Security and Medicare is about $6,365. On $83,200 of net self-employment earnings, self-employment tax runs about $11,756 (15.3% of 92.35% of net; IRS Topic 554). That's about $5,391 more out of your pocket on the same money, before you deduct half of it on your income tax.

Benefits. In March 2025, 72% of private industry workers had access to employer retirement plans and 72% to medical plans (BLS, Employee Benefits in the United States, March 2025). On your own, that's 0% until you buy it.

Collections. Your rate means nothing until the check clears. GCs and owners pay on their schedule, not yours.

Unpaid hours. Estimating, bidding, invoicing, buying material, chasing permits and inspections. Nobody pays you for those hours directly. They have to be built into your price.

05The honest tradeoffs

Here's what you're trading, side by side.

Plenty of hands go out, run their own shop for a few years and come back to a W-2 job happy. Plenty go out and never look back. The ones who last usually had customers before they had a logo.

06A checklist before you pull the pin

Line up these before you give notice.

1. License in hand, not "test next month." Know exactly what it lets you bid.
2. Insurance quotes for general liability, workers' comp and a commercial auto policy on your truck.
3. Business setup. Talk to an accountant about the entity, estimated tax payments and bookkeeping before the first invoice.
4. Three customers who've said yes, not "said they'd call." A GC, a property manager, a builder.
5. Six months of living costs in the bank. Commercial invoices can take weeks or months to pay, even when they pay on time.
6. A supply house account and a sense of your material costs.
7. Pricing. Know your real hourly cost, including insurance, taxes, truck and unpaid office hours, before you quote.
8. A plan B. Know what a W-2 job pays near you, so you know what you're giving up and what's waiting if you come back.

If you're in your 50s and thinking of contracting as a way off the tools, read electrical work after 50 first. Running a shop is easier on the knees and harder on the sleep.

Run your Pay Check to see what electricians with your license make near you. Takes about a minute and your boss never hears about it.

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