A Step-by-Step Guide to Opening a Solar Business in the USA
As more than 57% of people and organizations in the USA turn to renewable energy, this is the most opportune time for opening a solar panel business. Moreover, the initiative can be a sound investment with a promising future when done right. To help you with this noble initiative, I have done the heavy work of collecting the necessary information you need. Read on to know everything about starting a solar company – legalities, fundraising, marketing and all.
Why Should You Start a Solar Panel Business?
The solar energy sector has experienced a boom around the world, and the United States has been no different. The first factor to make opening a solar panel company one of the best decisions today would be the support given by the Solar Investment Tax Credit (ITC). Knowing that the U.S. government is supportive of renewable energy, it will become easier for you to raise funds from private investors.
Now that you have understood what your responsibilities will be, let us now move towards the next (and most elaborate) phase – setting up your solar panel company.
How to Set Up Your Solar Panel Business in 7 Easy Steps?
Be it an academic brand that offers assignment help or a solar panel company, starting a business goes beyond raising funds and registering with the state. To make things simpler, I have put together a step-by-step guide for starting a solar panel business. Use this guide to plan your business correctly, get registered and legally compliant.
Step 1: Plan the Business
As an entrepreneur, the first thing you need is a clear plan to map out the ongoing costs, the target market you will serve, the initial prices you can charge and more. Lucky you because I have saved you hours of research and done the job on your behalf already. In what follows, you will find all the answers to essential factors that should go into your plan.
- Opening Costs for a franchise will be between $100,000 to $350,000, and at least $500,000 to move independently with a crew and perform the first round of installations.
- Ongoing Expenses will involve ordering panels from a distributor, paying an energy company for customer accounts, payroll, marketing, office space rent, business insurance, etc.
- Target Market will constitute of small and large businesses and homeowner associations.
- Prices and Charges can range from $15,000 to $50,000, depending on the type and size of panels and the location.
- Annual Profits will depend on the number of panels that you install. A report based on solar panel companies operating in the U.S. has estimated an average return of 6% per year, or somewhere in between $5,000 to $10,000 per job.
Step 2: Choose the Name
Now, when it comes to solar panel companies, you must keep the word ‘Solar’ in the name of your brand. This mars the creative scope a bit, but you can still experiment. While you can try out synonyms for solar or words related to the earth, you have to choose a name that people can understand, remember and most importantly pronounce. So, nothing that is Greek to most people. If you don’t have a name in mind, you can use this business name generator as well.
Now, ascertaining a name isn’t enough. You must also do a trademark check to ensure that the business name of your choice is available in your state. Also, since having a website is a must for marketing management, make sure that the web domain for the name you choose is available too. Buy it right there so no one else can take it. After you have a registered domain name, set up an email account with your company’s name (e.g., email@ABCsolar.com)
Step 3: Form a Legal and Taxable Entity
While there are several business structures to consider, my suggestion is that you go for an LLC. This way, you will not be personally liable even if your solar business panel brand falls into a legal trap. Always consider a registered agent to stay compliant.
You will also need to register for state and federal taxes to open your solar company.
To register for taxes, you will have to apply for an EIN and acquire it via the IRS website or mail/fax.
To know more about it, head on to this link – https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online.
Step 4: Open a Business Account
However small scale your business is, you do not want to mix your personal account with your business. Moreover, when you register as an LLC, you will require a separate business account for your company to protect your personal assets.
So, if you do not want your corporate veil pierced, get a bank account that you solely operate for your business. This will also make recording the expenses and sources of income of your company easier. This will not only help you decipher the financial performance of your business but also simplify the otherwise complicated process annual tax filing.
Additionally, a separate bank account will help you apply for a business credit card and build a robust and transparent credit history for your company. This, in turn, will open up lines for credit and help you raise money later on.
Step 5: Obtain Licenses and Permits
You will require several permits to operate a solar panel business smoothly, failing which you may have to incur hefty fines, or shut down your business. You can visit SBA’s reference to state licenses and permits to learn about the licensing requirements followed as per the state you belong to, or the state in which you want to open the company.
Certain areas across the U.S. restrict solar power and the installation of solar panels. So, you better be sure to check with the clerk’s office of your town, city or county before moving any forward. If you are worried about the Red-Tapism involved, you can hire the services of one of the US Small Business Associations for local business resources.
Here is a list of all the licenses and permits that you will require:
- The Service Agreement that outlines the details regarding the prices of your services and the installation process. My suggestion is that you hire an attorney for legal advice on your service agreement.
- The Certificate of Occupancy that confirms the physical location you will operate from. It will establish that your company abides by all the building codes, the zoning laws and the government regulations. Now, there are some limitations involved, like:
- If you plan to lease space for your office, make sure that your landlord has a valid C.O. that applies to a solar panel business.
- If you plan to purchase office space, you will have to acquire the C.O. from a local government authority.
Step 6: Get Business Insurance
Your solar business will need insurance to be legally compliant. And it is just not about abiding by the law. Business insurance will also protect your business’s financial wellbeing in case you incur a loss that is covered in the insurance policy.
The insurance policies may differ with the extent of coverage of different kinds of business risks. For starters, you can begin with a General Liability Insurance to cover the needs of a small business. Since you will have to employ a crew of installers, builders and engineers, you can also go for the Workers’ Compensation Insurance to cover your employees’ payroll.
Step 7: Create and Market your Brand
Several solar companies are mushrooming in the USA owing to the demand. To stand out in the crowd, you will need to establish brand authority. Initially, you can market your product via on-air and print ads. Later on, you can hire a team of P.R.s for marketing management and engage with your potential customers. Also, make sure to have a website where your customers can learn more about your company and its offerings.
You can also consider offering installation of panels in a high-traffic area at a promotional rate. After a few years, you can donate a panel to a public school as a goodwill gesture.
Our home planet has suffered to the extent where the very existence of human life has become a question today. In dismal times as these, it is our responsibility to rise above the greed and do something for the mother earth. So, if you want to start a solar company in the States, you have all my best wishes with you for the initiative. Thank you for taking up the onus of making this planet a better place to live in, even if you have a personal interest in it.