Accounting for electricians in Ontario: licence costs, permits and apprentice ratios

An Ontario electrical business pays for the right to trade twice. Once a year for the contractor licence that lets the company bid at all, and again on almost every job for the inspection notification. Both are recoverable, and both get coded in ways that make the job margin report meaningless. Behind them sits the thing that decides how much gross margin an electrical shop can build in the first place, which is Ontario's one to one journeyperson to apprentice ratio.

The licence belongs to the company, the qualification belongs to a person

The Electrical Contractor licence is held by the business, and it is what allows the business to bid on, advertise or carry out electrical work for others. The Master Electrician licence is held by an individual. Holding the second one on its own does not let you contract.

To hold the EC licence the business has to employ a Designated Master Electrician at all times, keep an Ontario address for service that is not a postal box or general delivery, and carry public liability and property damage coverage of at least $2,000,000. Both licences are issued by the Electrical Safety Authority under Ontario Regulation 570/05, made under the Electricity Act, 1998. ESA's own contractor licence application states that "a master electrician shall not accept the master electrician designation on behalf of more than one electrical contractor at a time", and that the designated master electrician has to be actively employed by the business designating them.

That has a payroll consequence that rarely gets priced. Where the DME is an employee rather than a shareholder, the company's licence rests on one person staying. Whatever premium keeps them is the true annual cost of the licence, and it dwarfs the fee.

Those come from ESA's 2026 licensing fee schedule, which says HST is applied on top in accordance with CRA rules rather than being included. Spread $539 of annual licensing over two journeypersons billing 1,600 hours each and it costs 17 cents of your hourly rate. The liability policy and the DME premium are the numbers that need to reach the rate card, and getting those into the hourly rate is where our accounting work for contractors tends to begin.

The notification is a job cost, and it belongs to the job

Almost all electrical work needs a notification of work filed with ESA before it starts. As the licensed contractor you file it, ESA inspects, and a Certificate of Acceptance follows.

The fee guide in force when we checked in August 2026 is the one effective July 6, 2026, which replaced an April 1, 2026 edition. Licensing fees and the wiring fee guide move on different dates, so treat any table you find as perishable.

Take a panel change on a 1960s house. Six hours of labour billed at $115 is $690, materials are $520, and the notification for a 0 to 200A single family dwelling is $253. Quote it at $1,463, add 13 per cent HST of $190.19, and the invoice is $1,653.19. If that customer decides to file the notification themselves, they pay $568 instead of your $253, so pulling their own permit costs them $315 more for the same inspection. That is a plain commercial argument, straight off the published wiring fee guide.

The coding matters more than the recovery method. Building the fee into the quoted price and passing it through as a separate line are both defensible. What breaks the numbers is booking the recovered fee to sales while the ESA charge sits in an overhead account, because revenue inflates and job cost understates at the same time and your gross margin percentage stops describing anything. Post both sides against the same job and a pass-through nets to nil where it should.

Small work is where an unrecovered fee actually bites. A $46 notification on a $340 outlet job is 13.5 per cent of the invoice, which is most of the margin on that call.

One more timing trap. Residential and apartment renovation notifications are valid for twelve months. They renew automatically where at least one inspection happens in the initial year, with renewal fees applied annually until the work is complete. A job that stalls at the customer's end quietly starts costing you money.

The one to one ratio is the ceiling on your labour margin

Under the Building Opportunities in the Skilled Trades Act, 2021, trades that carry a journeyperson to apprentice ratio run at one to one. The trades subject to a ratio are listed in Ontario Regulation 876/21, so check that yours is on the list before you plan a hire.

Here is why it decides your gross margin. Take a journeyperson at $42 an hour. Add employer CPP, EI, WSIB, vacation and statutory holiday pay at roughly 22 per cent and the loaded cost is $51.24. Billed at $115, that hour earns $63.76, a margin of 55.4 per cent.

Put a second-year apprentice at $23 an hour beside them. Loaded at the same 22 per cent that is $28.06, billed at $78. The pair now produces $193 of billing an hour against $79.30 of labour cost, which is $113.70 and 58.9 per cent. The apprentice moves the whole crew up three and a half points. The ratio is what stops you doing it again, because a second apprentice on the same journeyperson is not available to you.

The federal Apprenticeship Job Creation Tax Credit is worth 10 per cent of eligible salaries and wages to a maximum of $2,000 per eligible apprentice per year, for an apprentice in the first two years of a contract registered with a provincial apprenticeship authority, in a trade prescribed as a Red Seal trade. Electrician qualifies. Unused credit carries back three years and forward twenty, per CRA's page on the apprenticeship job creation tax credit. That apprentice at $23 an hour over 1,800 hours earns $41,400, so 10 per cent runs past the cap and the claim is the full $2,000. We set out how the claim is made and what supports it in our post on the apprenticeship tax credit.

None of that works without a registered training agreement. An unregistered apprentice produces no credit, and in a compulsory trade the person cannot lawfully do the work at all. Electrician, Construction and Maintenance 309A and Electrician, Domestic and Rural 309C are both on Skilled Trades Ontario's list of 23 compulsory trades. Industrial Electrician 442A is not on that list, which is stated backwards often enough that it is worth checking the published list for yourself before you budget for renewals. Each compulsory certificate carries a $60 plus HST annual renewal.

Service work and new construction do not fund each other

An electrical shop running both is running two businesses with the same vans, and the difference shows up in working capital rather than in the profit and loss. Bill $60,000 a month of residential service collected at an average of 12 days and roughly $24,000 sits in receivables. Bill the same $60,000 on new construction at 55 days and about $110,000 is tied up before the holdback is counted. Identical revenue, four to five times the cash. Separate them as job types, because a blended margin describes neither.

Wire is inventory, and it never comes back whole

Copper moves. A quote priced in February and installed in June can lose several points of material margin without anyone touching the labour. Wire also gets consumed in awkward lengths, so what leaves the reel and what reaches an invoice are different numbers.

Count van stock per vehicle at year end, code supply house purchases to a materials account rather than straight to cost of sales, and charge material to jobs at a rate that recovers handling, returns and offcut waste. The gap between metres bought and metres billed is rarely small on a van that has run unmeasured for a year. The van itself is a separate question with its own capital cost allowance rules, covered in work truck and van write-offs for Ontario trades.

The obligations that have nothing to do with electricity

Your ESA licence says nothing about the rest of the file. Coverage under the Workplace Safety and Insurance Act is the starting position for construction work in Ontario, with a narrow exemption, and we cover the mechanics in WSIB for Ontario trades. Where you pay other trades, whether the person is an employee or genuinely in business on their own account determines payroll withholding, WSIB and slips, and the subcontractor or employee check walks through it. If more than half your income comes from construction, T5018 slips follow, and contract work brings holdbacks with their own HST timing.

All of our contractors and trades work

General information only, current at August 2026. Tax rules change and GST/HST status is fact-specific. Confirm your own position before relying on anything here.