If you’re thinking about becoming a contractor or expanding your businesses in Texas, you’ll need to understand the rules and regulations that apply in this field. They can, however, seem confusing because the lack of a statewide Texas contractor license means each city handles them on an individual basis while the state still issues certain specialty contractor licenses.
To help you navigate this process, this article breaks down whether or not you’ll need a contractor license. It also explains the application process if you do and discusses any other relevant licensing requirements so you can focus on building your business.
Tip: If you’re planning to work as a general contractor in Texas, we recommend forming an LLC. This is an affordable business structure that protects your personal assets against debt and/or lawsuits.
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In Texas, not all contractors are required to obtain a specific license. Instead, licensing requirements vary depending on your specific trade and the location you’re based in. We’ve explored these considerations in greater detail below.
If your business plans to offer contracting services in specialized areas like plumbing, electrical repairs, or heating, ventilation, and air conditioning (HVAC), you must have a license issued by the state. Keep in mind that you must have the proper license even if you don’t formally call yourself an electrician, plumber, or HVAC technician, but still work on electrical, plumbing, cooling, and heating systems.
In addition, many municipalities within Texas require businesses that perform this sort of specialized work to satisfy additional local requirements. For example, all contractors in the city of Austin must register with the Development Services Department as well as the state in order to operate legally.
To qualify for any of these licenses, you’ll need to satisfy the experience requirements, register with the relevant state board, and often pass a mandatory exam. For example, you need to pass an Texas electrician licensing exam before filing a licensing application. When preparing for any contractor exam, it’s essential to take advantage of quality study materials so you can obtain the insights, tools, and techniques required to excel.
If your business offers handyman, building, or home improvement services, you should note that Texas doesn’t mandate a general contractor license for any of these roles.
However, it’s crucial that you understand exactly what these roles entail to confirm whether or not you’ll need a license and to avoid having to pay any penalties for accidentally violating Texas’s contractor licensing statutes.
For the purposes of Texas contractor licensing, handymen and builders are typically skilled tradesmen who handle small repairs and minor maintenance tasks (e.g., fixing a leaky faucet, performing gutter maintenance, or making basic drywall repairs).
For your business to take on more complex jobs (e.g., installing a new bathroom or rerouting electrical systems in order to create a new kitchen), it likely would need to obtain one of the more specific licenses outlined above.
Note: While not required at a state level, your business may still need to obtain a general contractor license at a local level because each municipality has its own rules and regulations in this area.
Becoming a general contractor in Texas is relatively straightforward since the state doesn’t mandate a license. This means there are no specific age, experience, or education qualifications that you must meet at a state level to be able to offer these services.
However, if you intend to perform any work in a specialist trade (i.e., as a plumber or electrician), there are certain steps your business will need to follow in order to get licensed in Texas. While the specifics of these steps vary between each trade, you will generally need to do the following:
Before starting the application process for a contractor license, you’ll first need to decide on the structure of your business. Since this decision will impact your liability, tax obligations, and how you run your business, it’s vital you’re informed about the details of each structure so that you can effectively determine which one is best suited to your needs.
Many contracting businesses in Texas, particularly smaller ones, decide to structure themselves as a limited liability company (LLC) because it grants them tax flexibility, limited liability protection, and credibility in the eyes of their clients.
More than 72% of our readers form their LLC using a professional filing service. Our recommended service provider is:
Northwest Registered Agent ($29 + state fees)
After forming your business, you’ll need to confirm that you meet the minimum basic requirements. While the specifics of these requirements will vary depending on the license you are trying to obtain, you’ll generally need to:
Note: Some licenses (e.g., a master electrician license) will require you to have held a more junior qualification in that industry for a certain amount of time. In Texas, applicants must have held a journeyman’s license for at least two years before applying to become a master electrician.
Once you’ve confirmed that you meet the basic requirements of the license your business needs, the next step is to complete and submit the appropriate application form to the relevant regulatory body along with any associated fees.
Here’s what’s involved for some of the most common specialist trades in Texas:
Note: While this article highlights several common trades in Texas, the application process is unique to each specific trade. As such, you’ll need to research the exact licensing process for the specific license you need because it may differ from those outlined above.
While not a universal requirement, many contractor licenses in Texas require applicants to pass a licensing exam in order to qualify. For example, electricians must take an exam administered by third-party vendor PSI after the TDLR approves their application.
Many candidates struggle with these exams as they will often test both their knowledge of the trade and their understanding of Texas’s specific regulations and laws. To avoid this, many applicants take advantage of online study guides and preparatory courses in order to get ready for these exams.
In order to protect both your business and the client in case of accidents and damages, most contractors in Texas will need to provide proof of insurance coverage in order to get licensed. For example, plumbers must submit a Certificate of Insurance to the TSBPE along with their application and other insurance coverage, such as general liability insurance or worker’s compensation insurance.
Additionally, many local governments in Texas impose a surety bond requirement based on the kind of work a contractor will perform. For example, any contractor looking to perform demolition services in the City of San Antonio will need a $5,000 annual bond.
Be sure to check the specific insurance prerequisites for the license you’re seeking as well as the surety bond requirements of your local municipality, as these requirements will be unique to each trade and city in Texas.
Once you obtain your license, it’s essential to keep it active. This often involves renewing it every few years, paying associated renewal fees, and meeting continuing education requirements.
For example, electricians, plumbers, and HVAC contractors all need to renew their licenses on an annual basis in order to continue offering their services without interruption.
Congratulations! You’ve now successfully obtained the professional license needed to work as a contractor in Texas. However, your licensing journey doesn’t end here, as there are additional licensing requirements your business will need to satisfy in order to operate legally.
Below, we’ve explored the various additional licenses and permits that your Texas contractor business may need in more detail.
While general contractor licenses aren’t required at a state level in Texas, there are certain state business licenses you may need to obtain before you can get up and running.
Because the building materials and services a general contractor provides to their clients as part of a construction project are generally taxable, for example, you’ll likely need a sales tax permit.
Additionally, your general contractor business may require an environmental permit from the Texas Commission on Environmental Quality if it takes on certain types of projects with the potential to impact the environment.
To better understand your general contractor business’s licensing requirements, check out the Texas Business Licenses & Permits Guide or our Texas Business License guide for a more detailed explanation.
Note: There are a range of different fees associated with registering your business in Texas. To get an idea of how much it would cost to get your contracting business off the ground, you can find these fees on the Secretary of State’s Business Filings & Trademarks Fee Schedule page.
Many local municipalities often impose their own additional requirements that you may be required to satisfy for your business to operate legally in that area.
For example, all contractors operating in San Antonio must register with the city through its Development Services Department and undergo a background check conducted by the San Antonio Police Department. The registration process is quite straightforward for general contractors who must identify themselves as either a residential building contractor or home improvement contractor. However, more specialist contractors will need to present their state licensing credentials to the city before it grants them any permits.
Note: You can use the Texas Municipal League’s City Officials Directory to find your city’s government website and read more about its specific licensing requirements.
In Texas, you need to meet the Texas contractor license requirements to become a licensed contractor for your trade. For example, plumbers, electricians, and HVAC technicians need to pass a state exam, submit a bond, provide proof of insurance, and pay a fee. For more information, see our Texas Contractor License article.
General contractors in Texas aren’t required to have a state license, but specialized trades like plumbers, electricians, and HVAC specialists do need state-issued licenses. However, these professionals may be required to secure a Texas contractor license bond, depending on local jurisdiction requirements. To learn more, see our How to Get a General Contractor License article.
To start a construction company in Texas, you must select a business structure, like an LLC or a corporation, and register it with the state. Additionally, depending on your specialty, obtaining a state license is crucial, as failure to do so can lead to Texas contractor licensing penalties. You’ll also need an Employer Identification Number (EIN) for tax purposes.
In Texas, specialized contractors, including those needing a plumbing contractor license or an electrical license, are regulated by state agencies like the Texas State Board of Plumbing Examiners and the Texas Department of Licensing and Regulation. Furthermore, local municipalities oversee general contractors, each with its own unique requirements.
Information on this page was researched and gathered from a multitude of sources and was most recently updated on July 17, 2024
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