How to Get a Texas Contractor License: Step-by-Step Guide

If you’re considering a career as a contractor in Texas, it’s important to understand the specific rules and regulations that apply to you and this line of work. You must meet specific requirements among which are getting a license, insurance, and a surety bond.

Whether you’re starting a new construction business or expanding an existing one in Texas, this guide will help you navigate the necessary steps to operate legally and successfully without having to worry if you are compliant with local laws and regulations.

1. Establish a Business Entity in Texas

Before obtaining a contractor license in Texas, you must register your business with the Texas Secretary of State. This includes selecting a business structure—such as an LLC, partnership, or sole proprietorship – and completing the appropriate registration process. Additionally, you’ll need to obtain a Federal Employer Identification Number (FEIN) from the Internal Revenue Service (IRS).

However, some contractors, including plumbers and general contractors, may not be required to register a business entity, depending on local regulations. Be sure to check with your city’s licensing authority for specific requirements.

2. Pick Your Texas Contractor License Type

Contractor licenses in Texas are issued by the following authorities:

• Texas Department of Licensing and Regulation (TDLR)
• Texas State Board of Plumbing Examiners (TSBPE)
• Local municipal licensing authorities

Before applying for a license, you must determine which licensing authority oversees your specific trade.

• Electrical Contractor License – Apply through the TDLR.
• Plumbing Contractor License – Obtain licensing from the TSBPE.
• HVAC, Air Conditioning, and Refrigeration Contractor License – Licensing is handled by TDLR.
• General Contractor License – Texas does not require a state license for general contractors. However, local governments may have licensing requirements. Check with your municipality or city to determine if a license is needed. We also have a dedicated section for the license requirements by city below.

3. Meet the Texas Contractor License Requirements

The different types of contractor licenses in Texas have different licensing requirements. See the following sections for an overview.

General Contractor License

Texas does not issue general contractor licenses at the state level. Instead, licensing is managed by local authorities. To determine if you need a license for work such as home improvement, roofing, or specialty trades, contact your local permitting office. Requirements may include:

• Proof of education or experience
• Passing a local licensing exam
• Submitting an application
• Paying applicable fees
• Obtaining a contractor license bond
• Securing liability and/or workers’ compensation insurance

HVAC Contractor License

The Texas Department of Licensing and Regulation (TDLR) issues licenses for HVAC contractors, offering two classes:

• Class A: Permits work on systems of any size
• Class B: Limits work to cooling systems up to 25 tons and heating systems up to 1.5 million BTUs/hour

To apply:

1. Accumulate the required practical experience. Educational achievements may substitute for some experience.
2. Obtain liability insurance:
   • Class A: $300,000 per occurrence, $600,000 aggregate for property damage or bodily harm, $300,000 aggregate for products and completed operations.
   • Class B: $100,000 per occurrence, $200,000 aggregate for property damage or bodily harm, $100,000 aggregate for products and completed operations.
3. Complete the TDLR application form and pay the $115 fee.
4. Pass the licensing exam.
5. You will have to renew the license each year.

Electrical Contractor License

There are 11 different electrical contractor license types, with several applying to specific types of businesses, such as maintenance or sign electrical work. To become a licensed electrical contractor in Texas:

1. Employ a licensed master electrician or obtain the license yourself.
2. Secure liability insurance with minimums of $300,000 per occurrence and $600,000 aggregate.
3. Obtain workers’ compensation insurance.
4. Submit the TDLR application and pay the $110 fee.
5. You’ll have to renew your license annually.

Plumbing Contractor License

The Texas State Board of Plumbing Examiners (TSBPE) offers four license types:

• Tradesman Plumber-Limited
• Journeyman
• Master
• Plumbing Inspector

First, you must meet the eligibility requirements for the license you will be applying for. After that, you must complete and submit an examination application for that specific license type. Finally, upon passing the exam, you must pay a license fee.

You’ll have to renew your license each year.

Water Well Driller or Pump Installer Contractor License

Applicants for a water well driller and/or pump installer license must have at least 2 years of experience under the supervision of a licensed water well driller contractor. Depending on the exact class and endorsement that you are applying for, you will also need to have a certain number of qualifying installations.

After meeting the above requirements, you must complete the license application form and submit it to the TDLR along with an application fee differing per license type as follows:

• Well Driller – $430
• Pump Installer – $430
• Combination (Well and Pump) – $650

These licenses are valid for a period of two years from the date of issuance.

4. Get a Texas Contractor License Bond

If you are required to obtain a local contractor license, you may also need a Texas contractor license bond. This bond serves as a financial guarantee that you will comply with local building codes and regulations.

The amount of the bond varies depending on the location and the type of work you will be doing. Most contractor license bonds in the state are between $5,000 and $25,000. For example, contractors in Texas City need to post a $5,000 bond.

To get bonded, you must pay a premium that is equal to a fraction of the full amount of your bond. Typically, applicants with good financials and a high credit score are offered premiums in the range of 1% and 3% of the total bond amount.

Curious about the cost of your contractor license bond? Apply through the form below to receive a free quote!

5. Submit Your License Application

Once you’re prepared, send your application and required documents to your local licensing authority. The specific requirements vary based on license type and location, but commonly requested documents include:

• Business registration details
• Proof of passing required exams
• Contractor bond or insurance verification

Once your documents are reviewed by the Board, Department, or local licensing authority, your license will be issued.

Texas Contractor Licensing: City-Specific Requirements

In Texas, local municipalities often have their own registration and licensing requirements. Here’s a concise overview of contractor regulations in several major Texas cities:

• Austin: General contractors must register with the Development Services Department before obtaining permits. Trade contractors, such as electricians and plumbers, need a state license and must also register with the city.
• Houston: General contractors are not required to register with the city. However, specific trades like electrical and plumbing work require appropriate state licensing. Permits for construction-related activities are obtained on a per-project basis through the Houston Permitting Center.
• San Antonio: All contractors must register with the city’s Development Services Department before any permits are issued. First-time registrants are required to apply in person. Registration prerequisites vary based on the type of license or registration held, and some may necessitate proof of insurance or bonding.
• Dallas: Contractors must register with the Building Inspection Division to obtain necessary permits. Businesses within Dallas city limits must provide a Certificate of Occupancy number during registration. The registration process includes submitting a completed application and, if applicable, proof of insurance.

Contractors must consult local authorities in the specific area where they plan to operate, as regulations and requirements can vary significantly between municipalities.

Helpful Tips to Succeed as a Contractor

Master Marketing Strategies

Effective marketing helps attract clients. Utilize social media, a professional website, and local advertising. Free or low-cost courses can improve your skills, or hire a professional to manage marketing while you focus on your work.

Gain Hands-On Experience

Practical training sharpens skills and expands industry knowledge. Work under experienced contractors to gain insight and build connections. Finding a mentor can also provide valuable guidance on licensing and business strategies.

Prioritize Customer Service

Strong client relationships lead to repeat business and referrals. Listen to client needs, meet deadlines, stay within budget, and maintain clear communication to build trust and credibility.

Stay Updated on Texas Building Codes

Texas construction regulations change frequently. Stay compliant by reviewing updates from TDLR, attending workshops, and following local requirements to avoid fines or project delays.

Maintain Proper Insurance and Bonding

Proper coverage protects your business and builds client trust. Texas contractors may need general liability insurance, workers’ compensation, and surety bonds as required by local authorities.

Build a Strong Reputation Through Quality Work

Consistently delivering high-quality work enhances credibility. Focus on craftsmanship, reliability, and professionalism to generate positive reviews and word-of-mouth referrals.

Network with Industry Professionals

Connections lead to new business opportunities. Attend trade shows, join contractor associations, and engage with suppliers and real estate professionals to expand your reach.

FAQs

Are there any penalties for unlicensed contractors in the state of Texas?

Yes. Texas has fewer licensing requirements than other states but strictly enforces those in place. The TDLR and TSBPE investigate unlicensed work, imposing fines and legal charges.

Operating without a required license can lead to:

• Fines that vary by jurisdiction.
• Cease and Desist orders halting all work.
• Legal action from clients, resulting in lawsuits and compensation claims.

For electricians, plumbers, and HVAC contractors, working without a required license is even a Class C misdemeanor, potentially leading to jail time and additional administrative fees.

Are contractor license bonds required in all Texas cities?

No, Texas has no statewide bond requirement, but many cities and counties mandate bonds for active contractors. These include Houston, San Antonio, Fort Worth, Galveston, and Odessa. Contractors performing plumbing, electrical, roofing, or building work often need permit bonds.

Who qualifies as an independent contractor in Texas?

In Texas, independent contractors are self-employed individuals responsible for their own taxes and expenses. They work independently rather than being directly employed by a specific entity or person, following state guidelines for employment classification.

Does Texas have a license reciprocity agreement with any other state?

Texas does not have reciprocity agreements for general contractors. Each city or county may have different licensing and bond requirements for contractors.

However, Texas offers licensing reciprocity for electricians and air conditioning/refrigeration contractors for the following states:

• Master Electrician Reciprocity: Louisiana, Nebraska, North Carolina
• Journeyman Electrician Reciprocity: Alaska, Arkansas, Idaho, Iowa, Montana, Nebraska, New Mexico, Oklahoma, South Dakota, Wyoming
• Air Conditioning and Refrigeration Contractors:
  • Georgia Licensees: Individuals holding a current Georgia Class II Conditioned Air unrestricted license may qualify for a Texas Class A Environmental Air Conditioning License.
  • South Carolina Licensees: Texas recognizes specific licensing equivalencies with South Carolina for various air conditioning and refrigeration licenses.