To become a general contractor in Texas, you don’t get a state license, because Texas doesn’t issue one. Instead, you form a business entity, obtain general liability insurance (and usually workers’ compensation), register as a contractor with every city where you plan to pull permits, and hold a Texas Department of Licensing and Regulation (TDLR) license for any specialty trade you self-perform. That combination is what “licensed general contractor in Texas” actually looks like in practice.
Texas Has No Statewide General Contractor License
People moving from California, Florida, or other centralized-licensing states expect a single board, a single exam, and a single card. Texas doesn’t work that way. The state gives cities and counties the authority to regulate construction within their borders, and building codes are adopted locally rather than through one statewide mandate.1International Code Council. Texas
The practical consequence: rules, fees, and registration processes vary from city to city. A registration in Fort Worth is not valid in Dallas or San Antonio. Some smaller towns require nothing; larger cities have structured applications with insurance minimums, background checks, and annual renewals. You check each jurisdiction separately.
Step 1: Form Your Business Entity
Before any city will register you, you need a legally formed business. Most contractors pick a Limited Liability Company or a corporation because both separate personal assets from business debts and lawsuits. You form either by filing a Certificate of Formation with the Texas Secretary of State. The filing fee is $300 for both LLCs and for-profit corporations.2Office of the Texas Secretary of State. Business Filings and Trademarks Fee Schedule Filings go through the SOSDirect portal or as a PDF through SOSUpload.3Office of the Texas Secretary of State. Filing Options
Once the state approves formation, apply for a federal Employer Identification Number through the IRS. You need one to hire employees, open a business bank account, and file federal taxes. The application is free and issues the number immediately online.4Internal Revenue Service. Get an Employer Identification Number Form the entity first; the IRS may delay processing if state records don’t yet show the entity.
How the business is taxed at the federal level is a separate choice from how it’s organized under state law, and the S-corp election can meaningfully reduce self-employment tax for profitable contractors. Talk that through with an accountant before your first tax year closes.
Step 2: Register With Every City Where You’ll Pull Permits
City registration is the closest thing to “getting licensed” for general contracting in Texas. Every municipality that requires it has its own application, fee schedule, and documents. You cannot assume one city’s rules match the next.
Fort Worth, as one example, charges building contractors $168.75 per year and requires a completed application plus a copy of a valid driver’s license.5City of Fort Worth. Contractor Registration Contractors doing utility or right-of-way work in Fort Worth pay $562.50 and post a $25,000 surety bond. Other cities charge nothing at all for general contractor registration.
The typical registration process involves:
- Submitting an application, usually through an online building permit portal but sometimes on paper.
- Providing proof of insurance, including general liability and, in many cities, workers’ compensation. Some jurisdictions require the city itself to be named as an additional insured.
- Passing a background check or providing a criminal history disclosure and, in some cities, fingerprints.
- Paying the registration fee, which can range from zero to several hundred dollars annually.
Once approved, the city issues a registration certificate or number that must appear on your permit applications. Registrations typically expire after one year and renew on submission of updated insurance certificates. If your insurance lapses, your registration lapses with it, and you can’t legally pull permits until both are reinstated.
Step 3: Carry the Required Insurance and Bonds
Insurance is where the real cost of setting up sits. Cities won’t register you without it, and you shouldn’t operate without it regardless.
General Liability
A commercial general liability policy covers property damage and bodily injury claims from your work. TDLR’s administrative rules for registered contractors set minimum coverage at $1,000,000 per occurrence for bodily injury and $500,000 per occurrence for property damage.6Cornell Law School. 16 Tex. Admin. Code 74.40 – Contractor Insurance Requirements Individual cities may set higher thresholds. Annual premiums for $1 million in coverage typically run $1,400 to $1,700 for a small contracting operation, though your actual cost depends on trade classification, claims history, and revenue.
Workers’ Compensation
Texas does not require most private employers to carry workers’ compensation, and it is one of the few states where the coverage is voluntary for private-sector employers.7Texas Department of Insurance. Workers’ Compensation Insurance Guide If you contract with a government entity, you must provide it for employees on that project.
Going without coverage as a “nonsubscriber” has real legal consequences. You lose the common-law defenses that normally protect employers in negligence suits: contributory negligence, assumption of risk, and fellow-servant negligence. An injured worker can sue you directly, and the case gets harder to defend. Many cities also require proof of workers’ comp as a condition of contractor registration, which makes it effectively mandatory anywhere you plan to work.
Surety Bonds
Some cities require a surety bond as part of registration. The bond protects the city and property owners if you abandon a project or deliver substandard work. Amounts vary by city and work type; Fort Worth requires a $10,000 bond for residential parkway contractors and $25,000 for commercial and utility work.5City of Fort Worth. Contractor Registration The premium is a percentage of the bond amount, typically 1% to 10% depending on credit. Strong credit might mean $250 for a $25,000 bond; weak credit can mean ten times that.
Commercial Auto
Personal auto insurance does not cover vehicles used for business. If you’re hauling materials, transporting crews, or driving between job sites, you need a commercial auto policy. Typical combined single-limit coverage runs around $1,000,000 per accident. Larger project owners often require proof of it before allowing subcontractors on site.
Step 4: Get a TDLR License Only for Specialty Trades You Self-Perform
Some technical trades absolutely do require a state license. TDLR enforces licensing for electrical work under Chapter 1305 of the Texas Occupations Code and for HVAC services under Chapter 1302.8State of Texas. Texas Occupations Code 1305.003 – Exemptions; Application of Chapter Plumbing falls under Chapter 1301 and is also administered by TDLR after the Texas State Board of Plumbing Examiners was abolished in 2019. Each trade requires passing an examination and meeting experience thresholds.
If you plan to self-perform electrical, HVAC, or plumbing work, you must hold the corresponding license. Unlicensed electrical or HVAC work is a Class C misdemeanor, carrying a fine of up to $500 per offense.9State of Texas. Texas Occupations Code Chapter 1305 – Section 1305.30310State of Texas. Texas Occupations Code Chapter 1302 – Section 1302.453 TDLR can impose administrative penalties of up to $5,000 per day per violation, with every day of unlicensed work counting as a separate violation.11State of Texas. Texas Occupations Code 51.302 – Amount of Penalty Those add up quickly.
Most general contractors handle this by subcontracting electrical, plumbing, and HVAC work to licensed tradespeople. Verify that every subcontractor holds a current, valid license. If they don’t, you share the liability.
Step 5: Handle Your Tax Registrations
Texas has no personal income tax, but it does impose a franchise tax on most business entities. The standard rate is 0.75% of taxable margin (0.375% for businesses primarily engaged in retail or wholesale trade).12State of Texas. Texas Tax Code 171.002 For 2026 and 2027, businesses with total revenue at or below $2,650,000 owe no tax.13Texas Comptroller of Public Accounts. Franchise Tax Most small and mid-sized contracting firms fall below that threshold, but you still must file the annual report by May 15. If the Comptroller forfeits your entity’s right to transact business for failure to file, your contracts become unenforceable until you fix it.
You’ll also owe self-employment tax on net business income if you’re a sole proprietor or a member of an LLC that hasn’t elected corporate taxation. The rate is 15.3%, made up of 12.4% Social Security and 2.9% Medicare.14Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) The Social Security portion applies only to the first $184,500 of combined wages and self-employment income in 2026.15Social Security Administration. Social Security Tax Limits on Your Earnings The Medicare portion has no cap, and an extra 0.9% Medicare surtax kicks in above $200,000 (or $250,000 filing jointly).
Starting with the 2026 tax year, you must file Form 1099-NEC with the IRS for any subcontractor you pay $2,000 or more in a year, up from the longtime $600 threshold; the amount adjusts for inflation beginning in 2027.16Internal Revenue Service. Publication 1099 General Instructions for Certain Information Returns – 2026 Returns Collect a W-9 from every subcontractor before making the first payment. Chasing tax ID numbers in January is a headache you can avoid.
Federal Certifications That May Apply
If you disturb painted surfaces in housing built before 1978, federal law requires your firm to be certified under the EPA’s Renovation, Repair, and Painting (RRP) program. Texas has not adopted its own RRP program, so the EPA administers certification directly for Texas contractors.17US EPA. Renovation, Repair and Painting Program: Firm Certification Firm certification costs $300 and is valid for five years. You also need at least one EPA-accredited certified renovator on every covered job. Skipping this on older housing can trigger EPA enforcement with fines into five figures.
Keeping Registrations, Insurance, and Filings Current
Setting up is the hard part. Staying set up is where people get tripped up. Most city contractor registrations expire annually and renew only when you show current insurance certificates. If your general liability policy renews on a different schedule than your city registration, mark both dates and build in time to get updated certificates to the building department. A lapse in insurance triggers a lapse in registration, and pulling permits during a lapse can bring a stop-work order on an active project.
State specialty licenses also require periodic renewal with continuing education hours tracked by TDLR. Hours and renewal periods vary by trade, and TDLR will not renew without documented completion. Set calendar reminders at least 60 days before expiration. Waiting until the last week invites CE provider delays, processing backlogs, and a license gap that could shut down a job.
Keep the franchise tax filing current, too. The May 15 deadline is easy to forget when you’re focused on job sites. If the Comptroller forfeits your entity’s right to transact business, contractor registrations can become invalid until the entity is reinstated. An accountant, or at minimum a recurring reminder, is cheap insurance against that outcome.