If you’re considering becoming a contractor in the state of Texas, you’re probably trying to discern which rules and regulations are applicable to your line of work. There can be specific insurance, bonds, and other requirements. Depending on your trade, you might have to carry a license. If the state does require a license and you don’t have one, you could find yourself in some hot water. We put together this Guide to Contractor Licensing in Texas to help you out.
This guide will point you in the right direction toward running your business above-board. We’ll go over the application process, the rules, and the requirements (or lack thereof, when it applies) to getting your license. The goal is to ensure you’re able to build your business without the stress of wondering if you’re in compliance with local laws and regulations.
For information on licensing in other states, check out The Ultimate Guide to Contractors License Requirements in Every State.
Table of Contents
Who needs a contractor license in Texas?
Not all contractors in Texas need to hold a license. Whether or not you need a license depends on your trade and the area in which you’re working. So then, who needs a contractor license in Texas?
No license required
If you’re a handyman, general contractor, or builder, you’re good to go. The State of Texas does not require folks in these lines of work to carry a license issued by the State.
But you might have some additional paperwork to sort through depending on where you’re working — though we’ll cover that in a bit.
Contractors that specialize in other trades do need to carry licenses: Plumbers, electricians, and HVAC technicians, to name a few, will need to meet specific requirements and pass a test issued by the state. There may also be local laws requiring additional paperwork from individual municipalities before you begin work.
Fire sprinkler installers, well drillers, mold remediators, and companies installing elevators and escalators also need to carry a state license.
Keep in mind that even if you don’t consider yourself an electrician, plumber, or HVAC tech, if you offer those services, you’ll still need to carry a license.
Do you need a contractor license to file a mechanics lien in Texas?
Texas lien law does not require a contractor to hold a license to file a mechanics lien. This not only applies to contractors that the state doesn’t require to hold a license, but even contractors that the state does mandate to have a license.
So, if you perform electrical work without a license and the owner doesn’t pay you, you have the right to a mechanics lien — despite the fact that the state says you need one to perform that work. That said, it’s never advisable to perform work for which the state requires a license without holding that license, and there can be penalties for doing so.
Learn all about filing a lien in Texas in Texas Mechanics Liens: Everything You Need to Know + Free Forms.
Texan general contractor licensing & registration
Becoming a general contractor in Texas is extremely easy. Because the state doesn’t require a license, there are no age, experience, or educational requirements.
However, you will have to register your business with the state or county, depending on your business structure. You’ll have to decide whether you want to register as an LLC, partnership, corporation, or sole proprietor. Going the route of the sole proprietorship is the easiest, but it also leaves unlimited personal liability for all the debts incurred through your business.
Contractor licensing for subcontractors and trades
If you’re not a general contractor, handyman, or home improvement specialist, you will need a license to conduct business in Texas. The following are some of the requirements for the typical trades requiring licensing.
If you’re interested in becoming an electrician in Texas, you’ll have to apply through the Texas Department of Licensing and Regulation (TDLR). There are 11 different licenses, with several applying to specific types of businesses, such as maintenance or sign electrical work. For the sake of this article, we’ll focus on the Master Electrician’s license.
To apply for the Master Electrician’s license, there are certain requirements and hoops to jump through. For one, you must have 12,000 hours of on-the-job training, which you’ll receive as an apprentice and journeyman working under a Master Electrician. You must also have held the journeyman’s license for two years.
Once you meet the requirements, you’ll have to send the Master Electrician License Application Form, with a $45 check, via mail to the Texas Department of Licensing and Regulation. Once the TDLR receives and approves your registration, they’ll contact you to take the test.
Once you pass the test, you’ll have to renew your license annually.
Plumbing contractor licensing has its own set of requirements, with four types of licenses for which you can apply. Licensing is a matter of the Texas State Board of Plumbing Examiners. To be an independent plumbing contractor, you’ll need a Responsible Master Plumber’s (RMP) license.
To apply for an RMP license, you’ll need to already hold a Master Plumber license in Texas. You’ll also have to complete a 24-hour training course with the TSBPE and provide proof of $300,000 of commercial liability insurance.
Once you send in your completed application, a Certificate of Insurance, and a $345 licensing fee, the TBSPE will review it and approve or deny your license. If approved, you’ll have to renew your license to the tune of $420 each year.
Air conditioning and refrigeration
Like electrical licensing, HVAC and refrigeration licenses are a matter of the TDLR. The TDLR offers a technician license or certificate, as well as a contractor’s license, which you’ll need to run your own HVAC business independently.
To qualify for a contractor’s license, you’ll have to have 48 hours of practical experience n air conditioning and refrigeration related-work under the supervision of a licensed contractor. Or, you could hold a technician certification for the 12 months prior to applying, in addition to having 36 months of practical experience.
There are exemptions for some of the requirements to take the test. They include earning a degree, diploma, or certificate from an accredited school, having a degree in mechanical engineering, being a licensed engineer, or having military training in HVAC. There is also an exemption for those employed by industrial operations, which wouldn’t apply if you were to strike out on your own.
You’ll also have to choose a class designation for your license. Class A licenses allow you to work on any size unit. Class B allows you to work on cooling systems 25 tons and under, as well as heating systems of 1.5 BTUs an hour and under.
To apply, you must be 18 years old and send in a completed application to the TDLR. There is a fee of $115. Once the TDLR reviews and approves your application, they’ll contact you to take the exam. If you pass and receive a license, it’ll be your responsibility to renew it each year.
After passing the exam, there are insurance requirements you need to meet:
- $300,000 Per Occurrence for Property Damage and Bodily Injury
- $600,000 Aggregate for Property Damage and Bodily Injury
- $300,000 Aggregate for Products and Completed Operations
- $100,000 Per Occurrence for Property Damage and Bodily Injury
- $200,000 Aggregate for Property Damage and Bodily Injury
- $100,000 Aggregate for Products and Completed Operations
Texas city and municipal licensing requirements
The state of Texas doesn’t require general contractors, home improvement specialists, or handyman services to hold a license. But remember: The area in which you’re working might have other ideas on paperwork.
The following are some examples of what requirements different areas have, but you need to check with your local municipality to be sure.
Austin’s rules on general contractors, subs, and trades are relatively straightforward. Essentially, Austin wants contractors to register with the Development Services Department as well as the State of Texas. If the state requires a contractor to hold a license, Austin requires proof of that license before you can pull a permit.
All trades and subcontractors will have to register with the city. To register, you’ll have to fill out the appropriate paperwork with the Houston Permitting Center.
Once registered, subs and trades will be able to pull permits for demolition, remodeling, earth hauling, and other permits. Master Plumber Registration and Master Electrician Registration forms are available through the permitting center’s website.
Houston’s registration requirements don’t require general contractors to register with the city. They are expected to register their business with the state, however.
Like Austin, San Antonio expects contractors to register with the city. If the state requires a license, San Antonio will also require you to have a license. This means that subs and trades will have to register with the city with their proof of licensing before they can pull permits.
Registration goes through the city’s Development Services Department, though you will have to go through the San Antonio Police Department for a background check as well.
There are two ways to register as a general contractor in San Antonio: as a home improvement contractor or a residential building contractor. If you’ll be engaging in repairs, replacement work, non-structural remodeling, and general updates, the home improvement contractor registration is enough. If you’re doing structural work, you’ll need to register as a residential building contractor.
The process of registering with the city of Dallas isn’t as straightforward as other cities, but there are similar requirements. On all of Dallas’s permit paperwork, it states the licensed contractors must register with the city.
Registration falls under the duties of the Building Inspection Department. Contractors interested in working in Dallas will have to create a login and utilize the city’s Contractor Portal for more details.
Texas contractor licensing penalties
While licensing is rather laid back in Texas, the state does take the licenses it requires very seriously. Both the TDLR and the TSBPE will investigate complaints of unlicensed contracting, bringing fines and legal charges against those who violate the licensing statutes.
Whether you’re an electrician, plumber, or HVAC contractor, working without a license where one is a requirement is a Class C misdemeanor, which could potentially bring some jail time. Both the TDLR and the TSBPE can hit you with additional administrative fees, as well.
Licensing aside, payment protection is critical
It doesn’t matter which state you’re in, what your particular trade might be, or whether you hold a license: Cash flow issues are a regular occurrence in the construction industry. Without a regular supply of cash coming in, the issue can stunt your company’s growth, or it can cost you your company altogether. That’s why it’s so important to protect your lien rights in Texas.
Protecting your lien rights means general contractors should always file contracts with the county recorder’s office. It also requires subs and suppliers to send preliminary notices to the owner and general contractor on all their projects. They also have strict mechanics lien deadlines to stay aware of, or they could lose their right to some or all of their payments.