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How To Become a Contractor in Texas in 5 Steps (Plus Tips)

Being a contractor can be a great fit for people who want to operate their own business and choose their own jobs, as it allows a lot of flexibility and independence. The rules and regulations for contract work can vary widely between locations, so it’s important to understand your local requirements.

In this article, we explore how to become a contractor in Texas and discuss average salary, work environment and tips for being a successful contractor.

What does a contractor do?

Contractors work independently and sell their labor or services to individuals and organizations. There are many kinds of contractors, and contract work is especially common in construction projects. Some examples of contractors include carpenters, electricians, painters and plumbers. General contractors organize building and remodeling projects, which can include hiring subcontractors.

Here are responsibilities contractors may have:

  • Communicating with clients about their needs

  • Providing price estimates

  • Obtaining required tools and materials

  • Applying for permits

  • Adhering to building codes

  • Meeting project deadlines

Work environment for contractors

Contractors often work at job sites, which may be in cities, towns or more remote areas. This can be a very busy, fast-paced work environment involving a lot of physical labor and teamwork. General contractors  are often on call 24 hours a day during a project so they can respond to potential emergencies. Specialized contractors, like plumbers and electricians, may have more limited work hours as they have specific jobs to complete.

Salary and job outlook for contractors in Texas

The average salary for a contractor in Texas is $61,878 per year. According to the U.S. Bureau of Labor Statistics, occupations in construction and extraction may see a 6% growth from 2020 to 2030. This is about as fast as average for employment growth across all occupations. For the most up-to-date salary information from Indeed, click on the link(s) provided.

How to become a contractor in Texas

Here are five steps that can help you become a contractor in Texas:

1. Register a state business entity

Before you can become a licensed contractor in Texas, you’re required to register a business entity within the state. This involves deciding on a business structure, such as LLC, partnership or sole proprietor, and following the registration process for that structure. You also need a Federal Employer Identification Number (FEIN) from the Internal Revenue Service. Some types of contractors, like plumbers and general contractors, may not need to register a business entity depending on the city in which they work.

2. Choose a contractor license type

The state of Texas doesn’t require general contractors or home improvement builders to take an exam or get a license, though some cities may require it. Other contractors typically need a license to work throughout Texas. Here are the types of contractor licenses you can get in Texas, with some offered by the state and others offered by local authorities:

  • HVAC

  • Electrical

  • Water well driller

  • Plumbing

  • General

  • Specialty

  • Home improvement

  • Roofing

  • Right-of-way

3. Meet the basic requirements for your license

Each contractor license has its own requirements, which can vary based on local regulations, so it’s important to research and understand the requirements for your city. Requirements commonly include a certain amount of experience, such as two years for a water well driller contractor license and 36-48 months for an HVAC contractor license. Some licenses may require an exam.

4. Obtain a Texas contractor license bond or insurance

Many places in Texas require contractors to get either a contractor license bond or general liability insurance. License bonds, which protect clients by ensuring you complete work and adhere to building codes and regulations, usually have an amount between $5,000 and $25,000. General liability insurance protects you and your business in case an accident occurs, and can be a good idea even when it isn’t required. Depending on your contractor license type and location, you may need both a bond and insurance.

5. Apply for your license

When you’re ready, submit application papers and documents to your local licensing authority. While the required documents can differ depending on the license type and location, some common documents include business registration information and proof that you passed the necessary exams for your license. You may also have to submit proof that you have a contractor bond or insurance. Contractor licenses are often valid for one year, though some may be valid for up to 18 months.

Tips for becoming a successful contractor

Here are a few tips that can help you become a successful contractor:

Learn marketing tactics

It’s important for contractors to market themselves so they can find new clients. Learning marketing tactics and techniques, such as how to use social media to help customers find you, can help grow your business. You can also take online classes in marketing for free or at a low cost. If you don’t enjoy marketing and if it’s possible for your business, consider hiring a professional to handle your marketing needs so that you can focus on the rest of your work.

Complete on-the-job training

On-the-job training is extremely valuable for a contractor, as it teaches you the necessary skills and helps you understand the full scope of the work. Before you become a licensed contractor, try to gain hands-on experience. It can also be a great way to meet other contractors or subcontractors that you might work with in the future. You may also find a mentor who can guide you through becoming a licensed contractor and offer business advice.

Focus on customer service

Maintaining a strong relationship with your clients is a great way to find jobs, as it makes it more likely they’ll hire you again or recommend you to others. You can help your client relationships by providing strong customer service. This can include carefully listening to their needs, meeting project deadlines and staying within budget. Another aspect of strong customer service is being available to answer questions and address concerns, so make sure your clients know what hours you’re available for business calls.

Frequently asked questions

Which types of contractors need a license in Texas?

Contractors who perform specialized work, such as plumbers, electricians and HVAC technicians, need a license before they can work in Texas. This entails meeting specific requirements and passing a state-issued examination. Local municipalities might also require that contractors in these fields complete additional requirements.

What qualifies as an independent contractor in Texas?

Like other states, Texas has specific legal guidelines that specify who qualifies as a contractor. According to the Texas state government’s guidebook for employment, independent contractors are self-employed individuals who pay their own taxes and expenses and don’t work directly for a specific entity or person.

Do all cities in Texas require a contractor license bond?

Texas doesn’t have a statewide bond requirement, though there are multiple cities, towns and counties that require active contractors to fulfill bond requirements. These include Houston, San Antonio, Fort Worth, Galveston and Odessa. Permit bonds are necessary for contractors who perform plumbing, electrical, roofing or building work.


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