If you know anything about construction, then you know contractors are always in demand—especially in a large state like Texas.
If you want to start a construction business in the Lone Star State, your first move is to learn about the licensing process. Licensing may be required on the state or local level, depending on your construction specialty—and our guide will take you through all the steps involved in becoming a licensed Texas contractor.
#1. Get to Know the Types of Contractor Licenses
You need a different type of license for different construction activities. Your first step is to figure out which license corresponds to your specialty.
If you want to become a general contractor, you don’t need a state license, but you’ll typically need one on the municipal level, depending on what your local authorities require. The same applies to home improvement contractors.
Specialty contractors including electricians, HVAC specialists, and water well drilling contractors need state-level licensure. The Texas Department of Licensing and Regulation (TDLR) regulates contractors’ activities and issues different license types.
You’ll also need a license on the state level if you want to become a plumbing contractor. These licenses are handled by the Texas State Board of Plumbing Examiners (TSBPE).
#2. Learn the Licensing Requirements
Next, get to know the criteria for licensing. Each license type has different requirements.
For all licenses, you’ll need to register as a business entity in the state. You can use the SOSDirect Business Services Portal to do so. If you’re planning to hire employees, you’ll need an Employer Identification Number (EIN) and workers’ compensation insurance. You may need to undergo a criminal background check too.
General Contractors
You don’t need a state license as a general contractor in Texas. You also don’t need one as a home improvement, roofing, specialty, or right-of-way contractor.
Licensing for these types of contractors takes place on the local level. The requirements vary between cities, counties, and municipalities. They will be different in, say, Austin, San Antonio, and Dallas.
Austin
To work as a general contractor in Austin, you’ll need to apply for a General Permit with the city’s Development Services Department.
San Antonio
In San Antonio, you can choose between registering as a home builder contractor or a home improvement contractor.
Dallas
You’ll need a general contractor registration from the City of Dallas.
Check with your local authorities to learn their licensing process. Some common requirements on the local level include getting a surety bond and general liability insurance, among others.
HVAC Contractors
There are two HVAC contractor license types in Texas. Class A allows you to work on units of any size. Class B license allows you to work on cooling systems of up to 25 tons and heating systems of up to 1.5 million BTUs/hour.
Licensing requirements include:
- Pass a licensing exam
- Get insurance coverage: Class A—$300,000 per occurrence and $600,000 aggregate for property damage and bodily injury; $300,000 aggregate for products and completed operations; Class B—$100,000 per occurrence and $200,000 aggregate for property damage and bodily injury; $100,000 aggregate for products and completed operations
- Pay a licensing fee of $115
Electrical Contractors
To get an electrical contractor license, you’ll need a master electrician license or to employ a person who has this license.
The other licensing criteria include:
- Get insurance coverage: $300,000 per occurrence and $600,000 aggregate for property damage and bodily harm; $300,000 aggregate for products and completed operations
- Pay a licensing fee of $110
Well Driller Contractors
Well drillers must satisfy the following requirements:
- Show their relevant work history
- Pay a licensing fee of $215
Plumbing Contractors
You can get four types of plumbing licenses in Texas: Tradesman Plumber-Limited, Journeyman, Master, and Plumbing Inspector.
The licensing requirements are:
- Pass a licensing exam
- Pay a license fee
#3. Get the Necessary Training and Experience
Most license types require relevant job training and practical experience.
To get licensed as a HVAC contractor, you’ll need the following supervised practical experience:
- 48 months over the past 72 months
- 36 months over the past 48 months and a technician certification from the past 12 months
If you want to open your own electrical business, you’ll have to first get a master electrician license, which requires 12,000 hours of on-the-job training.
To get a well-drilling contractor license, you’ll need at least two years of experience under the supervision of a licensed contractor.
You’ll see different training and experience requirements for the various plumber licenses. For the Tradesman Plumber-Limited license, you’ll need 4,000 hours of experience, while for Journeyman—8,000 hours. To get a Master license, you have to complete four years as a Journeyman. For the Plumbing Inspector license, you’ll need 500 hours in the field.
#4. Complete the Required Exam
To get your Texas contractor’s license, you’ll need to pass a state licensing exam:
- HVAC contractors—complete the state ACR exam
- Well drilling contractors—pass a state license exam
- Electrical contractors—complete an exam for a master electrician license first
- Plumbing contractors—take a licensing exam for one of the plumbing license types
#5. Prepare and File Your Contractor License Application
Once you get the necessary paperwork and pass the required exams, you’ll have to fill out an application form.
Here are the application forms:
- Air Conditioning and Refrigeration Contractor License Application (for HVAC contractors)
- Electrical Contractor License Application
- Well Driller or Pump Installer License Application
- Application forms for plumbers
You’ll have to pay an application fee.
Then submit all documents to the right licensing authority.
HVAC, electrical, and well drilling contractors:
Texas Department of Licensing and Regulation
P.O. Box 12157
Austin, Texas 78711
Plumbing contractors:
Texas State Board of Plumbing Examiners
P.O. Box 4200
Austin, Texas 78765
If you’re an HVAC, electrical, or water well-drilling contractor license holder, you can always check the validity of your license via the TDLR’s website.
Payroll and Time Tracking for Your Contractor Business
Running a contracting business is a complex process that involves handling a ton of different tasks.
If you need help with your employee time tracking and payroll management, Hourly is the right partner for you. The platform helps you with various types of administrative work, and connects workers’ comp to your payroll so you can pay your bill automatically. When all is said and done, you’re going to save money because your workers’ comp will be tied directly to your actual payroll.
Just download our payroll app and get started today!
1. Introducing Yourself
Your introductory email needs to pack a lot of information into a small package. Try something like this:
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Hello Jane,
My name is John Doe and I work for ABC Agency, where we provide business insurance policies to many of Dallas' rockstar small businesses.
Congratulations on your new business, Jane's Bakery. Are you wondering if you have all the insurance you need? Or if your policies will really cover you in a pinch?
At ABC Agency, we pride ourselves on providing robust, comprehensive coverage options to companies like yours with flexible, pay-as-you-go plans.
Are you available this week to talk more about how we can help? I can help you find the most affordable rates and the best policies out there.
I look forward to speaking with you soon.
Cheers,
John Doe
2. Presenting a Quote
Once you've met with your potential client, a quick reply with their quote will get the ball rolling.
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Hi Jane,
Thanks so much for meeting with me this morning. I loved touring Jane's Bakery–I can still smell those delicious chocolate chip cookies baking! You have a great location, and I'm sure you're going to do great on Front St.
After reviewing my notes, I've pulled together an insurance quote for you (attached). I recommend a business owner's policy. A BOP includes several insurance products in one: liability, property insurance, and business interruption insurance. It offers robust coverage at a competitive price.
I'll call you in a few days to see what you think about this insurance plan. In the meantime, if you have any questions, don't hesitate to email me or call me at [phone number].
Again, thank you for your time today. I look forward to working with you in the future.
Cheers,
John Doe
3. Thanks for Purchasing a Policy
Gratitude is important! It's never a bad idea to thank your clients for their business.
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Hi Jane,
Thank you for choosing a business owner's policy with ABC Agency. We know it's so important to get the right coverage for your business, and we are honoured you've placed your trust in us.
We're excited to work closely with you, and our no. 1 goal is to make sure you're business is always protected.
Do you have any questions? We are here to help. Reach out whenever something comes to mind.
Thank you again for choosing ABC Agency to insure Jane's Bakery.
Cheers,
John Doe
4. Welcome Email
A welcome email helps clients feel like you're there to help–and can softly pitch other insurance products you offer.
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Dear Jane,
Welcome to the ABC family! We are thrilled to have you as a new customer and can't wait to meet all of your insurance needs.
As an independent insurance agency, we work with multiple insurance providers to find the best coverage options for all our customers. If you need any other type of insurance–like [include additional offerings unique to your agency, like life insurance, health insurance, home insurance or anything else]–we can help you too.
Do you want to discuss any of these policies?
Cheers,
John Doe
5. Introducing a New Product
A happy client may want to expand their business with you.
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Hello Jane,
I hope all is well with you and Jane's Bakery. I stopped in yesterday for a blueberry muffin and coffee, and they were delicious. I loved the hint of cinnamon in the muffin! Was that your idea?
I wanted you to be the first to know we are now offering commercial vehicle insurance to our policyholders. Auto insurance for your catering vans is super important since your personal car insurance won't cover them.
We're offering this insurance coverage solely to our current business clients at the moment and have some very competitive rates.
Would you like me to work up a quote for you?
As always, thanks so much for being a part of the ABC family.
Cheers,
John Doe
6. Asking For Referrals
Once your relationship is established and comfortable, let your clients help you grow.
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Hi Jane,
You've been a valuable member of the ABC family for two years now, and we so appreciate your business–not to mention the muffins you supply for our monthly meetings!
Because you are a valued policyholder, I wanted to ask a quick favour. I know you are active in the local Chamber of Commerce, and I'm hoping you might know some colleagues who would benefit from working with our insurance company.
Referrals are one of the most effective ways to connect with our community since people really trust their friends, family and colleagues. Is there anyone you'd recommend I speak with?
Remember that in addition to business insurance products, we offer everything from life insurance policies to pet insurance.
As a thank you for your help, we will send you an Amazon gift card of $100 when your referrals buy insurance from us.
Thanks so much for your help!
Cheers,
John Doe
7. Policy Renewal
If your client needs to renew their policy with you, send an email like this:
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Hi Jane,
I hope you're doing well! What a year it's been—from being listed as one of the top 5 bakeries in Dallas to being an official vendor for the city—you have so much to be proud of.
Just a heads up that your business owner's policy is up for renewal soon and will expire on June 15, 2023.
If you're still happy with the coverage, we can easily renew it for you.
Do you have some time to chat this week?
Looking forward to serving you again!
Cheers,
John Doe