Starting a general contractor business in Texas means combining state-level formation with local permitting, trade licensure when required, and basic employer and tax setup. This guide explains choosing a legal structure, registering with the Texas Secretary of State and Comptroller, when to get an EIN, how state trade licenses and municipal permits interact, basic banking and funding options, hiring obligations, and the main cost categories you should budget for—so you know what to do next and where to check for local rules.
Registration & Entity Setup
Choose a legal structure (sole proprietor, partnership, LLC, or corporation) and complete the required state formation filings when you use an entity form; for example, forming an LLC requires filing a Certificate of Formation with the Texas Secretary of State and maintaining a registered agent and registered office in Texas.
If you operate under an assumed name (DBA), sole proprietors and partnerships file an Assumed Name Certificate with the county clerk where business premises are maintained; corporations and LLCs using an alternate name may need assumed-name filings with the Secretary of State according to SOS guidance.
Obtain an Employer Identification Number (EIN) from the IRS when you will hire employees, open business bank accounts, or need to separate business tax activity from personal tax filings; use the IRS SS-4 process to apply.
Register with the Texas Comptroller for state tax accounts if you will collect taxable sales or if your entity must register for franchise tax reporting; keep formation and tax-registration documents (Certificate of Formation, EIN confirmation, Comptroller taxpayer number) to present to banks and licensing authorities when requested.
Be aware of recent beneficial-ownership reporting changes: FinCEN issued a final BOI rule in August 2026 that exempts many U.S.-created companies and U.S. persons from BOI reporting, but certain foreign-formed entities registered in the U.S. may remain subject—treat BOI reporting and your bank’s CDD/CIP requests as separate obligations.
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Permits & Local Requirements
Texas does not require a statewide general-contractor license. However, local contractor registration and project permits may still be required. For example, Austin requires general contractors to register before applying for or activating a building permit. Check the requirements for each project’s location rather than assuming one city’s registration covers work elsewhere. Austin contractor registration guidance
Specialty trades have separate licensing requirements. Electrical contracting and air conditioning and refrigeration contracting are regulated by the Texas Department of Licensing and Regulation (TDLR). Before offering regulated services, confirm the applicable business and individual licenses, permitted scope of work, insurance requirements, and any required supervising license holder. Electrical contractor licensing · Air conditioning and refrigeration contractor licensing
Before starting a project, contact the permitting office responsible for the property. Ask which building or trade permits, plans, inspections, registrations, and supporting documents are required. Confirm review schedules and permit activation requirements before committing to a construction start date; submitting an application is not the same as receiving authorization to begin work. Austin permit activation guidance
Taxes & Ongoing Compliance
Federal employer obligations include obtaining an EIN, complying with payroll tax withholding and federal filings, and following OSHA construction-safety rules applicable to worksites; OSHA’s construction standards (29 CFR 1926) set federal safety and recordkeeping baselines.
At the state level, register with the Texas Comptroller when collecting taxable sales and for franchise-tax registration if your entity is a taxable entity; Texas does not impose a personal state income tax, but sales & use tax and franchise tax administration are state-level responsibilities.
If you hire employees, register as an employer with the Texas Workforce Commission for unemployment-tax accounts and reporting; employer UI account rates and notices are account-specific and provided by TWC.
Workers’ compensation in Texas is generally optional for private employers but may be required or effectively required by certain public contracts or municipal rules—confirm coverage requirements for the contracts and permits you pursue.
Business Banking & Funding
Banks typically require entity formation documents, EIN confirmation, and government-issued ID for signers when opening a business account; banks will also run customer-identification and customer-due-diligence checks and may collect beneficial-owner information under CDD/CIP rules even where FinCEN’s BOI rule provides exemptions for domestic companies.
Treat BOI reporting under FinCEN and a bank’s CDD/CIP account-opening requirements as separate regimes: a domestic-company exemption from BOI filing does not prevent a bank from collecting owner or control information as part of its supervisory obligations.
Explore SBA loan programs and conventional bank lending for working capital or equipment financing; SBA-guaranteed programs have lender-specific underwriting and documentation requirements—contact approved lenders or local SBA resources to start an application and prepare entity and personal financial documentation.
Hiring & Labor Market
Follow federal wage-and-hour and recordkeeping laws under the Fair Labor Standards Act (FLSA) for minimum wage, overtime, and related requirements; Texas does not impose a separate statewide minimum-wage above the federal baseline unless a locality has adopted a higher rate.
Complete federal employment-verification forms and required new-hire reporting, and register with the Texas Workforce Commission for employer unemployment-tax purposes once you meet state thresholds for employers.
Classify workers correctly as employees or independent contractors—classification affects payroll-tax withholding, unemployment insurance, and potential liabilities; review applicable federal and state guidance to confirm correct classification before hiring.
Cost of Doing Business
Budget for formation and filing costs (Secretary of State filing fees for entity formation), state license application fees where trades are regulated, and county or municipal assumed-name (DBA) filings when using a trade name.
Plan for insurance and bonding where required: TDLR-licensed programs frequently require proof of insurance for licensure (for example, ACR licensing), and many municipalities ask for liability insurance and bonds at permit issuance or for certain contracts.
Include project-level expenses such as permit and plan-review fees, inspection fees, tools and equipment, commercial auto insurance, and potential security bonds; municipal fees, bond amounts, and insurance minimums vary by jurisdiction and project type so confirm amounts with the issuing authority or insurer.
When estimating startup and operating costs, obtain quotes from licensed insurers and current fee schedules from local building departments because local permit fees and insurance underwriting terms are location- and business-specific.
Helpful StartupWerx Resources
References
- Form 205 — Instructions for Certificate of Formation—Limited Liability Company
- Formation of Texas Entities FAQs (Assumed Names & filings)
- Instructions for Form SS-4 (Application for Employer Identification Number)
- How to Apply for a Sales and Use Tax Permit / Texas Online Tax Registration
- Beneficial Ownership Information Reporting (BOI) — FinCEN (landing page)
- FinCEN News Release — FinCEN Permanently Ends Beneficial Ownership Reporting Requirements for Millions of Small Business Owners (Immediate Release)
- Electricians Compliance Guide — TDLR
- Air Conditioning & Refrigeration (ACR) Contractors — TDLR (out-of-state applicants & insurance requirements)
- Texas Local Government Code — Chapter 214 (Municipal Regulation of Buildings) — Section 214.904 Time for Issuance of Municipal Building Permit
- OSHA Construction Standards (29 CFR Part 1926)
- Texas Franchise Tax — Comptroller of Public Accounts
- Unemployment Insurance & Employer Resources — Texas Workforce Commission (TWC)
- Fair Labor Standards Act (FLSA) Overview — U.S. Department of Labor
- SBA Lender & Loan Program Information — Small Business Administration
- Division of Workers’ Compensation (DWC) / Workers’ Compensation — Texas Department of Insurance (TDI)
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