Start a construction business in Texas for $308 and a week of your time

You have the tools, the truck, and somebody who would rather pay you directly than pay your boss. In Texas that is close to the whole list of prerequisites.

The state does not license general contractors. It does not tax your personal income. It does not force private employers to carry workers compensation. A California contractor reaches the same starting line by proving four years of journey level experience, sitting a two part state exam and posting a $25,000 bond. In Texas the distance between deciding and invoicing is paperwork, not qualification.

Here is that paperwork in the order that works, what each stage costs, and who you hand it to. Order matters for one reason. The first general contractor who wants to use you asks for three things at once: a certificate of insurance, a federal tax ID, and an entity name that matches the name on your bank account. None of the three can exist before the entity does, which is why stage 2 is stage 2.

The three permissions Texas does not ask you for

No state contractor license. General contracting, framing, carpentry, concrete, roofing, drywall, painting and flooring carry no state credential in Texas, and neither does landscaping until it involves irrigation. The state licenses four trades and leaves the rest to the market: electricians through TDLR under Occupations Code Ch.1305, plumbers through the Texas State Board of Plumbing Examiners, air conditioning and refrigeration contractors through TDLR, and landscape irrigators through TCEQ under Occupations Code Ch.1903. If your trade is off that list, your competence gets proven on a job rather than in an exam hall. Which trade needs what is the license question answered trade by trade.

No personal income tax. What the business earns and pays out to you is not taxed by the state. That is not a loophole you have to manage, it is a line that does not appear.

No mandatory workers compensation. Texas is the only state that lets a private employer decline coverage outright. It is a decision with real money on both sides, and it belongs to you rather than to a regulator.

Speed is what those three buy you, and the door stands open the same width for the contractor down the road. That is exactly what makes readiness the whole contest here. The invitation goes to whoever can answer it the same afternoon with a certificate and a tax ID attached, which is the reason to do this week properly rather than in a panic on the morning a GC asks.

The stages, what they cost, and who you file with

Stages 2 through 6 are a week if you are slow about it. Stage 9 depends on how fast a broker moves. Stage 11 is the one that turns the other ten into money.

The entity: LLC is the default answer, and it takes an afternoon

You form a Texas LLC by filing a Certificate of Formation, Form 205, with the Secretary of State under the Business Organizations Code. The fee is $300. Filed online through SOSDirect and paid by card, the statutory 2.7% convenience fee makes it $308.10, and the filing comes back in days. You name a registered agent with a physical Texas street address who has consented to act, and that can be you at your own address.

Why an LLC rather than the sole proprietorship you fall into by trading under your own name: because Texas issues no license, the entity is the one thing standing between a claim on a job and the truck in your driveway. A sole proprietor who signs a subcontract in Texas is personally the contracting party on it, and personally the defendant when it goes wrong. The $300 buys that separation once, and it is the same filing whether you are one person or twelve. The full comparison, including how the tax treatment differs, is LLC versus sole proprietor in Texas.

If you plan to trade under anything other than the exact legal name on the certificate, that is an Assumed Name Certificate, Form 503, and it is $25 at the Secretary of State. File it before the bank account, not after, because the bank matches the name on the check to the name on the file.

Two accounts at the Comptroller, and why you want the first one

The EIN is free and takes minutes on the IRS site once the LLC exists. It is the number the GC's accounts payable clerk asks for, and it is what opens the bank account.

Then the sales and use tax permit, Form AP-201, also free from the Texas Comptroller. Read it as a purchasing tool rather than a duty. Texas sales tax runs 6.25% at state level plus local rates capped at 2%, so the combined figure tops out at 8.25%, and under the contractor rule at 34 TAC 3.291 how you pay it depends on the shape of your contract. On a lump sum contract you are treated as the consumer of the materials and you pay tax when you buy them. On a separated contract, where labor and materials are priced separately to the customer, the permit lets you issue a resale certificate and buy those materials tax free, then charge the tax on the material line. That difference is real margin on a materials heavy job, and the permit is what makes the second route available.

One mechanic in Rule 3.291 is worth knowing before you sign anything, because it decides which of those two you are in. Separately stated prices anywhere in the contract, or in a document the contract incorporates, convert a lump sum contract into a separated one. Separated invoices on their own do not, unless the contract requires them. So the election is made at contract writing time, in the wording, and every invoice after that has to agree with it. The detail by job type is in sales tax for Texas contractors.

The franchise tax is the annual one. Every taxable entity in Texas, an LLC included, files by 15 May. For report years 2026 and 2027 the no tax due threshold is $2,650,000 in total revenue, so a business under that owes nothing and files anyway, because the Public Information Report is due at zero. Skip it and the entity forfeits its right to transact business in Texas. Under Tax Code s.171.252 a forfeited entity is also denied the right to sue or defend in a court of this state, and that second consequence is the one to read twice: the day a forfeiture starts to matter is the day you go to enforce a lien and find the entity has no standing to do it. A report that costs nothing is what keeps your ability to chase your own money intact. The franchise tax report, in plain terms.

The workers comp decision, and what each side of it buys

Every other state tells an employer what to do here. Texas hands you the choice, so make it with the trade in front of you.

Carry comp and you buy the exclusive remedy: an injured employee's claim runs through the comp system, and the premium is the price of that ceiling. Go non-subscriber and you keep the premium, but Labor Code s.406.033 takes away the three defenses an employer would otherwise argue in a suit brought by an employee. Contributory negligence, assumption of risk and the fellow servant rule all come off the table. The employee sues you directly, and you cannot tell the jury they were careless.

Non-subscribers file DWC Form-005 with the Division of Workers Compensation every year between 1 February and 30 April, within 30 days of hiring a first employee, and within 10 days of dropping existing coverage. You also post the no coverage notice for your crew in English and Spanish.

The choice is not made once and for all, because the contract keeps reopening it. Commercial GCs write coverage into their subcontracts, and on a public job Labor Code s.406.096 makes the governmental entity require written certification of coverage from its contractor, with each subcontractor certifying up through the GC. So the shape it takes in practice is non-subscriber while the work is residential and the contract is yours to write, and coverage from the day a commercial subcontract or a public project puts the requirement in writing. The comp decision with the numbers on both sides.

The insurance the GC asks for long before the state does

Texas writes no general liability minimum for the trades it does not license. What it does write are the limits it imposes on the trades it licenses, and the limits cities impose on the trades they register. Those are the numbers the market reads from.

A Responsible Master Plumber sits on a different shape again, $300,000 of commercial general liability for all claims in a one year period under Occupations Code s.1301.552. So $300,000 per occurrence is the floor Texas uses on the trades it licenses, and San Antonio already asks $500,000 of a residential building contractor before it will register one. Commercial subcontracts then add the two requirements no statute describes: additional insured status for the GC and the owner, and a waiver of subrogation.

What actually gets a certificate rejected is smaller than the limits: the named insured not matching your legal entity word for word, a missing endorsement, an expiry date inside the job. Getting those right the first time is certificates of insurance for Texas contractors.

Your city is the licensing regime

With no state license, the registration desk at your city hall is the gate that decides whether you can pull a permit. It varies more than anything else in this guide.

Dallas is the one worth reading twice, because the figures circulating for it are wrong. The city's current general contractor registration packet asks for $120, an address and a responsible party. No surety bond, no general liability minimum, no proof of comp. The $10,000 bond and the $1M and $2M limits quoted in third party guides are not in the packet or in the city's contractor FAQ, and a broker quoting you against them is quoting the wrong city.

Two more worth having in your head before you plan the week. San Antonio charges its $150 and $170 for a two year term, so it is the cheapest of these per year, and a commercial general contractor there needs no city registration at all. Fort Worth runs one year from the day it issues, not to a calendar date, so your renewal is whatever day you first registered. The city by city detail, including what each portal wants uploaded, is Texas city contractor registration.

Bid ready is the stage that turns the rest into money

Everything above this line makes you eligible. This stage is what gets you chosen. The pack a Texas GC asks for is short: certificate of insurance, W-9 with the EIN, the entity's Certificate of Formation, a safety record, references, and your rates.

Set the payment machinery up in the same week, because it runs on dates you cannot recover later. Chapter 28 of the Property Code gives you 35 days from an owner's receipt of your payment request on a private job, and overdue money accrues interest at 1.5% per month. Anyone who receives a payment covering lower tier work passes that share down within 7 days. If you are working as a sub or supplier rather than the original contractor, your lien rights run on the monthly notice at Tex. Prop. Code s.53.056: for each month you furnish labor or materials, notice goes to the owner and the original contractor by the 15th day of the third month after that month, or the second month on residential work. And s.53.101 has the owner reserving 10% of the contract price during the work and for 30 days after completion, which is money already set aside with your name on it.

Those dates are arithmetic done on a bad day, so do not do them by hand: the Texas lien deadline calculator counts every 15th from the months you actually worked. The rest of the pack is the Texas bid ready checklist.

What running it on AEC Stack costs

There is no monthly subscription. AEC Stack takes 2.5% of each invoice processed through the platform, collected on the payment due date, so the software gets paid after you do.

That ordering matters more in a first Texas year than it looks on a pricing page. The $308.10 to the Secretary of State, the broker's first premium and up to $170 to a city all land before a single invoice does. Software billed monthly joins that queue and starts drawing money before the business earns any. Software priced as a share of what has already been collected cannot.

Do stage 2 today. File the Certificate of Formation, get the EIN while you wait for the confirmation, and open the bank account tomorrow. Then go find the job: where work is starting in Texas is the feed of projects with a name and a date on them, and find work is where it lives.