How to start a general contracting business

This guide takes a working carpenter, superintendent or project manager through opening a general contracting company: the license class, bonds and federal work, lien rights, safety duties for the whole site and the first clients. The finding most new owners miss is that the paperwork protects the payment: in Texas a lien on a homestead needs a written contract signed before work starts, by both spouses if the owner is married, and filed with the county clerk.

By Niomi AscotUpdated October 3, 202617 min read

Licensing: Set by each state; Texas voted out its statewide agency in 2009, and North Carolina licenses by project size
Experience bar: Four years in California, Florida and Arizona; Florida's general class adds a year on buildings of four stories or more
Federal bonds: Performance and payment bonds on federal construction over $150,000 under the FAR
Bonding help: SBA guarantees bonds up to $9 million, or $14 million on federal contracts
Falls: 389 of 1,034 construction deaths in 2024 were falls to a lower level
Who homeowners hire: General contractors, engaged by 29% of renovating homeowners (Houzz, 2026)

What a general contractor is, and the kinds of firm you can build

The statutes define the job by breadth. California’s B General Building license covers structures needing “at least two unrelated building trades or crafts,” and the right “to do or superintend the whole or any part thereof” (CSLB B). Florida calls a general contractor one “whose services are unlimited as to the type of work” (Fla. Stat. 489.105). The general contractor holds the prime contract and answers to the owner for everything under it.

Most new firms pick one of these lanes first:

Residential remodeling: additions, whole-house renovations, kitchens and baths. It is a common first lane, and homeowners hire general contractors more than any other professional: 29 percent of renovating homeowners engaged one in Houzz’s 2026 study, against 13 percent who hired builders (Houzz & Home 2026).
Custom or spec homes: construction lending, warranty exposure and sometimes a different license tier.
Light commercial and tenant improvement: bonds, prevailing wage on public jobs, commercial sales tax and asbestos notices.
Construction management: a fee for running the job, with little self-performed work.

Subcontracting the work does not hand off the duties: a firm that self-performs nothing still answers for site safety and for liens from subs it fails to pay.

The outlook: pay, demand and the size of the field

Two occupations on O*NET OnLine describe the people who run general contracting firms. Construction managers earned a median $55.28 an hour, or $114,990 a year, in 2025, with 550,300 employed in 2024, growth of 7 percent or more projected to 2034 and 46,800 projected openings. First-line supervisors of construction trades earned a median $38.42 an hour, or $79,920, with 921,600 employed and growth of 5 to 6 percent projected. Both draw on Bureau of Labor Statistics data.

Demand is steady rather than surging. Houzz put the median 2025 renovation at $20,000, with the 90th percentile at $150,000. Harvard’s remodeling indicator, as reported by NARI in July 2026, expects growth to slow to 0.5 percent by the second quarter of 2027, with spending around $519 billion.

The field is crowded with very small firms. The Census Bureau’s NAICS index places residential remodeling general contractors in Residential Remodelers and house construction by general contractors in New Single-Family Housing Construction. County Business Patterns for 2023 counted, among establishments with paid employees:

135,337 residential remodelers, 81.0 percent with fewer than five employees.
60,635 new single-family home contractors, 78.1 percent with fewer than five.
39,072 commercial and institutional building contractors, 48.1 percent with fewer than five.

Licensing

No federal license exists for general contractors. Most large states license them, a few only register home improvement contractors, and Texas has no statewide license. Two federal rules reach almost every firm:

Lead paint. The EPA names “General contractors” among the firms covered by its renovation rule, and firms “cannot advertise or perform renovation activities covered by the RRP Rule in homes or child-occupied facilities built before 1978 without firm certification” (EPA RRP for contractors). Firm certification costs $300 and lasts five years.
Asbestos. The NESHAP work practices apply to demolitions and renovations of all structures “excluding residential buildings that have four or fewer dwelling units,” and the state agency must be notified before any demolition (EPA asbestos rules).

State licensing for general contractors

State	Who issues it	What you need	Key requirements, as the agency states them
California	Contractors State License Board	B General Building, or B-2 Residential Remodeling	Needed for permitted work, any added workers or $1,000 or more; four years at journey level or above; trade, law and business, and asbestos exams; $25,000 bond
Florida	DBPR Construction Industry Licensing Board	Certified or registered general, building or residential contractor	Age 18; four years of experience, one as a foreman; general class needs a year on buildings of four or more stories; FICO 660 or a 14-hour course; $300,000 public liability for general and building contractors
Arizona	Registrar of Contractors (A.R.S. 32-1122)	General residential, general commercial or general dual license	Four years of trade or management experience, two within the last ten; exam on the trade and state “building, safety, health and lien laws”; license bond, plus a $200,000 bond or the recovery fund for residential work
North Carolina	State licensing board, under G.S. 87-10	Limited, intermediate or unlimited license	Required from $40,000 per project; limited up to $750,000 per project, intermediate up to $1.5 million; age 18; financial responsibility as the board sets it
Texas	No state agency; lawmakers let the residential construction commission lapse in the 2009 Sunset review	No statewide general contractor license	Licensed plumbers and electricians for that work; a statutory disclosure statement before a residential contract; city registration and permits
Pennsylvania	Office of Attorney General	Home improvement contractor registration	Required at $5,000 or more of home improvements a year; $100 every two years

Fees are as of October 2026. Check every requirement with the issuing agency before you apply, and with the city or county that will issue your building permits.

California. The B license comes with a scope limit: you may not take a prime contract for trades other than framing or carpentry unless it requires at least two unrelated trades besides those, or you hold the specialty license or subcontract to someone who does. The B-2 is narrower, for existing residential wood frame structures where one contract uses at least three unrelated trades. Experience counts only “at a journey level or as a foreman, supervising employee, contractor, or owner-builder,” and training can supply up to three of the four years (CSLB experience). Next to the B trade exam, the Law and Business exam is the one carpenters underrate: contracts 21 percent, employment 20, business finances 15, safety 14, licensing 13, insurance and liens 12 and public works 5 (CSLB law study guide). The fees are $450 to apply, $32 and $17 for fingerprints, and $200 for a sole owner’s initial license or $350 for other entities, and a $25,000 bond comes before the license issues (CSLB, issuing your license). Only A and B licensees may advertise as general contractors, the number goes in all advertising, and no ad may say you are bonded (CSLB advertising guidelines).

Florida. The three classes stack. A residential contractor builds and remodels one- to three-family homes of no more than two habitable stories; a building contractor takes commercial and residential buildings of up to three stories; a general contractor is unlimited. The general class requires “at least one year of ‘active experience’ or ‘proven experience’ … in the construction of structures not less than four stories in height,” and the building class needs commercial experience in at least four listed areas such as masonry walls and steel erection (Fla. Admin. Code R. 61G4-15.001). Most house builders and remodelers therefore start residential, and Fla. Stat. 489.111 lets a certified residential contractor move up to building after three years of proven experience in the class, or general after four. The credit rule is in R. 61G4-15.006; residential contractors carry $100,000 public liability and $25,000 property damage, general and building contractors $300,000 and $50,000 (R. 61G4-15.003). The $2,500 minor-work exemption is lost to anyone who advertises as a contractor (Fla. Stat. 489.103), and every bid, contract and ad shows the license number (Fla. Stat. 489.119).

Arizona. The classes include general residential, general commercial, general dual and general engineering (A.R.S. 32-1102), and technical training can cover no more than two of the four years. General residential contractors post a bond or cash deposit of $5,000 to $15,000; general commercial bonds scale with annual volume, up to $100,000; residential and dual licensees add a $200,000 bond or join the residential contractors’ recovery fund (A.R.S. 32-1152). Casual or minor work under $1,000 is exempt (A.R.S. 32-1121), and the registrar must decide within 60 days of a complete application (A.R.S. 32-1124).

North Carolina. A general contractor is anyone undertaking work “where the cost of the undertaking is forty thousand dollars ($40,000) or more” (G.S. 87-1). Application fees are capped at $75, $100 and $125 for the three tiers, and renewal requires continuing education. The board sets its own financial responsibility thresholds, so ask it directly.

Texas. “During the 81st Regular Legislative Session in 2009, House Bill 2295 failed to pass, abolishing the Texas Residential Construction Commission” (Texas Sunset Advisory Commission), and no statewide general contractor license has replaced it. The trades stay licensed: plumbing under Tex. Occ. Code 1301.351 and electrical work under Tex. Occ. Code 1305.151. The state still regulates the contract. Before a homeowner signs a residential construction contract, the original contractor must deliver a disclosure statement that opens “KNOW YOUR RIGHTS AND RESPONSIBILITIES UNDER THE LAW” (Tex. Prop. Code 53.255).

Setting up the company

Entity and tax ID. An LLC keeps personal assets out of reach of business debts and lawsuits “in most instances,” the SBA says. File with the state first, then apply for a free EIN from the IRS.

Sales tax. In Texas, residential repair and remodeling labor is not taxable, the full charge on nonresidential remodeling is, and lump-sum versus separated contracts change who pays tax on materials (Texas Comptroller Publication 94-116). Other states draw the line elsewhere.

Insurance. Florida’s minimums are in the table, Google’s General contractor ads ask for general and professional liability, and the SBA lists workers’ comp, unemployment and disability insurance as required once you have employees. In our experience builder’s risk and commercial auto join the list as soon as a firm takes its first ground-up or addition job.

Workers’ compensation. California requires it of an employer with as few as one employee (California DWC). Florida construction employers must cover “one or more employees,” against four or more in other industries (Fla. Stat. 440.02). Texas leaves it optional for most private employers, but “private employers who contract with government entities must provide workers’ compensation coverage” (TDI).

Subcontractors. The IRS looks at behavioral control, financial control and the relationship, and a worker misclassified without a reasonable basis can leave you liable for employment taxes. Collect each sub’s license, insurance certificate and W-9 before the first day on site.

Bonds, public work and prevailing wage

Beyond license bonds, project bonds decide how large a job you can chase.

Federal jobs. The Miller Act requires performance and payment bonds before “any contract of more than $100,000 is awarded for the construction, alteration, or repair of any public building or public work of the Federal Government” (40 U.S.C. 3131). The Federal Acquisition Regulation applies the requirement to “any construction contract exceeding $150,000,” with other payment protections for contracts from $35,000 to $150,000 (FAR 28.102-1).
Prevailing wages. Davis-Bacon applies to “every contract in excess of $2,000” for federal construction, alteration or repair (40 U.S.C. 3142).
Bonding with no history. The SBA’s Surety Bond Guarantee program “guarantees bid, performance, and payment surety bonds issued by certain surety companies” on contracts up to $9 million, or $14 million for federal contracts. Performance and payment guarantees cost 0.6 percent of the contract price, and “SBA does not charge a fee for bid bond guarantees” (SBA surety bonds). For a new firm with no record a surety can price, this is often the first door that opens.

States and cities run their own bond and prevailing wage rules for public work.

Trucks, office and software

From what we see, a new general contractor spends first on:

Vehicles and tools. A pickup and trailer, job-site storage and your own trade tools if you self-perform; rent heavy equipment until the work justifies owning it.
Safety equipment. Fall protection for work at six feet and up, ladders and scaffolds that meet OSHA’s construction standards, and silica controls for cutting concrete and masonry.
Software. Estimating and takeoff, scheduling, a CRM for bids that take months, document control for contracts, change orders, lien waivers and notices, and accounting with job costing.
Suppliers and subs. Trade accounts at lumber yards and supply houses, whose credit terms work as a short loan, and a bench of licensed subs in every trade.

Pricing, payments and lien rights

No public source with a stated method gives typical markups or startup costs, so none are printed here; the SBA checklist lists what to budget. In practice firms bid lump sums from plans, work cost-plus for a fee, sell design-build with a paid preconstruction phase, or charge time and materials on small work, and commercial jobs withhold retainage until completion. Write every change down: Houzz found 37 percent of renovating homeowners went over budget in 2025.

Deposits and cancellation. On a California home improvement job the down payment may be no more than $1,000 or 10 percent, whichever is less (Cal. Bus. & Prof. Code 7159.5), special-order materials included, and buyers get three business days to cancel, or five at 65 and older (CSLB consumer guide). Florida contractors taking more than 10 percent up front must apply for permits within 30 days and start within 90 days of their issue (Fla. Stat. 489.126). The FTC Cooling-Off Rule covers sales made at home until midnight of the third business day.

Lien law is a general contractor’s main collection tool and its main exposure, because unpaid subs can lien the same property. Four states show how differently the steps run:

State	Notice from subs and suppliers	Your deadline as the contractor with the owner	The trap
California	Within 20 days of first furnishing work (Civ. Code 8204)	Record a claim within 90 days of completion, or 60 days after the owner records a notice of completion (Civ. Code 8412)	Home improvement contracts must carry a mechanics lien warning
Florida	Notice to owner within 45 days of starting (Fla. Stat. 713.06)	Record within 90 days of final furnishing (Fla. Stat. 713.08)	Direct contracts over $2,500 on homes of up to four units must contain the statutory notice (Fla. Stat. 713.015)
Arizona	Preliminary twenty day notice (A.R.S. 33-992.01)	Confirm with an Arizona construction attorney	On an owner-occupied home, only someone with a written contract directly with the owner-occupant may lien (A.R.S. 33-1002)
Texas	Monthly notices of unpaid claims (Tex. Prop. Code 53.056)	Residential: by the 15th day of the third month after your work ends; fourth month on other projects (Tex. Prop. Code 53.052)	A homestead lien needs a written contract signed before work starts, by both spouses if married, and filed with the county clerk (Tex. Prop. Code 53.254)

Two consequences follow. In California the direct contractor gives preliminary notice “only to the construction lender or reputed construction lender, if any” (Civ. Code 8200), so your subs’ notices, not yours, are what the owner sees (CSLB on mechanics liens). In Arizona, because only you can lien an owner-occupant’s home, your subs look to you alone for payment. Collect lien waivers with every draw, and confirm deadlines with a construction attorney.

Funding. For a young company, the SBA notes, lenders typically judge the owner’s personal credit score. On bigger projects, in our experience, a lender’s draw schedule often sets when you are paid.

Hiring and safety on a site you control

People with supervision experience are in demand: O*NET lists 74,400 projected openings for first-line supervisors and 46,800 for construction managers over 2024 to 2034. The Department of Labor’s Registered Apprenticeship model offers “progressive wage increases, classroom instruction, and a portable, nationally-recognized credential” for training your own.

Falls kill more construction workers than anything else. In 2024, 389 of 1,034 construction deaths were falls to a lower level (OSHA Stop Falls). OSHA requires fall protection at “six feet in the construction industry” (OSHA fall protection), and in fiscal year 2025 fall protection was its most-cited standard, with construction ladders third and scaffolding, fall protection training and eye and face protection also on the list (OSHA top 10).

You answer for your subs’ hazards. OSHA’s multi-employer policy makes a controlling employer of anyone with “general supervisory authority over the worksite, including the power to correct safety and health violations itself or require others to correct them,” whether that control comes from the contract or from practice. In OSHA’s own example, a general contractor that pointed out a sub’s missing fall protection but “takes no further actions” was citable because “it lacked a graduated system” of enforcement (OSHA CPL 02-00-124). Put safety rules in every subcontract and escalate when a sub ignores a warning.

Cards are not compliance. OSHA says its 10- and 30-hour Outreach program “does not fulfill an employer’s requirement to provide training under specific OSHA standards” (OSHA Outreach).

Silica and records. Cutting concrete, block or stone triggers the silica standard: you either follow OSHA’s Table 1 controls or measure exposure, and in both cases you keep a written exposure control plan, name a competent person and offer medical exams to workers who must wear a respirator 30 or more days a year (OSHA silica in construction). Many employers with more than 10 employees keep OSHA injury logs, and every employer reports a death within 8 hours and a severe injury within 24 (OSHA recordkeeping).

Finding the first customers

Google Business Profile. A service-area business “can’t list a ‘virtual’ office unless that office is staffed during business hours” (Google guidelines). List up to 20 service areas within about two hours’ drive (Google service areas), and take video verification if Google offers it (Google verification).

Local Services Ads. The General contractor category runs business and owner checks on every advertiser and asks for general and professional liability insurance and state licenses where they exist (Google requirements). The checks cover identity, criminal history and, for the company, civil litigation such as judgments and liens (Google background checks), and screening averages three to four weeks. The category was not in the August 2026 first phase of the move into Google Ads; when it moves, manual cost-per-lead bidding ends (Google Ads migration).

Reviews. Fewer than 20 reviews rules a business out for 47 percent of consumers in BrightLocal’s 2026 survey, and 74 percent only weigh reviews from the past three months, so ask at every final walkthrough. The FTC’s 2024 rule bans fake and bought reviews.

Referrals. In our experience the first year’s work comes mostly from people who have seen you build: architects and designers, real estate agents, property managers, and subs passing on jobs too big for them.

When you are ready to grow, our page on marketing for general contractors covers license numbers in ads, following up long bids and the channels that bring larger projects. A website with project pages and a properly set up Google Business Profile are the two places a referred homeowner checks first.

What trips up new general contractors

Lost lien rights. A Texas homestead job started on a handshake, or a claim filed after California’s 90 days or Florida’s 90 days.
Paying twice for materials. A sub’s unpaid supplier can lien your client’s house.
A sub’s fall, your citation. As controlling employer you can be cited for hazards you saw and did not get fixed.
Outgrowing the license. A North Carolina limited license stops at $750,000 per project, and a Florida residential license at two habitable stories.
No bonding capacity. Public and larger commercial work asks for bonds before it asks for a price.

Questions people ask before starting a general contracting business

Do you need a license to be a general contractor?

In most states, yes: California requires one from $1,000 or any permitted job, Florida above $2,500, Arizona above $1,000 and North Carolina from $40,000 per project. Texas has no statewide general contractor license, though plumbing and electrical work must be licensed and cities register contractors.

How much experience do you need for a general contractor license?

Four years is the usual bar. California counts it only at journey level or above, Florida wants one year as a foreman plus a year on buildings of four or more stories for the general class, and Arizona wants two of the four within the last ten years.

What does a California general contractor license cost?

As of October 2026, $450 to apply, $49 in fingerprint fees and $200 for a sole owner’s initial license or $350 for other entities, plus a $25,000 bond priced by the surety.

How does a new contractor get bonded with no track record?

Through a surety that writes bonds under the SBA Surety Bond Guarantee program, which covers contracts up to $9 million, or $14 million on federal work. Performance and payment guarantees cost 0.6 percent of the contract, and bid bond guarantees carry no SBA fee.

Is a general contractor responsible for subcontractors’ safety?

Yes, under OSHA’s multi-employer policy, if the general contractor controls the site. A controlling employer that spots a sub’s violation and does nothing further to enforce correction can be cited.

What are the lien deadlines for a general contractor?

In California, 90 days after completion or 60 days after a recorded notice of completion; in Florida, 90 days after final furnishing; on a Texas residential job, the 15th day of the third month after the work ends. Texas homesteads also need a written contract signed and filed before work begins.

Does an OSHA 30 card cover my training duties?

No. OSHA says its Outreach cards give basic safety education and do not meet the training each standard requires, so train on fall protection, ladders and other hazards and keep records.

Sources

Checked on October 3, 2026. Rules and fees change, and many are set state by state or city by city: confirm the current requirements with the agency that issues them before you apply.

Starting out, or ready to grow?

One team, operating since 2015, runs local SEO, ads, reviews, websites and the CRM for local businesses. Every business that reaches out gets a free consult, an honest evaluation and a plan it keeps.

Get a free plan Marketing for residential general contractors