Start a construction company

This guide covers residential building construction: general contractors, homebuilders, and remodelers who take on a whole project for the owner of the property. The Census Bureau counts that work under NAICS 2361, and its 2023 figures describe the shape of the field. Specialty trades run on a separate track. An electrician, plumber, or HVAC contractor is licensed under different rules in most states, and those rules are not what this guide or its state pages describe.

The LLC filing is the easy part of starting a construction company. Formation documents with the state, a registered agent, and a free EIN from the IRS take days in most states. The licensing question is the one that decides when you can sign the first contract, and it is answered by the state and often by the city, not by a federal agency.

Four solo operators for every employer establishment is a low ratio for a service industry. Cleaning runs at 16 to 1 on the same measure. Construction crosses into payroll early, which is why the employer obligations further down this page arrive sooner here than in most trades.

The license question belongs to the state

No federal agency licenses or registers construction companies. There is no equivalent of the operating authority a trucking company files for, and no national contractor registry. What exists instead is fifty separate answers, and the ten states this site covers split across three models.

The first model is a state competency board. The state runs the licence itself, usually with a trade and business law exam, financial statements or a net worth test, and a surety bond posted with the board. California, Florida, and North Carolina work this way, and the licence has to be in place before the work is contracted, not before it is finished.

The second model is a consumer-protection registration. The state does not test competence, it registers the business, takes a bond, and attaches disclosure duties and penalties for fraud. New Jersey and Pennsylvania run their home improvement regimes this way, as does New York City through its consumer agency.

The third model is no state licence at all. Texas and New York State leave general construction to municipalities, which set their own registration or permit rules, while keeping the specialty trades under state licensing boards. A contractor in this model still has a licence to find. It sits at city hall rather than in the state capital.

Read the trigger column before the fee column. A threshold decides whether the licence applies to the work you actually plan to take, and the thresholds are not close to each other: $1,000 in California, $5,000 a year in Pennsylvania, $40,000 a project in North Carolina. The same remodeling job can be unregulated in one state and a licensed activity in the next.

The federal rules that do apply

Two federal programs reach a residential contractor regardless of the state, and both apply to companies with no employees as much as to companies with crews.

The first is the EPA Lead Renovation, Repair and Painting rule. A firm that disturbs painted surfaces in housing or child-occupied facilities built before 1978 must hold an EPA lead-safe firm certification, and must assign a certified renovator to each job. Certification costs $300 and lasts five years. Some states run their own authorized program in place of the federal one, including Georgia and North Carolina among the states covered here, so the application goes to the state rather than to the EPA.

The second is workplace safety. Construction has its own OSHA standards at 29 CFR Part 1926, and they bind from the first employee. The fall protection trigger there is six feet above a lower level, against four feet in general industry, and it applies to a roof edge on a single-family house the same way it applies to a commercial site.

Worker classification is the third federal thread, and it is where construction gets audited more than most industries. The IRS decides employee against independent contractor on common law rules grouped into behavioral control, financial control, and the type of relationship. A business that wants a determination rather than a judgment call can file Form SS-8. Several states then add a construction-specific statute on top. Pennsylvania’s Construction Workplace Misclassification Act, in force since 2011, presumes a construction worker is an employee unless a written contract, freedom from control, and an independently established business are all present, with penalties starting at $1,000 for a first violation.

Bonds and insurance are three different things

New owners routinely treat one purchase as covering all three, and the regulator, the client, and the lender each want a different instrument.

A licence bond is what the state takes to issue the licence. California sets it at $25,000, and an LLC licensee posts a further $100,000 worker bond for unpaid wages and benefits. New Jersey and Pennsylvania attach their own bond or insurance minimums to registration. The bond protects the customer, not the contractor.

General liability insurance is separate and is what a client, a general contractor, or a property manager asks to see on a certificate before work starts. A performance or payment bond is separate again, bought per project on larger jobs, and it guarantees the contract itself.

Workers’ compensation is the obligation that arrives with the first hire, and several states apply a lower threshold to construction than to everything else. Florida is the sharpest case among the states covered here: a construction employer needs coverage at one employee, where a non-construction employer is required at four.

What the formation data shows

Construction ranks third of the nineteen sectors tracked here by business applications, at 543,434 in the twelve months through June 2026, behind retail trade and professional services. Growth is a different picture. The sector is up 5.9% year over year while retail and professional services each grew above 25%, so construction formation is high in volume and slow in change, which matches an industry where entry is gated by licences and capital rather than by an idea.

The density figures split the same way the licensing does. California carries the most employer establishments at about 25,200, ahead of New York and Florida. Texas and Florida carry the most solo operators, above 93,000 each, where California sits near 87,000. A state can be the largest market for construction firms with payroll and not the largest market for one-person firms, and the state pages read both numbers rather than one.

1. 1
   Find the regulator and the threshold first

   State board, state registration, or city hall. The answer decides whether you can sign the first contract at all.
2. 2
   File the LLC and get the free EIN

   Formation documents, registered agent, EIN. Days, not weeks, in most of the states covered here.
3. 3
   Apply for the licence in the company name

   Exam, financial statements, and experience proof where the state requires them. The licence names the entity, so the entity comes first.
4. 4
   Post the bond, then buy the insurance

   The licence bond satisfies the regulator. General liability satisfies clients. They are separate purchases.
5. 5
   Add the EPA firm certification for pre-1978 work

   $300 for five years, or the state program where one is authorized. Required before the first job that disturbs old paint.
6. 6
   Set up classification and safety before the first crew day

   Written subcontractor agreements, workers' compensation at the state's threshold, and the OSHA Part 1926 program.

Each state page walks its own regulator, threshold, fee, and timeline, because the gap between them is wide enough that assuming one state’s rule applies in the next is how a contract gets signed without the licence it required.