Starting an HVAC business in Texas is one of the smartest moves you can make if you want to be your own boss. I have started three businesses in my life and I can tell you that the Lone Star State is a great place to build a company. People here do not just want air conditioning, they need it to survive. When the temperature hits 105 degrees in August, an HVAC tech is the most important person in town. You are not just fixing machines, you are saving people from the heat. It is a high-demand job that will never go away as long as people live in Texas.
What makes starting a HVAC business in Texas different
The first thing you have to understand is that Texas is a massive state with a very unique climate. In most parts of the country, HVAC guys spend half their time on furnaces and half on AC units. In Texas, your bread and butter will always be cooling. You will spend your days in hot attics and on scorching rooftops in places like Houston and San Antonio. The humidity in East Texas and the dry heat in West Texas mean you have to know how to handle different types of air. You cannot just use a "one size fits all" approach here.
Another thing that makes Texas different is the sheer growth of the state. Thousands of people are moving to Dallas, Fort Worth, and Austin every single month. All those new houses need new units installed and maintained. While other states are losing people, Texas is booming. This means your customer base is growing every day without you even trying. You also have the benefit of a state government that generally stays out of your way. Texas is very pro-business which makes the paperwork side of things much easier than in places like California or New York.
Lastly, the seasonality in Texas is a bit of a roller coaster. Our "cooling season" starts in April and can run all the way through October. This is much longer than the three-month window you get up north. You will have a massive surge of calls in the late spring when people turn their units on for the first time. You have to be ready to work long hours during these months. If you can manage your time and your money during the busy season, you will be set for the rest of the year.
What it costs to start
You might think you need a huge pile of cash to get started, but that is not necessarily true. I always tell my friends to start lean and grow as the money comes in. Your biggest upfront cost in Texas is going to be your LLC filing fee. The Secretary of State charges $300 to file your Certificate of Formation. This is a one-time fee to make your business a legal entity. It only takes about 2 to 3 business days to get approved if you do it online. Do not bother with the mail-in option because that can take over a week.
Next, you are going to need a van or a reliable truck. You do not need a brand-new $60,000 Sprinter van on day one. A used cargo van for $10,000 or $15,000 will get the job done just fine. You just need enough space for your tools and a few common parts like capacitors and contactors. Speaking of tools, expect to spend about $2,000 to $5,000 on a good manifold gauge set, a vacuum pump, a recovery machine, and your hand tools. You can buy these used if you know what to look for, but do not cheap out on your vacuum pump.
Insurance is another cost you have to plan for. Even though Texas law does not strictly require general liability insurance for every small business, you would be crazy to work without it. Most commercial clients and even some homeowners will ask for a $1 million policy before they let you on the property. Luckily, insurance in Texas is pretty affordable. You can usually find a good general liability policy for about $40 to $50 per month. Compared to the peace of mind it gives you, that is a steal.
Texas-specific regulations you need to know
Texas takes its HVAC regulations very seriously through the Texas Department of Licensing and Regulation or TDLR. You cannot just hang a shingle and start charging people for AC repair. You have to be a licensed contractor to pull permits and run a business. There are two main types of licenses: Class A and Class B. A Class A license lets you work on units of any size. A Class B license is for units that are 25 tons or less. For most residential guys starting out, a Class B is more than enough.
You also need to know about the franchise tax. Texas does not have a state income tax, which is a huge win for your take-home pay. However, they do have a franchise tax for businesses. The good news is that most small HVAC shops will never have to pay a dime of it. The threshold is currently $2,470,000 in revenue. Unless you are bringing in over $2.47 million a year, you just have to file a "No Tax Due" report every May 15. It is a simple form that tells the state you didn't hit the limit yet.
Another thing to keep in mind is the sales tax on services. In Texas, most residential repair and maintenance services are actually not subject to sales tax. If you are fixing a central air unit at a house, you usually do not have to charge the homeowner sales tax on your labor. However, you do pay sales tax when you buy the parts from your supplier. If you are doing new construction or working on commercial buildings, the rules can change. Always check the comptroller's website to make sure you are doing it right for your specific job.
How much HVAC pays in Texas, by city
The amount of money you can make in Texas varies depending on which city you call home. In Houston, the demand is constant because of the extreme humidity. A solo owner-operator can easily bring in $85,000 a year just doing residential repairs. If you get into full system replacements, that number can jump over $120,000. The cost of living in Houston is still relatively low, so that money goes a long way.
Dallas and Fort Worth are also very lucrative. Because there is so much new wealth in the suburbs like Plano and Frisco, people are willing to pay a premium for fast service. In Dallas, I have seen owner-operators clear $95,000 a year after expenses. The competition is a bit tougher there, but the customers have more disposable income for high-efficiency upgrades. You can charge a bit more per hour in the DFW metroplex than you might in smaller towns.
Austin is a unique market because of the tech boom. People moving from out of state often want the newest smart-home technology integrated with their HVAC. If you know how to install Nest thermostats and zone control systems, you can easily make $100,000 or more in Austin. San Antonio is a bit more blue-collar, with a heavy focus on older home retrofits. You might make closer to $75,000 or $80,000 there, but your overhead will also be lower. El Paso is on the lower end of the scale at around $65,000, but it is still a solid living for a new business owner.
Managing the South Texas humidity and SEER2 ratings
One technical thing you must master in Texas is humidity control. In places like Corpus Christi and Houston, the air is thick with water. If you install a unit that is too big for the house, it will cool the air down too fast without removing the moisture. This leads to a "clammy" house and eventually mold growth. You have to be an expert at Manual J calculations to make sure the unit is sized perfectly for the space. This is a skill that will separate you from the "trunk slammers" who just guess the size.
You also need to be up to speed on the 2023 SEER2 requirements. The Department of Energy split the country into regions, and Texas is in the South region. This means we have stricter efficiency standards than the northern states. Any new unit you install in Texas must meet the minimum SEER2 rating for our region. If you try to install old stock that doesn't meet the code, you can get hit with heavy fines. I always tell new guys to build a good relationship with their local supplier so they stay informed on these changes.
Selling high-efficiency units is actually easier in Texas because the payback period is so short. When a homeowner's electric bill is $400 a month in July, they are very interested in a unit that uses 30% less power. I recommend learning how to explain "two-stage" and "variable speed" compressors to your customers. These units run longer at a lower speed, which is much better for pulling humidity out of the air. It makes the house feel cooler even if the temperature is the same, and your customers will love you for it.
Licensing and permits
Getting your license is the biggest hurdle, but it is also your biggest protection. To get a contractor's license in Texas, you usually need 48 months of experience under a licensed pro. If you haven't put in your time yet, you can still register as an HVAC technician and work for someone else while you build those four years. Once you have the experience, you have to pass a state exam. It is a tough test, so I suggest taking a prep course. It covers the mechanical codes and the business laws of the state.
Once you have your license, you need to think about local permits. Every city in Texas has its own building department. If you are replacing a full system in Arlington, you need to pull a permit with the City of Arlington. They will usually send an inspector out to check your work. This might sound like a pain, but it actually protects you. If the inspector signs off on it, the homeowner knows the job was done right. It also keeps the unlicensed guys from undercutting your prices because they won't pull permits.
Don't forget about your EPA 608 certification either. This is a federal requirement, not just a Texas one, but it is vital. You cannot buy or handle refrigerant without it. Most supply houses in Dallas or Houston will ask to see your EPA card before they sell you a jug of R-410A or R-32. Getting your Universal certification is the best way to go so you can work on any type of system. It is a one-time test and it never expires, so get it done early.
Getting your first 10 customers
The hardest part of any new business is getting the phone to ring. For your first 10 customers, I suggest starting with your own neighborhood. Put a high-quality wrap or at least a professional magnet on your truck. When you are parked in a driveway in a neighborhood like The Woodlands or Round Rock, the neighbors will see you. I have picked up dozens of jobs just by being visible while I was working on a neighbor's house.
Nextdoor and Facebook neighborhood groups are gold mines for HVAC techs in Texas. People are always asking for "a guy who won't rip me off." Be that guy. Don't go in there and post spammy ads. Instead, answer people's questions for free. If someone says their AC is freezing up, tell them to check their filter and turn the system off to let it thaw. When they realize you know what you are talking about, they will call you to come fix the actual problem.
Google Local Services Ads (LSAs) are also worth every penny. These are the "Google Guaranteed" ads that show up at the very top of the search results. In Texas, people usually search for "AC repair near me" when they are in a panic. If your name pops up with a green checkmark, they are going to call you first. You only pay when someone actually calls you from the ad. It is a great way to jumpstart your leads while you are still building your word-of-mouth reputation.
Seasonal calendar for Texas
March and April are your "Get Ready" months. This is when you should be reaching out to your existing customers for spring tune-ups. In Texas, if you don't catch a bad capacitor in April, it will definitely blow in July. I like to offer a discounted maintenance rate during these months to fill up my schedule. It keeps the cash flowing before the real heat hits and helps you build a list of people who might need a new unit soon.
June, July, and August are the "War Zone." You will be working 12-hour days and your phone will never stop. This is when you make the bulk of your profit for the year. In Texas, an AC outage in July is a true emergency. You need to have your truck stocked with common parts so you can finish jobs in one trip. Don't forget to take care of yourself during this time too. Drink tons of water and stay out of the attics in the middle of the afternoon if you can help it.
September and October are for "Shoulder Season" maintenance. The heat starts to break, and people stop thinking about their AC. This is a good time to run specials on duct cleaning or indoor air quality products like UV lights. November through February is your heating season. While Texas doesn't get as cold as the north, we still have some brutal ice storms and cold snaps. You will get calls for heat pump failures and furnace ignitor issues. Use these slower months to organize your shop and plan your marketing for the next spring.
Frequently asked questions
Q? How much does it cost to set up my business bank account in Texas?
- In Texas, you can usually open a business account at places like Chase or Frost Bank with a deposit between $5 to $100. You will need to bring your LLC Certificate of Formation, your EIN confirmation letter, and your government ID. Most of these banks offer free or low-cost accounts if you keep a minimum balance. It is important to keep your business money totally separate from your personal cash.
Q? Do I really need an EIN from the IRS right away?
- Yes, you absolutely do. An Employer Identification Number (EIN) is like a social security number for your business. It is free to get and takes about 5 minutes on the IRS website. You need it to open your bank account, hire employees, and file your taxes. Never pay a third-party website to get an EIN for you because the IRS provides them for free.
Q? Is there a state income tax I need to save for in Texas?
- No, Texas is one of the few states with no state income tax. This means more money stays in your pocket compared to almost anywhere else. You still have to pay federal income tax and self-employment taxes, but the state won't take a cut of your earnings. This makes Texas one of the most profitable places to run a small service business.
Q? What is the franchise tax I keep hearing about?
- The Texas franchise tax is a tax on the privilege of doing business in the state. However, it only applies if your total revenue is over $2.47 million. Most new HVAC owners don't have to pay anything. You still have to file a report every year by May 15, but for most people, it is just a "No Tax Due" filing that takes a few minutes.
Q? How long does it take to get my LLC approved?
- If you file your Certificate of Formation online through the Texas SOSDirect website, it usually takes about 2 to 3 business days. If you send it by mail, it can take 7 to 10 days or even longer. I always recommend the online route because it is faster and you get your documents back in a digital format immediately.
Q? Do I have to charge sales tax on my AC repair labor?
- In Texas, most residential repair and maintenance services are not taxable. This means you do not have to add sales tax to your labor bill for a homeowner. However, the rules are different for commercial work and new construction. You should always double-check with the Texas Comptroller to see if your specific type of job is exempt or not.
Q? What kind of insurance do I need to start?
- You should start with a General Liability policy. While not strictly required by Texas law for every business, most customers will demand it. It covers you if you accidentally cause damage to a home or if someone gets hurt. You can typically get a basic policy for $40 to $50 a month, which is very affordable for a new business.
Q? Can I start my business before I have a contractor license?
- You can form your LLC and get your tools ready, but you cannot legally offer HVAC services to the public in Texas without a contractor license. You must be able to pull permits for the work you do. If you don't have your license yet, you should work as a registered technician for another company until you meet the state's experience requirements.
Starting an HVAC business is hard work, but it is also very rewarding. In Texas, you have a massive market, a pro-business government, and a climate that practically guarantees you will stay busy. Just make sure you get your paperwork right from the start so you don't have to worry about it later. Focus on taking care of your customers and the rest will fall into place.
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