What’s the surety bond definition? A surety bond guarantees that your small business will perform the agreed-upon services. These bonds financially guarantee that your customer will be paid if they don’t receive services. So, if you run a barber shop and a customer claims that they paid but didn’t receive services, your bond will provide them with reimbursement.
Similar to having certain small business insurance coverages, being a bonded company or having surety bonds makes you more credible and reliable in the eyes of many customers. In fact, many clients may require contract bonds before working with you, especially for construction projects. These guarantee that they’ll be compensated if you don’t deliver the services outlined in the contract.
Many small businesses also need license and permit bonds before they operate. To see what’s required in your area, you can check with your state. For instance, you may need a contractor license to operate in your area. Once you have that, government entities or clients may also require you to get bonds in order to fulfill their contracts with your small business.
For some clients, bonds are required before they’ll work with your small business. In fact, many contracts require you to be a bonded company. To get the right bonds, you’ll want to find a surety company or work with your insurance company. They’ll determine how much you’ll pay for your bonds depending on factors like your:
The bonds you get will financially guarantee that your clients will get paid if you don’t provide the right services to them. This guarantee can help bring customers back for years to come.
Business license bonds are often required before you can operate your small business. For example, if you run a liquor store, you’ll need the right licensing and permits, including a liquor tax bond. These are a promise from your small business to pay your taxes. Some other types of license bonds include:
These bonds act as a financial guarantee to project owners that the work that’s agreed upon in a contract will be completed. If it’s not, the project owner can receive compensation from the bond.
The surety bonds that are required in court are known as court bonds. These can be judicial bonds that guarantee the payment of court costs in lawsuits. They can also be probate bonds that guarantee the performance of an executor of an estate for a person that recently passed away.
So, how much does a surety bond cost? Surety bond costs can vary depending on factors like your:
What’s the difference between bonds and insurance for small businesses? Surety bonds help cover third parties like customers and suppliers, while insurance policies help cover you as a small business owner.
The amount of time it takes to get a surety bond depends on the type of bond you’re looking to get. Generally, it doesn’t take long to get a surety bond if you’re prepared with your:
If you have questions about bonds, bond forms you need to fill out or insurance coverage, reach out to us at 855-440-1078 or learn more by getting an insurance quote today.
