What is the procedure for obtaining a surety bond for my business?
Obtaining a surety bond is not complicated and can usually be completed in a matter of hours. The first step is to contact your state’s Secretary of State’s office to see if a surety bond is required for your industry. Because many jurisdictions allow you to obtain an individual license or licensing by exception, which does not require a surety bond, this could save you time and money.
You can also open an escrow account with your local bank and ask them to function as an issuing agent for surety bonds if you desire. When the deposit amount satisfies their conditions, certain banks will do so. Even if you don’t need one (or the bank refuses), bonding businesses will still want to do a credit check on you, so make sure your accounts with local banks are in good standing.
The next step is to call an insurance agent that specializes in business bonds after you’ve decided what form of bond your firm needs. He’ll take down some information about you and your business, inquire about the bond size required, examine your financial statements (or bank statements), and then research your industry to find which bonding provider is suitable for you.
This choice is influenced by a number of variables, including the length of time since they have had an insurable interest claim made against them (insurable/financial stability) and who has their surety licenses (in case anything happens).
When it comes to beginning a firm, what is a bond?
A surety bond is a legal agreement between your firm and the surety company that backs it up. You agree to abide by all state and federal laws governing the conduct of business by signing this agreement. The premiums paid by your firm are used to pay for any claims filed against you.
There will be no out-of-pocket expenses for your company if no claims are ever filed against it; however, if they are, the government (or other entity) filing the suit will receive compensation from the bondsmen’s insurance pool or their own policy, depending on the agreements made between them and their insurer at the time of purchase.
Is it possible to get a surety bond through the internet?
Yes, you can obtain a bond on the internet. The first step is to contact a business bond specialist insurance agent. He’ll take down some information about your business and then research your industry to figure out which bonding company is ideal for you. After that, he’ll work with the bonding company’s underwriters to draft your agreement (which is essentially an insurance policy) and submit it for approval (where they make sure all of the terms of coverage are acceptable).
Once this has been performed successfully, he will phone or email you to inform you of the paperwork that must be signed on their end, as well as any other documents that must be signed before the transaction can be completed. He’ll also let you know when payment is due and give you a final invoice to keep for your records.
Once everything has been taken care of on the company side, the agent returns the paperwork to the bonding company, which issues you and your agent a certificate of insurance. This is proof that you’ve met all of the conditions for receiving service from this bond company.
Why is it necessary for a company to be bonded?
The sureties (the insurance firms that underwrite these contracts) have an insurable interest in ensuring that consumer monies are protected, hence a business must be bonded. This is why they require your financial statements, credit history for your company, and any other records relevant to your business operations.
Why do I need a business license for my new venture?
This is dependent on where you plan to conduct business. If you work out of your home state, there’s a good chance you won’t need a license; however, that doesn’t mean your state won’t demand registration or notification of your new venture’s start-up activities.
If you plan on undertaking any interstate transactions, you may be required to submit a license application in order to do business with other businesses. The best thing you can do is contact your state licensing office or the Small Business Administration for further information on what might be expected of you, depending on where your business is located.
Is it possible for my new company to obtain a license without me?
Yes, although this varies by state, and the SBA should be able to give you more precise information on these specific needs. However, if they have all of the necessary papers, they may be able to conduct business while they look for the company’s owner(s).
