There are a lot of people who have never heard f surety bonds until they need one. If you are going to be running a business, you need to know what surety bonds are and the reasons why you might need them. Not all businesses will legally require a surety bond, but it is important that you consider whether or not you should get one anyway.
You Need To Get Licensed
There are certain industries where you need to have a license to operate and many of these licenses require surety bonds. These bonds will generally be called License and Permit bonds. The industries that require bonds include construction, collections, private investigation, mortgage providers and motor vehicle dealerships.
The surety bond for licensing is a guarantee that your business will work to certain ethical standards and that you follow certain best business practices. If you fail to follow the rules of your profession or act unethically, clients or suppliers will be able to claim against your bond. A license bond will generally be easier to obtain than other forms of bonds.
Construction Project Bonds
If you are going to be bidding for construction projects, you may need to have a bond. Bid bonds are not always required, but most high-value construction projects will require them. You should also consider getting a payment bond and a performance bond.
There are a number of contract bonds that you need to know about when bidding for construction projects. These bonds will ensure that different actions take place such as being able to follow through on your project bid or guaranteeing that all suppliers will be paid. It can be more challenging to obtain and you will generally need to have business financials to approve the bond applications.
You Wish To Protect Your Business
A Fidelity Bond is an optional bond that you do not have to get to operate your business, but will provide you with some protection. This bond will protect your business from fraud, theft and embezzlement which is something that most insurance policies will not cover. This additional protection is something that many businesses consider.
It is important to note that there are many different types of Fidelity bonds available and you need to choose the one that works best for your business. If your business offers a pension plan, you should consider getting a bond that protects this fund. Fidelity bonds are often easy and inexpensive to obtain which makes them easier for your business to use. There are also other reasons for a bond that the Gade Law site also covers.
There are many reasons why you might need to have a surety bond and there are many different types of bonds on the market. It is important that you understand the bonds that you may have to get to operate your business particularly if you are within certain industries. You should also consider how you are going to get the bonds, which bonding agent you will work with and the documentation needed to secure the bond.