Getting licensed means that an individual or their business has passed the minimum requirements in their field to obtain a license from the state in which they do business. Bonding means that the business may have something called a surety bond that will help protect the individual or their business if a claim should be filed against them.
If the claim turns out to be legitimate and the company cannot pay the sum of money due, the bond will kick in and cover the claim.
Most bonds that companies seek are required by the government to operate in their line of work. The idea is that being bonded and having insurance will limit the risk to the company and the public in case something goes wrong while the company is doing business.
Once you decide what type of bond you want, most insurers will require you to provide some basic information to determine your coverage (state you are from and doing business in, the business you are operating in, and the amount of coverage you will need). Then they will be able to provide you with quotes of what you will have to pay monthly/quarterly/annually to receive the coverage you need.
Licensed and Bonded
How Much Will It Cost?
Most states have standard fees that they will charge for each type of license. Licenses and the fees will vary depending on which state(s) you operate and do business in. Some licenses will be more expensive than others. When calculating the cost of getting licensed, keep in mind the renewal fees as you will have to renew your bond periodically (depending on the state you are in and the line of work you do). Those fees will add up over time, so be sure to figure them into your costs when getting licensed.
When it comes to getting bonded, different levels of surety bonds will cost different amounts of money. The surety bond is not insurance for your company but rather a line of credit extended to you by the bonding company. To get a closer estimate of costs, you will have to get an estimate from a bonding agency such as NFP to determine what your payments will be to get the level of coverage your business wants or will need in order to operate safely.
Why is it Important to be Bonded?
Being licensed in your industry proves that your company is credible and knows what they are doing and keeps you in good standing with the state. Many states require certain professions (electricians, roofers, etc.) to be licensed in order to operate within the state. This ensures that the company is complying with building codes and providing quality work that will not put the general public in unnecessary danger. If a company is not licensed, yet continues to operate, there can be legal ramifications for the business initiated by government entities.
Bonds are important because they act as a form of protection for both the business and the public they work with. For example, a common type of bond is one purchased by a janitor (janitorial bond). These bonds cover both the janitor and the people they are working for if the company or person who hired them claims theft or stolen goods. Bonds can also cover companies if a job they do doesn't turn out right (malfunctions), causes damage to their property, or creates other hazards to the public.
If any issues arise, being bonded can help protect your company and your assets through the line of credit. Otherwise, it's up to your company to pay everything out of pocket. A large claim can put a small-to-medium sized business in serious financial trouble and may cause the company to go out of business altogether.
Being bonded can help protect your company against these unnecessary risks by providing a credit line that can help cover you in the event of an issue arising. How do you get bonded and insured if you're a small business? Contact us, we can help. Credit repair surety bond programs for buyers with bad credit are always available.
What are the ramifications of not being licensed and bonded?
Being licensed shows that you stand behind your work but are are covered if accidents happen. Many clients will want to know if you are licensed and bonded (and insured), and many will not be willing to hire someone who is not appropriately covered in case of an accident that causes damage or destruction to their property.
If you are working and an accident were to happen while you are working, not being licensed to do the work you are doing, not being bonded for it, and even being uninsured put you in a position to be liable for the damages that occur. This could result in lawsuits from the people who had their property damaged or destroyed. If you are found to be responsible for the damage, your business will have to cover the cost of the damages. This could result in the liquidation of assets and property to cover the cost of the damages.
Being licensed and bonded helps cover your company with a line of credit in the event something goes wrong. If there is any damage to someone's property or public property, the line of credit will help keep your business from being directly liable for the damages. The license proves that you are indeed qualified to perform the work you are performing and the bond provides financial protection for your company.
Operating unlicensed can result in issues with the local or state government or authorities. Working without being bonded (and possibly insured) can result in you being financially liable if anything were to go wrong. Being bonded and licensed ensures that your business is covered and in the event that an emergency can protect you from devastating losses that can either cause severe financial issues or the bankruptcy of your business. It's your livelihood and it is absolutely worth protecting.
From understanding what it means to be bonded to determining which bond is right for your business, we're here to help you. Request a free quote today.