How to get Licensed and Bonded
What Does it Mean to Get Licensed and Bonded?
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. The bonding part means that the business may have something called a surety bond which will help protect the individual or their business if a claim should be filed against them. If the claim does turn out to be legitimate and the company cannot pay the sum of money due to the bond will kick in and cover the claim.
Getting Licensed and Bonded
You can get both through methods such as getting surety bonds or a fidelity bond to cover your business in the event of an emergency or catastrophic event. 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. This information that you will have to provide will include such as the 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.
How Much Will It Cost?
Most states have standard fees that they will charge for each type of license that is given out. Licenses and the fees will vary depending on which state(s) you operate and do business in. Some licenses will be more expensive to have issued to you than others. When calculating the cost of getting licensed keep in mind renewal fees as you will have to have your bond renewed every so many years (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. Keep in mind that 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 Surety 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 so Important?
Being licensed in your industry is not only important to prove that your company is credible and knows what they are doing but also to stay in good standing with the state. Many states require certain fields of work (i.e. electricians, roofers, etc.) to be licensed in order to operate within the state. This ensures that the company is working to the building codes and providing quality work that will not put the general public in unnecessary danger from doing poor quality work. If a company is not licensed yet continues operations there can be legal ramifications for the business that are handed down by the government.
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 can be purchased by a janitor. 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 other hazards to the public. If any issues arise being bonded can help protect your company and your assets through the line of credit that is provided. 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 if not 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.
What Are the Ramifications of Not Being Licensed & Bonded?
Being licensed & bonded is important in a variety of fields of work. It shows that you can cover incidences were accidents have happened. Many clients will want to know if you are license and bonded (and insured) when applicable 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 an accident were to happen while you are working and you are not licensed to do the work you are doing, bonded for it, and possible even insured you are 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 damage that was alleged in the lawsuit.
Licensed and Bonded
Being licensed & bonded helps cover your company with a line of credit in the event of something going 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 for or the bankruptcy of your business. It’s your livelihood and it is absolutely worth protecting.
For more information about getting bonded please feel free to reach out to us at Surety by NFP today to find which bonds will work for your business.