If you’ve never heard of a surety bond before, you’re not alone. Most people first hear the term when told they need one. Surety bonds fall into different categories like contract, court, license & permit. There are many bond types within those categories. One of those types is a Business Service bond.
According to Wikipedia, a Surety bond is defined as a contract among three parties: the Obligee, the Principal and the Surety. The Obligee requires the Principal to be bonded and is protected by the surety bond. They also set the bond amount.
You or your business are the Principal. The Surety is the company you enter into an indemnity agreement with. The agreement outlines the terms of repayment should a claim be filed. (Dr. Tenpao Lee, professor of economics at Niagara University) (Evan Tarver, FitSmallBusiness.com)
The Business Service bond is an exception to the three party contract. With these bonds there are only two parties, the Principal and the Surety Company. There is no Obligee requiring the bond or setting the bond amount.
Maybe you’re thinking of starting a new business. Something small with a few employees. You’ve heard the phase “Licensed, Insured and bonded”. It has a nice ring to it. You want that for your business. But, is it right for you?
When starting a new business it’s important to check with your state or local government to see if there are any specific licensing requirements. If there are none, you can apply for a general business license. Protection for yourself comes in the form of insurance. The Business Service bond is what provides protection to others.
Business Service Bonds are generally written for individuals or businesses that performs work inside someone’s home or office. Examples include cleaning/janitorial services, pet sitting, house painting, carpet cleaning and moving companies. If you or an employee does anything illegal or unlawful and there is a conviction, the Surety Company will pay out on a claim against your bond. You then are required to pay the Surety back.
Bond amounts will vary. Surety1 writes Business Service bonds from $5,000 to $100,000. Contact Surety1 for help in determining what bond amount is right for you. The premium, or what you pay, is just a small fraction of whatever amount you choose.
Invest in your company. With a low annual payment, you provide your clients with peace of mind. In a growing competitive market, you have an advantage over other, non-bonded, businesses. A Business Service bond will set your business apart.