How to Become Bonded in a Small Business
Many small businesses must be bonded in order to legally operate. These bonds, also known as surety bonds, provide assurance to those hiring you to complete a job or project. This means that if you can't complete the job, the monies lost by the hiring company can be reimbursed. Being bonded may even be a requirement for certain projects. By paying a small insurance premium, you will be able to stay competitive and increase your business over time.
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Instructions
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Contact your local small business administration office to determine if you need a bond to legally run your business. Visit local civic websites, or call the local chamber of commerce to find out additional information about being bonded locally.
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Gather together all your tax information, invoices and other business files before applying for a bond. For many insurance companies to bond you, you must have enough liquid assets to cover the bond. This means if you take out a $5,000 bond, you must be able to cover the bond amount through profits or the selling of your business.
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Contact your home or auto insurance company to see if they offer surety bonding services. If your insurance carrier does not provide such services, contact other insurance companies in your area to learn what criteria they require for bonding and to get price quotes.
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Complete all application paperwork provided by the insurance company. Pay the premium, and make sure to file all paperwork and bond information.
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Renew your premium on time in order to maintain adequate coverage throughout the year.
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Tips & Warnings
Employees may also need to be bonded, so ask your insurance company if they offer a reduced rate for bonds that cover groups.
Surety bonds are not a substitute for small business insurance. Personal injury, limited liability and other types of insurance are still necessary, especially if you have employees.
