When starting a new business, you may have to deal with business licensing, certification and a number of other factors to make sure that you comply with business requirements. In some cases, you may also be required to be bonded and insured. This helps protect your business, and your customers, from potential problems.
Government Bond Requirements
Depending on what type of industry you are in, you may be required to buy a surety bond for your business. Government agencies regularly require businesses to purchase some kind of surety bond to protect customers. For example, if your business is in the construction industry or in some kind of industry that works in customer's homes, you may be required to purchase a bond in a minimum amount. When you open your business, it is important to check with the local government to see what the requirements are in this area.
How Bonds Work
When you buy a bond for your business, it can provide peace of mind for your customers. With a bond, if you or one of your employees does something wrong, the bond will pay a lump sum of money to the customer. This is designed to help compensate him for his wasted time, and to help him fix the mistake with another company. You pay a bond company for the bond, and then the bond company essentially guarantees the quality of your work.
When starting a new business, you may also want to look at buying some insurance policies. Although government laws may not require you to purchase a certain amount of insurance, it is generally a good idea so that you are not held personally responsible for anything that goes wrong with your business. For instance, if one of your customers is injured, you can be protected from having to pay a settlement out of your own pocket.
Not every industry or business needs to be bonded and insured. While insurance can provide additional protection regardless of industry, buying a bond might be overkill in some cases. For example, if you do not directly work with the public and you have a small home business, buying a bond might not make sense. Before spending the money on a surety bond, you need to make sure that it is a worthy investment to consider.