But that doesn’t mean that your small business can’t qualify for those important and business building surety bonds. Here are a few tips to help you understand why these small business surety bonds are so vital to your financial health and how to improve your chances at qualifying for them when the project or opportunity arises that require one.
Why Do I Need a Small Business Surety Bond?For many small business owners the first question is why they want to try and qualify for any kind of small business surety bond such as a performance bond or a payment bond. As the economy recovers many city state and federal government projects are seeing new life and increased funding. These types of lucrative projects, whether it is as a contractor providing laborers for construction or a local provider for schools, will require a guarantee of your ability to deliver what you promise. In the case of a performance bond, it will guarantee that you will perform according to your contractual agreement on the project. When it is a payment bond, you are guaranteeing that subcontractors and suppliers that you bring in will be paid according to the contractual schedule. Since most if not all government project require these guarantees, if you want to be able to bid for this type of work, you will need to qualify for bid surety bonds, performance bonds and even payment bonds if you act as a contractor with subcontractors and suppliers. As the saying goes, any money you leave on the table isn’t yours when you head home, so why leave this growing and important sector to the competition?
Qualifying for that Surety BondOf course, the big hold up for many is simply qualifying for a surety bond if you have never done so before. For a brand new small business, surety bond qualification may seem beyond you, but it doesn’t have to be if you plan for it. The key is to work closely with your financial adviser and have these four items in mind as you prepare to qualify for a small business surety bond:
- Working Capital – You must be able to demonstrate your ability to raise adequate capital for future projects. This means your current assets minus your liabilities must always be top of mind when planning.
- Banking Relationships – Do you have a strong relationship with your bank? This is the kind of qualification that takes time to work on, and is worth the time you do spend. Talk to your financial adviser about the best way to approach this.
- Strong Job History – Even if you are just starting out, you can point to the success of what has been done before. Work-in-progress that is timely and within budget, bid results that show your ability to keep your promise and how much work you have in the pipeline are all part of this equation.
- Cash Flow- This one is vital since the majority of times a surety bond is called in to complete a project it will be because the bond holder has had a cash flow problem. Take a hard look at your own current cash flow situation and if it isn’t up to snuff, discuss with your financial adviser what you can do to change that.
Tags: bid bond, bid bonds, commercial surety bonds, contract bonds, get a surety bond, get bonded, Performance Bond, performance bonds, performance surety bonds, post a surety bond, SBA Bond Program, small contractors, surety bond definition, what is a surety bond
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Performance Bonds in QuestionThe former beauty queen called Park Girl has stated that the county district attorney overstepped his boundaries when he charged her with 17 criminal counts of fraud. She claims it is all a matter of settling these disputes in a civil court case because they are simply disagreements on what her contracts stipulate. According to Ms. Ares, the contracts include an arbitration clause that every complainant could have invoked or they could have cancelled their contract with her. Instead they chose to bring it to court as a question of fraud. Performance bonds that were part of the contract, she claims, could have covered all disputes.
Legal Aid Steps InWhen over 40 of her clients went to legal aid over the contracts, things began to get a bit ugly. This is when Park Girl claimed that the performance bonds that were part of the arbitration clause could have been called into the case. But since the state says it is not bound by the arbitration clause, the possibility of invoking the performance bonds became untenable and fraud was charged. Now Park Girl, the company and the ex-beauty queen, have filed for bankruptcy. Where this leaves the 40 original complaints remains to be seen.
Demanding Arbitration With Performance BondsAlthough there is some question of whether these particular performance bonds could be called in to resolve the disputes, it is a good example of why they can be so important in many types of businesses. Performance bonds can be used in contracts to ensure both parties will live up to the expectations outlined in the agreement. When they are not, the disputing party can use the leverage of the performance bond to demand satisfaction. This is why it is so important when using a performance bond in a contractual agreement to use a surety bond company that is reliable. BuySurety has been providing performance bonds as well as many other types of surety bonds, to companies and governments for over two decades. When you need a performance bond to ensure your contractual agreements, be sure to talk to the helpful service agents at BuySurety to get the right bond for your business needs.
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Portland Maine Ferry Cruise to Run SmoothlyIn the summer months, tourists and residents alike have in the past had the ability to take a ferry cruise from Portland Maine up into Canada’s Nova Scotia coastal towns. The cruise created crucial tourist income for many towns along its eastern coastal route. It also helped locals to travel between the two destinations with ease by having ferry capabilities and cruise ship like amenities. However in 2004 that service ended and a new ferry cruise ship was commissioned to run out of the Portland Maine harbor. Holding up the ability to sell tickets was the very important permission from the U.S. Federal Maritime Commission regarding the approval of the cruise company’s performance bonds. With the authorization of these surety bonds the company has announced it will begin to make the $79 one-way tickets available to the public. The bonds ensure that the company will have the financial ability to refund tickets if for any reason the ship cannot venture such as in the case of severe weather.
Performance Bonds to Protect Customers from Winter’s ChillThis last winter saw some of the most severe temperatures across the nation in decades. That chill was even worse if you discovered that your pre-paid winter heating fuel was not available because of shortages caused by increased usage. New Hampshire was one of the states to be hit hard by this problem and wants to ensure it will not happen again. A new legislative bill has passed the New Hampshire House and is expected to pass the Senate as well. When passed, it will require that all dealers of household heating fuel will have to register with the state and file a report each year. That report will show that the company holds at least 75% of the amount of fuel that it is contracted for, as well as proof that it has taken out a performance bond to guarantee delivery. It also requires dealers to reimburse customers for undelivered fuel under the contract within 30 days of failure to deliver on the contracted date. The performance bond can be invoked if the dealer fails to comply with this agreement.
Performance Bond Requirements IncreasingWhile not every type of business will need to have a performance bond or any other type of surety bond in order to operate within the law, many do. As business life gets more complex and greater financial amounts are at stake, surety bonds have an important role to play for commerce. If you think you may need to post a surety bond because of changes in legislature, don’t wait until it becomes the law. BuySurety has been providing a wide array of surety bonds to many industries for a multitude of reasons for over two decades. Let our knowledgeable customer service representatives help you find just how fast and easy getting bonded can be when you use an experienced surety bond provider like BuySurety.
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Data to Provide GuidanceThe current target has been to have 23% of eligible prime or direct contracts made available to small businesses. However, government agencies have been missing that target over the last several years. With the development of new data that will help small businesses to compete on a level playing field for these valuable government contracts, it is believed that a greater number of businesses who qualify by getting bonded prior to bidding could get awarded. By being able to measure the number of times projects are consolidated into one large contract, and reducing this, the House Committee hopes to make more projects available to the small business community.
Getting Bonded – The First StepObviously what this may mean for small business in many sectors is new opportunities for government projects. But as anyone knows who has done work in the public sector, getting bonded is an important first step. Waiting until the opportunity arrives may not always be the best policy, especially for any business that has not been bonded before. For anyone who has a business that may be competing for this new piece of the federal pie, making sure you qualify for getting bonded might be a smart initial step. Find out how easy it is to get bonded when you talk to the friendly and knowledgeable customer service folks at BuySurety. We have been helping companies large and small get bonded for government contracts for over twenties years, and we can help you. Contact BuySurety today for your quote.
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Legal DesignationsFind out what the legal designation of the individual is who will be preparing your taxes. Every state is different in terms of who they legally allow to do taxes professionally. An attorney or CPA is always a pretty safe bet. Because each state has different rules, you might want to see who can do taxes and charge for them in your state. So they should be either licensed by the state or have enrolled with the IRS. If they aren’t, walk away and report them to your state regulation agency. Tax preparations scams are the third largest tax scams according to the IRS, so make sure your tax preparation is done by someone who is certified.
Preparer Tax ID NumbersAnyone who does this for a living has to have a preparer tax ID number. As of 2011, anyone who does taxes must have one, so insist on seeing theirs first.
Signing the ReturnIf they do the work, they have to sign the form. They are required by law to sign it and record their tax preparer ID number with their signature on the form. Ask them pointedly if they are prepared to sign the tax return.
Preparation FeesAlways find out up front how they will base the fees for the tax preparation services. If they have costs associated with different services, find out what those are or better yet have them hand you a printed copy of their fee schedule. If they tell you they based their fees on your refund or claim they can get you a bigger refund then other companies, walk away.
Are They Bonded or Insured?In California a California Tax Education Council (CTEC) registered tax preparer is required to have posted a $5,000 tax preparer surety bond. Many other states have similar types of requirements, although only California so far requires all tax preparers to be bonded. You should also ask about Errors and Omissions Insurance (E&O) which is a sure sign the company is reputable. So when the time comes to take those company financials out to a tax preparation specialist, make sure that you have asked the right questions. Getting this kind of information up front can save you plenty of grief later on.
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