Contractors are required to have a few different types of surety bonds. Almost every state has some sort of bonding requirements for a contractor to become licensed. If you have applied with the state to become a licensed contractor; the state will require you to obtain your contractor license bond. The State will not grant you your license until the insurance requirements have been met. Each state has it's own bond amount; each state has it's own specific bond form too.
California contractors are required to maintain a contractor license bond in the amount or $12,500 where as the Oregon contractors bond amount varies for which type of trade they will be performing Always check with the contractor licensing board to verify the correct requirements.
Performance and payment bonds are another type of bond that are sometimes required. If you are going to get involved with government projects such as building a road or any other type of construction they will require you to maintain a performance bond. A performance bond will insure that the tax dollars being spent will not be wasted if the contractor defaults on the job.
The State or Federal government will only hire contractors that are licensed with the state and meet the proper bonding and insurance requirements.
Sales tax bonds
Some states such as Arizona requires a contractor to maintain a sales tax bond. The bond is to insure that they will pay their sale tax. The bond amount is based off your gross receipts and the amount of the bond can change every year since your income may change ever year.
Thursday, July 16, 2009
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