Does your state require that you carry a surety bond, often called a contractor's license bond? Are you aware of the numerous different requirements for each state? As a contractor it's essential that you discover how to obtain your contractor bond and why you're required to hold it.
First and foremost what's a contractor's license bond?
A contractor's bond is purchased by a contractor as a guarantee with their clients of these compliance with state laws. This gives the client with financial assurance. The particulars of the size, what causes a payout and what other types may be required differ from state to state.
Contractor's License Bonds may be similar from state to mention; however, there are essential differences and requirements that needs to be understood. For instance:
Arizona -
- License bonds are needed by the Arizona Registrar of Contractors
- A connection must cover damages because of noncompliance with license standards
- Bonds vary by size from $2,500 to $90,000 based upon their license type and simply how much volume of work a contractor performs
- Contractors that have conducted business in Arizona for under per year are also required to obtain a Sales Tax Bond.
California -
- License bonds are needed by the California Contractors State License Board (CSLB)
- A connection must cover damages caused by violations of the Contractors License Law
- All contractors license bonds are for $12,500
- Responsible Managing Employees and Responsible Managing Officers that own less than 10% of the business enterprise are needed to obtain another $12,500 bond
- The CSLB may need a separate Disciplinary Bond for contractors who've been disciplined; the amounts of these vary. bonds to invest in the UK
New Mexico -
- License bonds are needed by the New Mexico Regulation & Licensing Department
- A connection must pay for cost to correct building code violations
- All contractors license bonds are for $10,000
Nevada -
- License bonds are needed by the Nevada State Contractors Board (NSCB).
- A connection must cover willful and deliberate violations of a structure contract as well as employees damaged by a contractor's failure to cover wages
- Vary by size from $1,000 to $50,000 and are set by the NSCB. Their decision is founded on such factors as kind of business, experience and monetary limit granted.
- Residential pool and spa contractors must obtain a consumer protection bond. The amount, also set by the NSCB, varies from $10,000 to $400,000
Oregon -
- License bonds are needed by the Oregon Construction Contractors Board (CCB) and the Oregon Landscape Contractors Board
- A connection is necessary in the case the contractor is ordered by the CCB to cover damages as caused by a CCB final order
- Vary by size from $3,000 to $75,000 based upon their license endorsement classification as well as simply how much volume of work a contractor performs. Contractors that work on public works projects bigger than $100,000 must obtain a $30,000 Public Works Bond.
Washington -
- License bonds are needed by the Washington State Department of Labor & Industries
- Required to cover unpaid wages, unpaid material suppliers, unpaid taxes to the State of Washington and to cover damages because of breach of contract
- Vary by size from $4,000 to $12,000 depending on the kind of contractor
Whether or not your state needs a license bond, you will find other bonds that could be required by the project you're bidding on.
Other kinds of contractor's bonds:
Bid Bonds - Submitted by the contractor with his bid for a particular project. Usually 5-20% of the full total bid. A bid bond protects projects from contractors that have bid too low and discover which they cannot meet their bid obligations.
Performance Bonds - This type guarantees contract performance by the contractor. The surety company's capital and surplus back this guarantee around the financial limit of the bond.
Payment Bonds - Guarantees that the contractor will pay certain bills for labor and materials. The surety company backs this guarantee around the financial limit of the bond.
