Surety bonds are often thought of as insurance since they protect consumers and other entities from being victimized by disreputable businesses. But in reality, they are a form of credit that a business can take out (from a surety company and as required by another party requiring the bond) that act as a guarantee of performance and compliance in all aspects of a contract. If you're a small business, you'll almost certainly come across surety bonds at one point or another, so it's worthwhile to know the benefits of the bonding process. Take a look below for just a few of the best.
Perhaps the biggest benefit of being a bonded company is that the surety bond acts as an advertisement to potential customers that shows you are a reputable business that honors the terms of its contracts and treats consumers fairly. This is such a big deal in the eyes of most government agencies -- be they local, state or federal -- that not being bonded is effectively illegal, and can result in some serious financial penalties or even the revocation of your business license. If you want to have a business that is approved in the eyes of the law, surety bonds are a must.
Access to Professionals
Bonding also has the added benefit of vastly increasing the labor pool on which you can rely. If you're working on a project and are not bonded for whatever reason, it will be next to impossible to find qualified professionals and subcontractors who are willing to work with you. Be they lawyers, engineers, or accountants, they will want to see proof of a surety bond before they lend their services to your business. In other words, if you don't want to go it alone, you'll need to show proof of a surety bond.
Freedom of Capital
Another huge advantage to going through the bonding process as a business is that you will then be free to use your assets in whatever way you wish, including to grow your business or invest elsewhere. On the other hand, if you do not possess a surety bond, you should expect to prove (before every project) that your company possesses liquid assets equal to the amount of money necessary to complete the project. This essentially acts as insurance. If you don't, chances are that you will not be legally allowed to begin.
To learn more about surety bonds, check out a site like http://www.laprescali.com.