Protect Your Business and Professional Services
Information on bonding, insurance, and intellectual property (copyrights, trademarks, patents). Links to sources for accountants, lawyers, insurers, bankers, website designers, and trade groups.
If you are a business owner with only a few employees, for example, a cleaning or pet-sitting service, you may want to be bonded. The bond would reimburse the client for loss of stolen items as a result of one of your dishonest employees, but they would have to be caught and convicted before the bond holder would pay.
If you are a business owner with no employees, you may still want to consider being bonded. As a business owner, you know that you would not steal from your clients; however, to your clients you are a complete stranger, and being bonded is that extra reassurance for your potential customers, but many people feel that insurance is all that you need and bonding is unnecessary. Speak with an attorney or an accountant who will help you make that decision.
Simply put a bond, sometimes called a surety bond, is given to your by a third party who promises to pay if you do not fulfill your work obligations under a contract. It is a financial guarantee that you will honor a business contract. Frequently a customer will require that your company be bonded.
There are various types of bonds:
- License: a specialty bond that is required by some states. This is where you pay the state directly rather than obtaining a bond
- Performance: a guarantee that you will do your work as stated in the contract
- Bid: a guarantee you will perform the work that you bid on
- Indemnity; bond says that you will promise to reimburse any loss that would happen if you don't do the job
- Payment: bond says you promise to pay all subcontractors and material providers utilized in the performance of a contract.
As the Principle to the bond you will be required to provide your personal information and probably your spouse's personal information and the information that will actually appear on the bond, mainly your businesses name and address, before you can get a bond.
To obtain a bond:
- Locate a bonding company through the internet or yellow pages and talk to them about your need for a bond. They will ask for your personal information. This information will include the name and address of obligee which is usually local or state government, the type of bond your are required to have and the amount the bond.
- You will need to complete an application to the bonding company. You may want to at this point, have an attorney look over the application and the documentation so that you completely understand what it does and does not cover.
- The bonding company will do a very complete back ground check on you, to find out if you are a honest and trustworthy person, with no criminal record. The background check will consist of speaking to previous employers, personal character references, and a computer check of the national and state records of criminal convictions.
- If the bonding company is satisfied with your background they will offer to bond you. This means that you have been offered an insurance coverage that will pay you in case of damage or theft.
- At this point you can sign the indemnity agreement and pay the premium and forward the info to the obligee.
Workers’ Compensation Insurance
A business with employees must purchase Workers’ Compensation Insurance. Corporate officers, members of an LLC, a sole proprietor, and partners must also be covered unless they own at least 10% of the business in which case a rejection of coverage must be filed with the Department of Labor. Employers must purchase insurance coverage through a private insurance company or, if qualified, through self-insurance programs. No portion of this cost may be deducted from an employee's wages.
1560 Broadway, Suite 850
Denver, CO 80202
Phone: (303) 894-7499
(303) 894-7490 - Consumer Information
(800) 930-3745 - Toll Free
FAX: (303) 894-7455
Contact a local business insurance broker or agent to handle these optional insurance needs: Liability, Property, Business Interruption, Disability, Life, Health, Surety Bond Guarantee, Fidelity Bond, Earthquake/Flood, Retail Sales Tax Bond
Small business insurance from several sources
Small Business Administration site
Library of Congress; basic registration fee is $30.
Phone: (800)-786-9199 – Trademark Assistance Center
Nolo Law Centers - Legal information for business
Legalzoom - Online legal documents