Starting your own construction business can sometimes be a leap of faith. But that faith in your business is stronger if you learn about the industry. For example, it is important to know the benefits of being a licensed, bonded and insured construction company.
Why should I be licensed and apply for permits?
The simple answer is for protection, for you and your customers. It may be easier to cut corners and not apply for permits or licenses. But, if you want to have a long standing and respective business, licenses and permits are the way to go. First, you will need a general business license. Beyond that, it is important to check with your local government and state offices to see which other license you may need. Permits are important because they help you to maintain valid parameters. By pulling a permit, you have sought the approval of your local government offices to perform the work that your customer wants.
What about insurance, do I need insurance?
How many insurances you need depends on the work you perform. If you directly employ workers, then you will need an insurance to protect yourself. If you drive your truck for your business, you will need extra insurance on your truck. Check with a local insurance agency to see which insurances are necessary to work your business legitimately.
Are Surety Bonds necessary?
YES! Surety bonds, unlike insurances, don’t protect you. BUT, they vouch for your financial strength and professional workmanship. Basically, a surety bond is an agreement between three parties: the obligee, the principal and the surety bond producer. The obligee requests that the principal applies for a bond for specific jobs. The principal then seeks out a surety bond producer. The surety bond producer looks at a plethora of financial and business records. If the records are satisfactory, then a surety bond is approved with a low premium. If the records aren’t the strongest, then the premium may be higher. The obligee will then have evidence that they are working with a respected and reputable construction company. In a nutshell, a surety bond is a BIG stamp of approval!
Do you still have questions? Feel free to contact us, at Surety Bond Professionals. We have decades of knowledge in the surety bond field. Surety Bond Professionals also has some of the best relationships with underwriters in the industry. We can help to communicate your company’s competency and financial strength.