A Guide to License Bonds in a Nutshell

Is a surety bond, also known as a contractor’s licence bond, required in your state? Are you aware of the various criteria that each state has? It’s critical that you understand how to get your contractor bond and why you’re supposed to have one as a contractor. Check Swiftbonds.

To begin, what exactly is a contractor’s licence bond?
A contractor’s bond is bought as a promise to their clients that they will follow all state laws. This ensures the client’s financial security. The details of the duration, what triggers a payout, and what other forms may be needed vary by state.
While contractor’s licence bonds can appear to be identical from state to state, there are important variations and specifications to be aware of. Consider the following scenario:

Arizona – The Arizona Registrar of Contractors requires licence bonds – A bond is required to cover losses incurred by noncompliance with licence requirements – Bonds vary in size from $2,500 to $90,000 depending on the type of licence and the amount of work a contractor conducts – Contractors who have been in business in Arizona for less than a year are also required to obtain a Sales & Use Tax Certificate.

California – The California Contractors State License Board (CSLB) requires licence bonds – A bond is issued to cover losses resulting from violations of the Contractors License Law – All contractors licence bonds are for $12,500.
The CSLB will request a separate $12,500 bond for contractors who have been disciplined; the amounts vary. – Responsible Managing Workers and Responsible Managing Officers who own less than 10% of the company must receive a separate $12,500 bond.