License bond

License bond

Whether you have always wondered what a company means when it stated its “licensed and bonded” status, or you yourself are now looking to become licensed and bonded, the answer is fairly straightforward to explain. There are two separate components to being licensed and bonded. To be “licensed” means to have a license issued by your state or local government in order for you to legally operate the business. Some examples: a taxicab company will need a license to drive a taxi, a bar will require a liquor license to legally serve alcohol to patrons, and a movie theater will need a motion picture theater license in order to show films. All of these licenses require different things from the owner or operator, depending on the business.

 

However, these licenses will typically require that you first be properly “bonded” before the license will be issued. Obtaining a license bond—also called a permit bond—occurs via a third party bonding company. This license bond guarantees that you will comply with whichever terms, codes, conditions, or regulations are being required of you by the state or local government entity in question. To be clear, a bond is not like an insurance policy, as it does not protect you, the business. Instead, it protects the general public. Promising to operate your business within the bonding requirements can help to protect government agencies, as well as consumers, from any financial loss that could otherwise occur.