Starting a New Business? You Might Need a Surety Bond
Let's think about it. Running your own business is strenuous enough. Over and above important things relating to taxes, licensing, business planning, accounting and more, there are invariably some "gotchas" that popup along the road to achieving business rewards. This is the case with surety bonds. Most small business owners are unfamiliar with surety bonds when they first startup their business. It happens to be during the licensing period of business organization that the requirement for a surety bond tends to pop up the most. This is because a large number of US states have substantial surety bonding requirements for organizations that are licensed within.
auto dealer bond
A surety bond is a three party contract where one party, the obligee, requires a second party, the principal, to perform certain activities. The surety bond is written and warranted by the third party, the surety, which is often a large insurance company. If the principal fails to perform its responsibilities, the obligee can attempt to recover financial losses from the surety company via the surety bond.
As for states requiring surety bond for various businesses, this is the case with the automobile industry, specifically car dealers. Many states require car dealers to have an auto dealer bond in order to operate their dealership within the state. The core purpose of the surety bond is to protect the consumer in case the dealership conducts business in a way that could negatively affect the consumer monetarily. It is important to recognize that each state has a distinct set of surety bond requirements. The bonds go by a few different names, such as auto dealer bond, car dealer bond, motor vehicle dealer bond, MVD bond, and more. Here are some of the surety bond obligations for new and used (retail) automobile dealers in specific states:
California: A $50,000 surety bond is required.
The State of Florida: A $25,000 surety bond is required.
Georgia: A $35,000 surety bond is required for used car dealers only.
New York: Up to a $50,000 surety bond is required, depending on the type of dealership.
The State of Texas: A $25,000 surety bond is required every two years.
Regardless of which state it is located in, auto dealers ought to be sure to confer with the state’s department of motor vehicles to ascertain the current bond obligations. Not only do these requirements vary by state, they are modified from time to time. The state DMV will have the most up-to-date information available pertaining to the bond requirements.
surety bond