When you’re in business to sell, chances are good that you are required to report and file the applicable sales taxes with your local and state governments. As a guarantee that you will do so, sales tax bonds are a common requirement. Here’s how sales tax bonds work—and how to obtain and renew them.
Summing Up: Tax Bonds
Sales tax bonds are also frequently referred to as simply tax bonds—or sometimes general tax bonds. The fundamental purpose of sales tax bonds is to ensure the seller reports and pays the relevant taxes to the government—on time. As CPA Practice Advisor further explains:
Sales tax bonds…are an umbrella name for a number of different tax bonds that state or local governments mandate from businesses, as a pre-licensing requirement. In these cases, a business license cannot be issued without a valid tax bond. The tax bond acts as a protection to the government, making sure the bonded business will pay the relevant sales taxes, and will report its revenue on time. Failure to comply with these two requirements can make you liable for a claim. If you are found guilty, you may have to pay fines up to the amount listed on your tax bond…Claims on tax bonds can decrease your chances of renewing your tax bond, which will lead to the revocation of your business license.
Sales tax bonds are a type of surety bond, known as license and permit bonds. Sales tax bonds involve three parties: the obligee (the public entity requiring the bond); the principal (the person needing the bond); and the surety company that issues the bond. Essentially, when you secure a sales tax bond, you are guaranteeing that you will abide by all of the regulations applicable in your state. Failure to do so can result in a claim against your bond. As accountants remind us, “Business owners are always advised to avoid claims…In the event of a dispute, document everything, and try and reach for a settlement if possible. Paying a claim can be much more costly…” (If you want to learn more about surety bonds, you’ll find this brief video helpful.)
It is critical for a sales tax bond to be written to the specific requirements of the obligee. As a direct writer, Colonial is prepared to meet the particular requirements of obligees across the country—and we are licensed for business in every state. There’s no need to get stuck in the middle when you are required to obtain a sales tax bond: get it directly, in minutes right now: Sales Tax Bond Here.
When you are in the alcohol business, your state most likely requires a liquor license bond. Depending on location and business type, this may also be referred to as an alcoholic retailer license bond, or simply as an alcohol beverage bond. Like a sales tax bond, a liquor license bond essentially serves as a guarantee that you will abide by all of the regulations applicable in your state. Failure to do so can result in a claim against your bond. In that way, liquor license bonds serve as a form of protection to the public—a commitment that your alcohol business is run professionally, honestly and in accordance with the law.
Important: Bond Renewal?
When bonds are a requirement renewing them is not a choice—it’s an obligation. Businesses and professionals required to secure bonds as a condition of state licensure must carefully adhere to bond renewal dates. The consequences of failing to maintain a current bond include lapse in state licensure, gaps in coverage for claims made against the bond and the delays and fees associated with beginning all over again with a new bond.
Conveniently, at Colonial Surety, license bonds can be efficiently renewed before the term ends, enabling businesses to maintain licensure and avoid the consequences and fees associated with expired bonds. Our user friendly online license bond service makes it quick and easy to obtain thousands of license and permit bonds—and our knowledgeable customer service team is at the ready too.
Looking to boost your earning potential as you branch into new business or career paths? Colonial Surety is here to help small businesses and self-starters in every field. Our direct, digital portfolio of 4,000 license and permit bonds makes it easy to obtain the specific, business and professional bonds required in every part of the country. From mortgage broker, to real estate agent, to motor vehicle dealer, collection agent and more—you name it, we most likely have exactly what you need: license and permit bonds here.
As a national surety bond leader, Colonial makes it quick and efficient to obtain license bonds in just a few clicks, online, anytime, from anywhere. Founded in 1930, Colonial Surety Company is a leading direct seller and writer of surety bonds and insurance products across the USA. Colonial is rated “A Excellent” by A.M. Best Company and U.S. Treasury listed. Our customers have awarded us a 4.8 TrustScore—and they especially appreciate our speedy, easy service. You will too—we promise!