How to Tell If a Business Is Licensed and Bonded

Use L&I`s verification tool to search for information about your business or another business. The main difference is that insurance protects the business itself from losses, while bonds protect the client who hired the company for a particular job or project. If you automatically assume that a contractor is licensed or must be allowed to work, you could be wrong. Each state has its own regulations that govern what a general contractor needs to work and how to verify a contractor`s license. While most states regulate contractors in one way or another, some states do not have licensing laws, and even individual cities or counties may have their own laws. In some cases, an “independent contractor” is actually an employee for whom you must pay, for example, workers` compensation bonuses, meet wage and hourly requirements, pay unemployment tax, etc. If you don`t understand your needs, your business can be vulnerable to unwanted penalties and hectic lawsuits. For more information, see our publication A Guide to Hiring Independent Contractors in Washington State (F101-063-000). The U.S. Small Business Administration can help your business apply for licenses and permits. REMEMBER that most licensed contractors are competent, honest, hardworking and financially responsible.

However, most of the problems the CSLB sees could be avoided if homeowners knew their home renovation rights and took responsibility for their project. A responsible and informed consumer can work more effectively with reputable entrepreneurs and avoid being harassed by unscrupulous or unlicensed operators. A licensed contractor must provide you with information about both types of insurance in your written contract. Now that you have a better understanding of what it means to be allowed, bound and insured, you may be wondering how all of this affects your business and where you can go from here. If a contractor is obligated, he has a private bond issued by an insurer or an authorized municipality. If the contractor does not perform its work according to your specifications, you can request a refund from the issuer of the bond. Don`t hire a contractor who isn`t related. They would have no protection if the work was not performed properly or was not completed in accordance with the contract or agreement. Plus, there would be less protection if an unrelated contractor stole something from your home. License – Entrepreneurs have obtained a commercial license as required by national and local laws. It usually requires passing proficiency tests on business practices and business skills, paying a fee, and providing proof of insurance and/or connections.

If a company is insured, it means that it has transferred a number of risks to a third party through an insurance product. There are many types of commercial insurance that can protect businesses from a variety of risks, but keep in mind that not all businesses need all types of insurance. Every contractor you hire should be licensed, bound, and insured. When interviewing a potential company, ask to see their proof of all three. Then check each of them yourself. It`s better to play it safe than to apologize. When it`s time to find a contractor, the Better Business Bureau will help you learn how to verify a contractor`s license. A BBB accredited company must have proof that it is licensed, bound and insured. However, don`t rely solely on BBB information. Also, be sure to ask for evidence in person.

The term “authorized, bound and insured” is widely used in some industries, particularly when hiring contractors or subcontractors is common. Preferably, your contractor will be attached and will have insurance. At the very least, he or she should have workers` compensation and liability coverage. Liability insurance protects your property and your family or friends in the event that the contractor or subcontractor causes damage or injury during their work. Workers` compensation is another key policy. This policy ensures that workers injured in the workplace have access to compensation for loss of wages and medical benefits. If your contractor doesn`t have coverage for this, you could pay the expenses, especially if your landlord`s policy isn`t large enough for these types of situations. The Better Business Bureau in Canada and the United States supports and fosters good business relationships between entrepreneurs and clients. The BBB also provides resources for consumers who want to search for companies, search for information about the company, or find out if the company has responded to complaints to the BBB. The cost of licensing varies depending on the location of your business, your industry, and the type of business your business operates. Insurance cost factors change depending on the policies you choose, the unique risks your business faces, the value of your property, the size and income of your business, and other key factors. In its most basic definition, a license means that the contractor has registered with the agency and holds a minimum amount of commitment or insurance.

Some cities, such as New York, base their laws on a dollar amount. In the case of New York, anything that costs more than $200 must be done by a city-licensed professional. For online businesses or merchants, look for the buySAFE seal or the Better Business Bureau, Accredited Business logo on the seller`s item, profile, and website. A business license not only gives your customers a sense of security, but can also protect them. In some states, this can help you collect damages if a customer refuses to pay. Check the companies from which you want to buy products or services. Learn more about their products, services and search their websites for contact information, service descriptions, and frequently asked questions. Some companies may mention in their advertising, business cards or website that they are insured and linked. Being insured offers security to companies and customers interested in working with you and shows that you are financially stable.

In the event of a problem, appropriate insurance coverage will protect your business from financial loss and allow you to overcome various challenges while addressing issues that could affect your ability to provide your services to customers. Let`s break down each term and get into a few more advanced considerations to help you understand what all of this really means for your business and your customers. The creditor – The creditor is the party who needs the surety before it allows the principal to do business, usually a state or municipal entity. A registered contractor has not completed as much training as a licensed contractor, but still pays a fee and must prove that they are insured. Some registered contractors must also be attached. Note that some locales use the terms “licensed” and “registered” interchangeably. Performance Bond – This bond ensures that the Company fully performs its services in accordance with the agreement between the Company and the hiring party. Commercial obligations are required for companies that wish to work on projects with a government or municipal institution. They protect public institutions from losses that may arise due to the related company`s inability to properly comply with applicable laws, rules or regulations. The guarantor pays the claim on the bond if the investor is unable to resolve the issue independently.

The customer must then reimburse the guarantee company. It helps to know how a warranty works. .