The National Directory of Certified Public Accountants

Ask A CPA - Small Business Services

In Reference To Small Businesses , What Is Bonding ?

Small businesses especially those performing contracting services will be asked to bond their work in advance. In some states certain types of contractors are required to be bonded. A bond is sometimes referred to as a surety bond is a third party obligation promising to pay if a vendor does not fulfill its valid obligations under a contract. There are various types of bonds; (LICENSE, PERFORMANCE, BID, INDEMNITY & PAYMENT). A bond is a financial guarantee that you will honor a business contract.

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