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All states have license and permit bond requirements for many different businesses and enterprises. Within government agencies, there are regulations that must be stringently followed. When a contractor engages in business with a vendor or company, they’ll be required to purchase surety bonds in NJ to protect those entities doing business with them.
There are agencies licensed in the state of New Jersey to assist with surety bond needs.
The price of bonds may vary, depending on the type of bond needed and the principals financial strength. Most people prefer to work with businesses that are bonded because it provides security that they will be protected in the event that the work is not finished, is unsatisfactorily performed, or something else goes awry.
For those smaller contractors looking to expand to larger jobs, it is beneficial to have bonds in place when making bids on contracts for jobs. Larger companies will often use a small construction firm, but only if they are bonded. Insurance brokers and mortgage brokers are among a few operators who are required to be bonded. Other professions that typically have to meet state requirements include auto dealers, collection agencies and travel agencies.
Securing of bonds is crucial to the US business market
Although bonds are insurance products, they function more as a line of credit that can be used to pay for performance issues. Consumers can make claims on bonds to gain financial reparation. In some instances, individuals intent on establishing a new business may find out that they dont have the financial means necessary because they were unaware of bonding requirements for their industry.
Providing collateral upfront and paying bonding fees can be extra costs someone new to such an enterprise might not be prepared to deal with. Entrepreneurs need to evaluate all aspects of their industry in the beginning to determine how their business will meet regulations and fit into the market of their choosing. Purchasing surety bonds in nj can help them meet this criteria.
Professionals who aren’t required by law to secure surety bonds can still choose to take advantage of their benefits since these bonds also provide financial protection if, for example, a dishonest employee chooses to steal from the company or otherwise engage in illegal activities.
Customs import bond insurance is basically a guarantee between the surety company issuing the customs bond, the importer of record, and the customs & border protection (CBP) agency. CBP requires all importers to file an import bond in order to clear their entries, even when the goods are duty free. The import bond guarantees CBP will collect all import duties, taxes, fines or penalties. If for any reason they do not receive this from the importer then they have a way to collect from the insurance/surety company who issued the bond.
Customs bonds are required in different situations, for example, when foreign goods are to be imported or handled within the US, including any cargo carrier or freight forwarder importing goods or merchandise into the country, international carriers transporting cargo (or passengers) from a foreign location to the US, and anyone operating a warehouse or facility used to store imported or exported goods.
Brokers are available across the US
Many customs brokers are also agents for sureties and sell import bond insurance. A list of brokers in the state where you operate is available online. Be aware however that some brokers will not issue you a bond without you giving them power of attorney to file your entry on your behalf.
The purpose of a customs bond is to provide a guarantee that the duties, taxes and fees owed to the federal government will be paid. There are both “single entry” and “continuous” customs bonds. The single entry bond is used when only importing once or occasionally, rather than performing services on a regular basis. The continuous bond is used when importing happens on a more regular basis.
Determining the bond amount gets more involved for continuous customs bonds. The CBP provides a document called Monetary Guidelines for Setting Bond Amounts to provide some kind of guidance on how the bond amount is determined. A continuous import bond is good at any US port and can be used by any customs broker or freight forwarder you choose to clear your entries.
As those dealing in freight forwarding and cargo contingency fully know, US customs reviews entries in a multi-step process. Generally, the freight is released to the importer before the process is complete. Customs therefore requires that a bond, which acts like an insurance policy, cover commercial entries. It acts as a guarantee that an importer will, once the freight is released, agree to pay duties in a timely manner (often within ten days if processed through a broker).
They must also agree to make or complete a proper entry, to produce documents and evidence when requested, redeliver the merchandise to customs custody, if necessary, and to rectify any noncompliance with the provisions of admission. Also, in order to receive a custom clearance bond they will need to agree to the examination of the merchandise and to use the freight in the manner dictated by a special-use provision entry, as well as comply with customs regulations, electronic entry requirements and advance cargo information filing requirements. They must also take responsibility for the consequences of any damages charged against the bond in the case of default.
Important information to know
The primary purpose of a customs bond is to guarantee the payment of import duties and taxes, as well as to assure compliance with all laws and regulations governing the entry of merchandise from foreign shipping points into the US. For restricted merchandise, including anything requiring a declaration to the FCC, FDA or other government agency, the bond is required to cover three times the commercial invoice value.
For items considered to be non-restricted merchandise, the bond must cover the commercial invoice value plus the duties and taxes applicable to the shipment. A Single-Entry bond needs to be filed in hard copy format to customs at the port in order to obtain a release. The documents are sent by courier to customs, reviewed by an inspector, subsequently released, and then returned to the broker’s office by courier. Remember, for time-sensitive cargo, that all of this traveling of the paperwork will often take some time.
Speak to an insurance agent knowledgeable about the custom clearance bond process, and also in surety and risk management solutions for supply chain and transportation intermediaries.
Surety bonds are necessary to provide financial security and construction project completion by assuring project owners that contractors that they hire will perform the work as well as pay their suppliers of goods and services. This particular bond is used as a way to transfer risk where the surety company assures the project owner (obligee) that the contractor (Principal) will perform a contract in accordance with the contract documents.
Types of bonds available through a surety company
There are three basic types of contract surety bonds:
- The bid bond assures that the bid has been submitted in good faith and that the contractor will enter into the contract at the price bid and will provide the required performance and payment bonds.
- The performance bond protects the owner from financial loss should the contractor fail to perform the contract in accordance with its terms and conditions.
- The payment bond assures that the contractor will pay specified subcontractors, laborers, and any material suppliers on the project.
By analyzing the risks involved with a construction project, the obligee will be able to better understand how surety bonds can protect against those risks. Owners, lenders, taxpayers, contractors, and subcontractors are protected because the contractor has undergone a rigorous prequalification process and is judged capable of fulfilling the obligations of the contract.
Contractors are more likely to complete bonded projects than non-bonded projects since the surety company may require personal or corporate indemnity from the contractor. Subcontractors have no need to file mechanic’s liens on a private project when a payment bond is in place, and the payment bond may be the only protection these claimants have if they are not paid for the goods and services they provide.
Bonding capacity is a vital tool because securing one can increase a contractor’s or subcontractor’s project opportunities, and put them in a better position to win projects they have bid on. The surety bond producer and underwriter can also offer technical, financial, or management assistance to a contractor.
Any contractor, whether just starting out, or having been in business for several years, large or small, with varying levels of knowledge, can all experience serious problems when performing this type of work. Through the years surety bonds have been instrumental as a reliable instrument for minimizing the risks in construction.
With the construction business now booming and in full swing there will be more and even stiffer competition when it comes to securing a winning bid on a new project. A Maryland surety bond, required by most clients, will be an important step towards winning those desired contracts.
Contractors should know that being the low bidder is often not enough in today’s market. In order to win more construction jobs, customers need a better reason to award a particular company a contract. Customers prefer to buy the best value, and to develop trusted relationships. But all factors being equal, they will often go with the lowest price.
To overcome being judged solely on delivering the lowest bid, it is suggested that contractors offer services that will set their company apart from the competition, with methods for improving things like their proposal strategy, and tracking bid success-to-failure ratio. This allows a company to determine which areas of the process they need to work on.
The art of winning bids for construction projects
Learning how to become the select bidder and getting on the right bid lists is a good place to start. Discover winning bid strategies that will give customers what they want by offering more than the minimum required by the plans and specifications. Learn how to get in front of the person who ultimately makes decisions in order to negotiate to win more contracts, and look for assistance from others who may have bid on similar construction contracts in the past.
Don’t wait for the SBA or government to contact you with “full and open competition” notices, create a contract location strategy and follow through on a regular basis. An effective search strategy focuses on a specific, geographic target location. Locating and preparing federal bids and proposals can be a difficult and time-consuming process that leaves no room for errors.
Locating and bidding on government construction contracts can seem difficult and confusing for those just getting started, so contractors need to become fully educated about every aspect of the business, including bidding procedures and the myriad of rules and regulations. In addition, understand that the SBA administers the government’s small business construction contracting programs. By qualifying as a small business (meaning the company’s average annual receipts range between $14 million to about $35.5 million) a business will be competing for construction contracts on equal ground with other small businesses.
Remember that a Maryland surety bond is the first step in this exciting and rewarding process. Speak to an agent about securing bonds today.