What is a surety bond, you might ask?

What is a surety bond?

As a subcontractor or even a general contractor, you may be asked to secure a surety bond or “surety insurance” by one of your prospect or existing clients. If you work on a public project or a government mandated project, you may be required to purchase a surety bond.

A surety bond is like insurance, except not. It involves three parties, not just two. Those parties are the business (the principal), the surety (the one issuing the bond), and your client (the obligee.) The surety bond will be paid out to the client, not to the business (this is insurance protecting your client and not you) and, at the tail-end of the bond’s duration, you’ll be expected to pay back the entirety of the surety bond to your surety provider.

Why have a surety bond?

Note that there are different types of surety bonds. There are contract surety bonds, commercial surety bonds, and court surety bonds. Contract surety bonds are in-place to guarantee that the obligations of a construction project/contract can be met. Commercial surety bonds are guaranteed to ensure compliance to all the required codes, such as if your company requires a particular license to operate. Finally, a court surety bond is designed to help cover losses should there be a court proceeding.

A contract surety is the most likely bond to be required in the construction or manufacturing industry. With this type of surety coverage, any consequential costs or remaining costs that may arise from a contract where your business is unable to fulfill the full terms of its terms and conditions is covered by the surety bond. The client can use the money they receive to complete the project and/or significantly mitigate their financial losses. Contract surety bonds often come in the form of:

• Labour and Material Payment – This bond guarantees that the principal (business owner) will pay all its suppliers and subcontractors

• Performance Bond – This bond guarantees that the principal (business owner) will complete their end of the contract, including all obligations and fulfillments.

There are also bonds you may acquire for contract acquisition, i.e. bid bonds. These show a potential client that you are qualified for a contract and may put you ahead of other bidders when it comes to the final decision process about which contractor to choose.

Do I need to have a surety bond?

Typically, if you work in the construction and/or manufacturing industry, the answer is yes: you need a surety bond. Contractors are often required to purchase bonds, as their clients may require it, or government parties may need it. Private clients can stipulate that all their contractors have bonds.

Furthermore, having bonds for the tendering stage can make you appear as a more reputable candidate. Bonds are designed to protect the clients, so while you may hesitate on this front due to the fact that it’s not insurance for you, it’s highly necessary for your reputation and perhaps to even acquire work at all. Construction workers, manufacturers, suppliers, and other types of contractors may require the purchase of surety bonds.

How much does a surety bond cost?

Calculating a surety bond is a little different than calculating insurance costs. It depends on the provider you go with, for one, as there are different cost structures. You’ll typically pay between 1-15% of the total coverage that is provided by the bond. The riskier you are, the more you’ll pay.

Bond rates may be determined by the type of bond, length of the bond obligation, your risk level (including personal demographics like business revenue, experience, licenses, financial history, credit score, and so forth) and the overall value of the bond.

Talk with a surety bond provider or broker if you aren’t sure!

Small business insurance in Ontario can be a great way to protect your company and your employees. 

What steps can you take to protect your business? These steps will make your business legal and easy to run. 

Set a Financial Plan 

When starting a business, the biggest financial risk is running out of cash before your business can succeed. This can be avoided by making a plan now to capitalize on the revenue growth curve. 

Cash flow is a key component of any small business owner’s work and thinking. A solid financial plan will include your fixed and variable expenses, expected revenue, and growth. This will allow you to project the money coming in over the months or years. 

Your financial plan can be used to evaluate any funding or fundraising requirements. This will ensure that you have enough money to cover your expenses until your business generates sufficient recurring revenue. You should consider all sources of capital including bank loans, private investors, grants, and grants 

Protect your assets. personal assets should be used only as a last resort. You run the risk of putting personal finances at risk. 

Get Ontario Liability Insurance 

Although small business insurance in Ontario may seem an obvious necessity, this is not something to ignore. Liability insurance policies will protect you and your employees from any legal claims.  

All businesses should have liability insurance in Ontario in case a customer falls or slips at your business, for example, among other countless scenarios. It is crucial to fully understand your business’s risks before deciding which insurance policy is right for you. You must assess the risks your business will face as it grows and changes over time. 

To ensure that their business is protected against errors and omissions, professionals may also want to obtain errors and omissions (E&O). This will protect the if a client claims an error or not adhering to a contract. 

Hire a Trustworthy Lawyer 

While you may not require a lawyer as often as you would like, you will need one quickly if you do. Ask your friends, colleagues, and entrepreneurs for recommendations on lawyers who are experienced in small business matters. 

Before you hire attorneys, take the time to interview them all and talk about payment options. Most attorneys can offer affordable solutions for small businesses. 

Interview attorneys before you start your business. A lawyer may be necessary to help you decide what to do if you are sued. 

It is a smart idea to hire an attorney who is familiar both with local laws and customs and in particular fields if needed. 

Keep a Qualified Accountant 

Even if your goal is to do the bookkeeping by yourself, it’s worth hiring a professional accountant. Who has the time to keep abreast of tax law changes? 

Accountants can not only save you money on taxes but can also give valuable advice about how to structure your company, how to finance expansion, and how much to make yourself pay. Before making major decisions, my company consults its accountant. 

Protect Sensitive Business Data 

Small businesses often store customer data, including credit card numbers and addresses. Data breach insurance is essential for future-proofing business models. This coverage when included in your Ontario small business insurance policy will help you quickly respond to data breaches. Data breach insurance can pay for the cost of responding to a data breach that affects your business. These costs would be covered by your own insurance. 

Separate yourself from your Business 

It is important to keep your personal assets separate and apart from your business. Because they are less expensive to start than other business models, many small businesses start as sole proprietorships. These businesses don’t have a legal distinction between the business owner and the owner. 

These are simple to set up but if you are sued, your personal assets will not be protected. Your personal assets could be required to cover some or all the costs of the claim. You can avoid this by choosing a business structure such as a limited liability corporation (LLC). This structure will protect your personal assets and prevent you from being sued by others. 

Manage The Changing Market

Everyday there will always be changes that can happen and all that you really need to do as you start out your small business and expect it to develop and become successful through the years to come is to be able to ride with all that is happening in the market including matching up with all of the changes that suddenly occur. Remembering that your initial ideas would not always manage to be a great way of bringing in money for your business should always be in your mind since it does translate to be the consistent flow of just about every industry and market out there, so being more attuned to all of the changes happening can make it a whole lot better for the continued development of your brand.

Listen To Consumer Opinions

Make things a lot more practical for you and much more applicable through going over what consumers have to say about other products and services that are a lot similar to your own business as this gives you a better hint of just how you should be handling your own marketing and approach of promoting your brand. Seeing all of these different consumer reviews and feedback simply through online searches will get you a lot more aware and open to the ideas that would work and those that may not be too ideal for the market of consumers that you will be catering to with your small business.

Work in The Current Trends

A small business will always seem a bit harder to promote and bring out into the open especially when there are a lot bigger and more popular brands that are already available in the market, so one of the immediate ways for you to really get your name out there is to see to it that you get to utilize some of the most up to date and in trend means of marketing and promotion which often will lead you to a lot of high tech and online platforms, so be well aware that you do need these channels and that these will definitely give you a great push to better success.

Stay Informed of Competition

Ultimately you will also need to be well acquainted with those other brands like your own and instead of focusing on trying to beat these other businesses, you should do well to actually study how they are currently doing in the market. See which products and services they have that should success and key points that need improvement as these factors will greatly help you too on changes your brand may need to work on to change and those to maintain.

If thinking on starting a part-time business, a personal loans can help raise the money when one is not able to get a small business loan.

SBA loans provide advantages for small business owners:

• SBA loans usually have lower down payments and longer repayment terms than other alternatives. Favorable conditions apply as the Agency guarantees a part of the loan.
• SBA loans offer a variety of purposes and terms to facilitate businesses growth.
• Use of funds for equipment purchases, real estate purchases and working capital.
• SBA loans are typically easier to qualify for than conventional business loans.
• Any applicable fees may be included directly into the loan.

The purpose of SBA loans is to give growing businesses and start-ups easy access to financing. SBA Loans are extremely convenient for small business owners and those looking to open a new business, including part-time businesses.

Many of today’s large businesses -especially in the Internet and technology world- started as a small venture using spare space at home.

Modern technology makes start up a home business even easier. Look at your personal computer, only with that you can:

• Run software to manage the financial side of a substantial company, let alone a small one –any personal computer can do that.
• Run publishing software to produce sales letters, brochures, business cards and much of the required material.
• Connect to Internet and you can do research, watch your competition.
• Set up a web site to sell and promote your products or services.
• Get the word out about your business via press releases, forums, and news sharing sites.

But when it goes beyond individual items, into the realm of saving for retirement, you have a bigger issue to consider. An IRA (Individual Retirement Account) allows you to set aside money for your later years. That has multiple benefits and a few risks.

When you save that money, obviously, you are not spending it. You accumulate interest on that money saved, which compounds over time. See one of the many online calculators to get a feel for how compounding can help, for example, turn a few thousand into many thousands over 30 years. You also get a tax benefit, since by design any money put into the account represents a tax deduction.

Instead, you are taxed on that money when you begin to use it many years later. The theory is that you will then be at a much lower tax rate and therefore pay a much smaller amount than you would when it was first earned. Sometimes that theory is true in practice, and in some smaller number of cases it’s not. You will need to make some predictions for your own case, but for most people it’s true.

There are more variations today on basic IRAs than there were 20 years ago when the idea first became a reality. But the basics remain true. You can still put up to $2,000 per year tax free into the account.

One variation, for example, is the popular Roth IRA. Federal regulations allow tax-free withdrawals as long as the contributions remain in the account for five years and you are at least 59½, or it’s used for a first-time home purchase.

Another common savings instrument is the 401k, named after a provision in the 1978 Internal Revenue Code. These allow employers to put money that is tax-deferred into an account on the employees behalf. You pay no income tax on the money until it is withdrawn.

Those who have difficulty summoning the willpower to save often find these helpful, since it’s allocated before you see your paycheck. Here again there are numerous variations around today.

These and other savings methods can form part of a total financial plan that involves borrowing and investment in many forms. The more options you learn about, the better plan you can develop to maximize your hard earned dollars.

Naturally, credit card companies and other lenders are happy to make available as much money as they think their borrowers will repay. They take risks, but those are calculated risks. They look at default rates, current interest rates and carefully review credit history when they make loans. Borrowers can benefit by following some aspects of their strategy.

You can factor in expected increases in income – banks and other business do – but you should be very sure you’re actually going to receive it. A promised raise or hoped for income from a stock sale is far from guaranteed money.

Look at current interest rates and make a prediction about where they are headed, businesses do. That’s a very difficult thing to be confident about, but general trends are not random. Look at bonds, futures and other indicators. If 6% bond option prices are going down, many pros are betting interest rates will rise to above that in the future. These represent the bets of professionals about the future direction of inflation and interest rates.

Since inflation is chiefly caused by governments – whether through high borrowing themselves, or deficit spending, or actual printing of more currency or issuing more credit – there is little an individual can do to change the system. All one can do as a citizen is recognize the causes and advocate sound policies.

But, as a borrower, there is much one can and should do when looking at the situation. After all, governments don’t continually increase inflation – if they did as happened in the late 1970s, for example, interest rates would eventually reach a point where there are loud demands to ‘do something’. When they ‘do something’ it invariably means closing down the spigot, this is reversing or at least slowing the actions listed above.

Those actions have a definite impact on anyone looking to borrow money, just as the inflation did. That deflation may lower rates, encouraging more borrowing, but it also causes dollars borrowed today to be worth less than they would be tomorrow. So you are repaying a loan with dollars that are worth more tomorrow if you held onto them (by saving or investing) than they are today.

So, when you consider borrowing you have to try to make a guess – just as the banks do – about which way inflationary or deflationary pressures are likely to go. That’s a tough job for even professional economists, so how can a laymen be expected to do that with any rationality?

While there’s no sure method, there are some indicators that are available to anyone. It used to be that gold and silver were good indicators, but that is no longer true since the dollar is no longer related to any hard commodity. Still, there are one or two that can be helpful.

Since oil is a very basic commodity that is tied to so much production of other things, as the price of oil rises inflation is likely to heat up some. So look at the price of oil options to see whether prices are expected to be higher or lower in the future.

The price of bond options going up is also an indicator. In this case it suggests that professional money managers are betting interest rates will change sharply over the coming year or two. The relationship is a little complicated and borrowers would do well to consult a specialist.

Just keep in mind that a dollar today is a measure of the cost of goods and services today, just as a dollar tomorrow is a measure of that cost tomorrow. But when borrowing money, you’re buying dollars today to spend today, but will pay them back in the future. How much those dollars are worth when you pay them back is a measure of what that loan will actually cost you.

What is personal finance? When you apply sound financial principles to manage money, you are there. All the procedures people or families perform to manage their money are considered to be part of personal finance. As there are several aspects and more than one task to carry out when managing money, it is common to talk about personal finances. While you don’t have to become a financial expert, there are a few basic ideas you need to know. Don’t worry, most of it is plain common sense.

When you never paid much attention to money, trying to get your finances in order can be overwhelming. The only way to do it is by taking small steps. You can even enjoy the process if you know what you are doing.

Once you have an idea about what personal finance entitles, organize you personal financial space, where you can deal with your money management tasks undisturbed. Research the best personal finance tools to make our chores easier to carry out.

Design your personal financial plan because if you don’t have a clue about where you want to finish be sure you’ll never get there, and you may end up where you never wanted to go. Estimating your net worth is your financial starting point. Then you need to establish some realistic financial goals –getting where you want to go, remember?- and design your personal financial budget, where you state your overall financial strategy and the concrete steps to achieve those goals.

Once you have laid the basis for your new financial life, start saving money, creating an emergency fund and learn how to make your money work hard for you.

Those who decide to get professional help will find the types available at personal finance resources. The rest will find there tips, tricks and any useful information about personal finance we find out. Trends change, new financial tools come to the market, money regulations get tighter. It pays to keep informed.