Licensed & Bonded! Are you?

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pdqdl

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Most likely he is not even licensed and bonded.

That's a claim I have never been able to prove. I've seen it on trucks, business cards, etc. Except in over 40 years of business, I've never been asked to prove I am "bonded" except for performance bonds as required by government contract.

What is this "bonded" that everyone keeps claiming they have?

As far as that goes, there is no such thing in my area as "licensed" either. Some of the cities around me do require an occupational permit, but that isn't exactly a license.
 
That's a claim I have never been able to prove. I've seen it on trucks, business cards, etc. Except in over 40 years of business, I've never been asked to prove I am "bonded" except for performance bonds as required by government contract.

What is this "bonded" that everyone keeps claiming they have?

As far as that goes, there is no such thing in my area as "licensed" either. Some of the cities around me do require an occupational permit, but that isn't exactly a license.
Well there is in my State you need a License issued by the State like an Electrician or Plumber etc. Look up your individual State laws and take it from there. At minimum they should have insurance.
 
I laugh when I hear the licensed and bonded term in my area. I have yet to have any person be able to show me what it truly means. Here all the bonded part means is you carry adequate liability insurance to cover your rear end if you make a mistake. The license part is a bit shady. A little over 20 years ago I had a house in a city across in Iowa. It was going to sit vacant for awhile so I could do major repairs. It had a 60amp panel and meter in a closet that needed pulled . Of course 200amp is required by code if changes are made. This would require the power company to run a new service to the new meter base. I knew doing this would trigger a city inspector to poke around. I called the city to inquire about the process. The woman I spoke with said I could not do the work myself as I needed to be licensed. I asked her what the process was to get a "license" and she could not tell me as she had no idea. All she knew was I had to be "licensed". I pursued the issue and finally got to someone who said I needed to take an exam. I said that was fine when and where is it? They could not answer. All they knew was I needed to take an exam. This went on for awhile and I just did the work that was most needed on interior meter base. It passed a yearly inspection for 14 years. In March of 2017 the house was hit by a tornado and took 30% of the upstairs off. At that point the electrical was not much concern.

I am sure some areas do require some sort of a license but here it is shady. As for proper insurance that is a must.
That's a claim I have never been able to prove. I've seen it on trucks, business cards, etc. Except in over 40 years of business, I've never been asked to prove I am "bonded" except for performance bonds as required by government contract.

What is this "bonded" that everyone keeps claiming they have?

As far as that goes, there is no such thing in my area as "licensed" either. Some of the cities around me do require an occupational permit, but that isn't exactly a license.
Nothing to do with tree service but one example of a bond is when I became a used car dealer. The state required a bond for the first 3 years because we were a licensed agent of the DMV and collected license and title fees and sales taxes. If you were "shady" or went belly up and collected all the money from the customer and didn't send it to the state the bond covered it. We also had to have a certain amount of insurance in force or our license would be revoked.
 
Nothing to do with tree service but one example of a bond is when I became a used car dealer. The state required a bond for the first 3 years because we were a licensed agent of the DMV and collected license and title fees and sales taxes. If you were "shady" or went belly up and collected all the money from the customer and didn't send it to the state the bond covered it. We also had to have a certain amount of insurance in force or our license would be revoked.
There are a lot of different kinds of bonds, but I don't know of any that are provided to the general public by tree services. Basically, a bond is different from an insurance policy, in that money is guaranteed up to the value of the bond, except that the person or company posting the bond is going to be the final person that pays. The bonding agency agrees to be the enforcer of payment for that bond.

I used to put up 100% performance bonds on public mowing contracts. The bonding company would provide the "bond" documents, I paid a percentage of the bond value to the bonding company. If I defaulted on the performance of the contract, the bonding company would have to pay up or find another contractor to finish the job. Part of that deal is that I would be the guy that ended up with the final bill for my failure. The bonding company had legal releases to sue me for my contract failure and also for the bonding company's expenses to collect the money from me.
 
A bond is, in it's simplest terms, a special insurance policy that the work in a contract will be completed. It iis almost exclusively used in commercial and government settings. Unfortunately, it looks really snazzy on the side of a truck, and has become very misunderstood.
 
This has always been a question in my mind, so let's find out what the community knows.

Do you have this printed on your trucks or company literature? If so, what kind of bond are you claiming?
I don't have it advertised on my trucks, business cards yes,
That is a WA State Biz license, General contractor, Insurance on both my logging/land clearing and on the trucks, Bond is required for any general contractor in WA State.
However, if you are sole proprietor, and not a general contractor, you do not legally need Ins, or a bond, not even real clear if you need a biz license but it makes things like resellers permits a lot easier, as well as getting business banking account and various other business related stuff, like having insurance
I'm not real positive what the bond is for, other then giving money to scum bag lawyers, cause the client will likely never see it if its ever needed, but its supposed to cover me not completing a said job, and them having to hire someone to potentially fix my mess. I take care of my screw ups so its a really expensive 4 letter word, that some lawyer says I need to have... grrrr
 
In California a bond was required to get your contractors license for tree work. I recall it only cost a couple hundred bucks per year. A customer could look up your license number on the cslb database to confirm that you have a valid license, bond, and work comp insurance.... I still find the bond concept confusing but it wasn't a big deal to get it every year. A lot of customers would ask if we were "licensed and bonded". You'd think they'd be more inclined to ask if we had work comp since it cost a 1000 times more.
 
On that theme, I have been told that janitorial services are often asked to provide a security bond. This kind of bond is a guarantee to the customer that there will be no thievery going on while the owners are away.

I'm pretty sure a tree service seldom gets asked to do a security bond.
 
General liability insurance is insurance against torts, which can be in the form of property damage, or injury to a customer or bystander. Say that you drop a tree and it lands the wrong way, and it crushes the house, and injures the customer inside. General liability insurance would pay to fix the house and pay for the customer's medical bills and pain and suffering (although if it hurt an employee, that would be a different story, and that would be covered by worker's compensation insurance, which you really should get if you have any employees, as it's usually required).

Bonding is very rare for tree service companies, and bonding is usually insurance against breach of contract rather than a tort. For instance, some companies take a percentage up-front as payment, such as 25-50% up front. It has happened where contractors steal the money, and don't perform the work. The customer could pursue the bonding company for compensation. Also, if a contractor provided below-standard quality work (such as didn't meet the specs of the contract by leaving large logs all over the place when the contract specified hauling them away), the customer could pursue the bonding company for the cost to complete the project. Unless your in a state or town where it's required, bonding is usually unnecessary, especially since most tree companies don't take any money up-front. The customer would just probably not pay you upon completion if you didn't complete the work as specified.

It would be unethical to say you're bonded when you don't have bonding. Just say you're fully insured, assuming you have General Liability Insurance, and Worker's Comp coverage on any employees you have, along with Commercial Auto Insurance. If they ask about bonding, be honest and tell them it's very rare for tree companies to be bonded and explain that since you aren't taking money up-front there's virtually no risk of them benefiting from bonding.

In terms of licensing, only eight states require tree service contractors be licensed. https://occupationallicensing.com/occupation/tree-trimmer/
Some towns/cities may require tree service licenses, however, but they usually are fairly straightforward, with just providing a COI (some want to be listed as additionally insured), and paying $10-$100/yr, with no exam needed, and signing an indemnification agreement. If you have a DBA registered with your county, a DBA is in effect a "license", provided no further licenses are required. Also, if you have an LLC or Corporation, you are registered with your State Secretary of State, (unless you incorporate in another state, in which case, you probably need a foreign corporation designation in your state). If you have an LLC or corporation, you can say that you are "registered with the Texas (or whichever state you are in) Secretary of State, or just say "Registered and Fully Insured".

The ISA certification is mostly a voluntary, credential-boosting process, and isn't generally required, and it certainly is not a "license" in and of itself.
I hope this information helps.
 
The 3 kinds of bonding I am familiar with - 2 have been discussed above...to summarize:

1) An insurance policy to pays losses to client if you do not complete a project to specification or on time. As @pdqdl said: more common on larger government projects. Outside of tree work, think highway construction. If a company goes belly up or just decides the project is costing more than they bid so they just wanna walk away, the bond will allow the state to complete the work.
2) A different kind of bond will protect your clients from your employees stealing stuff. If they do, the bond pays the client for what was stolen. This is not regular liability insurance as that is for accidents like a tree falling on a house. Since we generally aren't working in houses, it is very uncommon. However, if the client hires a cleaning service, (or even plumbers and electricians who are working in houses) they may expect to see bonding.
3) An activity that is permitted by the government may require bonding to hold you to the standards. For example, a coal mining operation will pay a bond that is held by the state until their reclamation work is complete to the expected standard. Once that is done, the bond is returned.


So, #2 is the one that applies to service contractors. When i see that on a tree company advertisement, I honestly wonder if they even have liability insurance...because I would think if they really cared about being on the up and up, they would have explored that option and realized bonding probably isn't needed. I suspect that they see "bonded" on the cleaning lady's truck or the plumber's sign so they think they need to put that word on their advertising as well.
 
License:
"Ohio law requires any person or business making retail sales of tangible personal property or taxable services to obtain a vendor’s license." That is the same if you have a tree company or an underwear store. This is just so they can force you to collect taxes on behalf of the State (sales tax).

That is all that would be required by the state...if you just did diagnostics and consulting, even that wouldn't be necessary because those are not taxable services.

If you are doing ANY commercial pesticide applications you'd also need an applicator's license for that and the business needs a separate license.

As others have said, other localities - states, counties, cities, etc... may have different licensing requirements.
 
License:
"Ohio law requires any person or business making retail sales of tangible personal property or taxable services to obtain a vendor’s license." That is the same if you have a tree company or an underwear store. This is just so they can force you to collect taxes on behalf of the State (sales tax).

That is all that would be required by the state...if you just did diagnostics and consulting, even that wouldn't be necessary because those are not taxable services.

If you are doing ANY commercial pesticide applications you'd also need an applicator's license for that and the business needs a separate license.

As others have said, other localities - states, counties, cities, etc... may have different licensing requirements.
Yes, I forgot about the sales tax license, which most states require. However that's fairly easy to get.
 

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