Sales Tax Bond

A tax bond is a type of financial guarantee bond that may be required for your business if you operate in certain areas. Before you get started on the bonding process, you should be aware of what they are and the many different types, so that you can be well informed and make the best decision possible for your company.

A tax bond is a financial guarantee bond that offers security for a business that will automatically cover all of the various sales taxes that are owed on a state and federal level. This bond offers a guarantee that the business in question will file all of its information on time in accordance with state deadlines. There are several additional details that are important to understand.

For instance, there is a wide range of different kinds. Depending on the types of products your business sells, you may have to purchase one of these bonds or several of them. When you're considering purchasing a bond and have determined the answer to the tax bond definition, you can focus on setting up the contractual agreement, which is a third-party agreement. Your business is known as the principal, while we, as the bond provider, are known as the surety. The third party in this contractual agreement is the state or local authority that makes a request for this bond. They are known as the obligee. A sales bond is a type of protection offered to the obligee in the event that your business doesn't pay its taxes on time.

Many businesses that operate throughout the US will be required to obtain bonds of some sort, maybe even several, depending on the type of product that's sold. Without this, it will be impossible for this business to operate legally. The exact specification of when a sales tax surety bond is required and when it is not largely depends on whether the local or state governments within your area of operations deem it necessary to collect sales tax from your company.

The amount that you must post with a sales bond differs depending on where you live. Each state has its own regulations that determine the required amount for any of the bonds that you need to purchase. We can assist you in identifying what these amounts are and which types of bonds your business will need. Within the vast majority of states, the bond amount is determined by anything from your sales receipts to your yearly sales tax liability. It's even possible for this amount to be determined by the monthly sales tax that you're required to pay.

It's also important to remember that the total amount you pay for your tax surety is just a small number compared to the premium you'll need to pay on this bond. At NFP, we identify the amount that your premium should be, which is determined by your personal and business finances. In essence, the better your finances are, the smaller your overall monthly premium will be. Now that you're aware of what tax sureties are, the types of available tax sureties, and which companies are required to get these bonds, you can get started on the process.

While most bonds are limited to businesses that are selling a specific product, it can, in certain instances, apply to businesses that are currently producing and storing any of the products that qualify. The products where a bond is required range all the way from alcohol to cigarettes.

It's also important that you understand that certain states call tax surety bonds by a different name. A tax preparer bond is a type of surety known as a continuous bond of the seller in Texas and a bond of the seller in California. Once you've determined that you need to purchase one or several surety bonds for your business, we can assist you with the process by streamlining it as much as possible. Tax preparer bonds are also required, especially in California.