What Does it Mean to Be Licensed & Bonded?

Licensing and bonding provides security to clients and customers.

Licensing and bonding provides security to clients and customers.

While you could hire anyone as a housekeeper or to remodel your bathroom, you may be hesitant to hire someone you do not know. Many people hire workers or businesses who are licensed and bonded so they know they are hiring someone trustworthy. Licensed and bonded service providers are competent and are backed by a third party who ensures that the services will be provided as promised.

Licensed

Merriam-Webster defines a license as "a permission to act" and "a permission granted by competent authority to engage in a business or occupation or in an activity otherwise unlawful." Individuals or organizations that are licensed have been given permission to practice or engage in a business that is regulated by a government or other regulating agency. Without this permission, people or organizations are not allowed to perform the activity. Many jobs or job functions require a license, which backs up the person's ability to do the job and aims to protect the welfare of the public.

Becoming Licensed

Registered nurses, psychologists, real estate agents, insurance agents, social workers, armored car guard, barbers and horse trainers are examples of professional that are licensed or certified in the state of New York. Each state decides which jobs require a license or certification. Contact your state's Bureau of Occupational Licenses to find out if you need a license to practice in your state, and to find out what the licensing requirements and procedures are.

Bonded

"Entrepreneur" magazine defines bonded as "a guarantee of performance required, either by law or consumer demand, for many businesses, most typically general contractors, temporary personnel agencies, janitorial companies and businesses with government contracts." This bond is known as a surety bond. Anyone receiving services from someone who is bonded is protected and has a third-party assurance that the job will be done according to the contract. Bonding helps protect the public from fraud and business mistakes. Companies offer bonds in all 50 states, including bonds for athletic trainers, car salespersons, debt collectors, milk handlers pharmacies and travel agents.

Becoming Bonded

Bid bonds, payment bonds, performance bonds and ancillary bonds are the four types of surety bonds available. Being bonded may be required to get federal or state contracts exceeding $150,000, such as federal construction projects. Many white collar employees are bonded. Some may choose to be bonded to provide a sense of increased security to their customers or as a means of attracting new customers. Surety bonds are purchased from surety bond companies. Many insurance companies also sell bonds.

 

About the Author

Sara Mahuron specializes in adult/higher education, parenting, budget travel and personal finance. She earned an M.S. in adult/organizational learning and leadership, as well as an Ed.S. in educational leadership, both from the University of Idaho. Mahuron also holds a B.S. in psychology and a B.A. in international studies-business and economics.

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