Reasons Why a Construction Company Needs to Have License Bonds

Most people see the construction business as a mass of tools and building supplies. But few people realize how much paperwork is involved in running a business. One of the vital pieces of paperwork that every construction business needs is the bonding paperwork. There are several different reasons for this.

One big reason that construction companies need to have license bonds is that it is required by law in many states. The law often requires the construction companies to purchase a bond as part of their licenses. The amount of the bond that is needed varies from state to state. The law requires this contractual liability to ensure that the contractor does the work as assigned and that the customer has a recourse in case something happens.

Another big reason that construction companies should have bonding paperwork ready to go is for the customers. There is a lot of advice about finding the right contractor. The one item that is included in all of that advice is to check that the contractor is bonded in the state. So, the bonding paperwork does help to ensure that the business is legitimate and that the consumer is potentially protected in case of the contractor fails to complete the job as directed by the paperwork.


Bonding paperwork is also required to protect the construction company. Bonds can help to protect the business from things like tool theft. Since construction sites aren’t typically the most secure places and leaving tools at the site is often more convenient than taking them home, the tools are at risk. Replacing them can be expensive. Thus, having this protection can help minimize the damage sustained by theft. learn more at for more information on adding this type of protection.

Sometimes, bonds are required to make a bid on a construction project for the Government. This is especially true if this bid is for a Federal or State construction project. This paperwork is usually required to be added in addition to the bid paperwork. Since these projects can bring in a lot of income for a business, it is important to have this in order before submitting any type of bid that would require Government contracts.

These are some of the reasons why a construction business needs to be bonded in the state they are working in. You can learn more here about how to get your construction company bonded and licensed.