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Three Myths about Surety Bonds

A surety bond is a three-party contract between a principal (business owner purchasing bond), an owner (state agency requiring bond) and a surety (the bond agency). For the customer, the surety serves as a source of insurance in case of work unfinished. For the business owner, it functions as a line of credit in business matters and as a source of reliability for the customer in choosing the company.

If the surety is defaulted on, the bond company is then required to pay a lump sum to the customer that the business has left with unfinished work. Here are some common misconceptions that you may be unaware of.

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How to get NYC Home Improvement Licenses

How to get NYC Home Improvement Licenses

In order to run a home improvement contracting company in NYC you will be required to obtain the proper NYC home improvement licenses.

Who is required to have NYC Home Improvement Licenses

As described by the NYC Department of Consumer Affairs, “A person or business must have a Home Improvement Contractor license if engaged in the construction, repair, remodeling, or addition to any land or building used as a residence. This includes, but is not limited to, the construction, replacement, or improvement of basements, driveways, fences, garages, landscaping, patios, porches, sidewalks, swimming pools, terraces, and other improvements to structures or upon land that is next to a home or apartment building.”

Application Requirements for NYC Home Improvement Licenses

There are a few things you need to do before you even apply for your NYC Home improvement license.  Even though you don’t need these documents in order to process your application online, the DCA reserves the right to request and examine them.

Anyone who owns a sole proprietorship operating under a name other than your own must file a business/assumed name certificate with the clerk of the county.  For those who do business under a name other than your own and not under a DBA (doing business as) there is no need for a business certificate.  If you are in a partnership, you must file for a partnership certificate with the county clerk where you do business.  For Corporations, Limited Partnerships, Limited Liability Companies, or Limited Liability Partnerships you must register with the NY Dept. of state.  If you would like to check the status of this you may check at this website: http://www.dos.ny.gov/corps/bus_entity_search.html. If you happen to be doing business out of the state which you incorporated in you need to get a Certificate of Doing Business in Good Standing from your home state’s Secretary of State.

Once you take care of the previously mentioned requirements you may file for your license. The following documents are required by the state as outlined by the nyc.gov licensing website.

The first form to be filled out is the Basic License Application.  This can be done online or in person.  Second, you will need to have your Sales Tax Identification Number OR Certificate of Authority Application Confirmation Number.  The Sales Tax Identification Number is the 9, 10, or 11-digit number on your New York State Department of Taxation and Finance Certificate of Authority.

You will then add this number to the Basic License Application form. If you have not received your Certificate of Authority, enter the 6-digit confirmation number you received when you submitted the application for a Certificate of Authority.  A certificate of authority can be filled out online at http://www.opal.ny.gov/.  If you are more comfortable filling out a paper application then reach out to the organization via telephone at (518) 485-2889. It takes up to 6 weeks to receive this certificate.

Next you will need proof of your business address.  To do that you can use a Utility bill, dated within the last 90 days, a Current lease or deed in the name of either the business or individual listed on the license application, Current rent or mortgage bill, Current license or permit issued by New York State or another New York City government agency that shows your business address.  In addition, you will need to provide Proof of your Home Address.  This can be proven in a similar way by providing either a Utility bill, dated within the last 90 days, a Current lease or deed, a Current rent or mortgage bill a Driver’s license.

Workers compensation documentation is also required.  Proof of this can be in the form of an insurance certificate from a private carrier or the NY State insurance fund office or a certificate of Attestation of Exemption from the NY State Workers’ Compensation Board.  In addition to Workers Comp, you must find a company to provide bonds for licensees.

Following these documents, a roster of employees and a contractual compliance agreement will be needed.

Home Improvement Contractor Exam and Exam Fee

If you wish to get a home improvement license in NYC you need to pass the home improvement contractor exam and pay a fee.  The test is 30 questions and of them, 21 must be answered correctly.  The fee is 50 dollars.  You have 2 chances to pass.  Only one member of your organization needs to pass.

Fingerprints and Processing Fee

All sole proprietors, general partners, corporate officers, members, and all shareholders owning 10% or more of company stock must be fingerprinted at the DCA Licensing Center. The fee is 75 dollars and you must provide either a drivers licence, a government id, passport, green card, or federal employee ID card.

License Fee

The last step would be to pay your license fee.  Depending on when you file, your cost will vary.

HOME IMPROVEMENT CONTRACTOR LICENSE
License TermLicense Expiration DateIf You File Your Application Between These Dates:Your License Fee is:
2 yearsFebruary 28
Odd years
From March 1 in an odd year to August 31 in an odd year$100
From September 1 in an odd year to February 28 or 29 in an even year$75
From March 1 in an even year to August 31 in an even year$50
From September 1 in an even year to February 28 in an odd year$25
OR
*$125

 



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Surety Bond Types – How are they different?

Types of Surety Bonds

There are a number of surety bonds out there in the market, each one specifically designed.  They all have different obligations and forms, so it isn’t surprising to learn that even the most experienced contractors sometimes forget how each surety bond differs.  Let’s dive into some terminology and clear up some common misconceptions about surety bonds and what they cover.

License Bonds

A license bond just guarantees that the person doing the work will abide by all the right laws and regulations that are set by the obligee, which is usually a government entity.  Permit bonds grant contractors some sort of privilege.  The different types of license and permit bonds include, but are not limited to, electrician’s license, plumber’s license, general contractor’s license, driveway permit, sign permit, and sales tax.  Most contractors post bonds as part of their licensing.  This ensures that they will be following the electrical codes for the city or town which he does work in.

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Public Official Bonds

Another type of bond is that which protects government officials in the event that they cannot perform their duties.  People such as treasurers, Tax Collectors, Peace Officers, Judges and Notaries are eligible to get public official bonds.  An example of a professional getting a public Official Bond would be a legislator who wants to protect himself from a lawsuit if he is unable to make due on promises.

Court Bonds

Finally, there are probate and other court bonds.  These guarantee that honest accounting practices will be upheld by fiduciaries and their trustees.  These bonds are required by courts.  Type of these bond are administrator, guardian, and trustee.  In addition to these court bonds, a bankruptcy or equity bond might be required of an appointed fiduciary for the sale of real estate or for property in foreclosure.

There are many surety bond types, all are meant to protect the parties involved.  Be sure to ask your insurance broker which type of surety bond will be right for you.

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How to Start A Construction Contracting Business

Everyone feels that entrepreneurial spirit every now and again but why not bring these dreams to fruition and start your own Construction Contracting Business?  With a projected 12.5 percent increase annually for residential projects, and 13 percent for commercial, over the next 4 years, what better time is there than now to get started.  Below are a few tips on how to get started.

 

Get Familiar With The Industry

The most basic thing you can do is familiarize yourself with business planning, strategy, incorporating and registering with the right agencies.  It might be a good time to get to the library and read up on some legislation.  You don’t need to become an expert just yet, but learn a little about a lot and it will pay dividends later.

 

Get Your Licenses, Bonds, and Insurance

Don’t conduct any business without the right documents and insurance.  Make sure you are protected at all times.  Besides just having a general business license, you will need specific licenses to operate legally.  If for example you do work for electrical, plumbing, HVAC, gas fitting, and other construction trades you will be required to obtain a tradesman license.  Do research and figure out from local government websites and registries what permit and documentation is necessary for starting your own construction contracting business.

Once you procure licenses to do business, you are going to want to get some Surety Bonds.  This is so that in the event you cannot commit to the work obligations you have promised you will be covered by a third party who promises to pay your client for the services you failed to provide.  Each state has its own law regarding regulations so be sure to contact a bond agent.

Finally, you’re ready to get your insurance coverage.  Three insurances you might want to consider at the get go of your business venture are general liability, vehicle, and property insurance.  This will insure that you will be covered in the event of theft or damage to your place of business.  In addition to this many states require disability and workers compensation.

Stay Tuned for More information regarding your construction contracting business.  Next blog post we will delve into health and safety plans, as well as finding and hiring labor.  Here at contractorsinsurance.org, we aim to educate all you aspiring contractors out there.  Call one of our agents if you have any questions.  We would be more than happy to help.