If you run a cleaning business, you may be wondering if you need to get bonded. While surety bonds are not required, they can prove quite helpful in establishing your business and mitigating the negative impact resulting from the misconduct by your employees.
How do surety bonds for cleaning businesses work?
Janitorial bonds are a type of business services bond. These bonds are acquired by various types of companies that work on other people’s property. In addition to cleaning companies, some types of companies that commonly get a business service bond include gardening, moving, and security businesses.
Business service bonds function a little differently than typical surety bonds. The latter are three-party agreements between an obligee, a principal, and a surety company. Business service bonds are essentially two-party agreements, similar to a traditional insurance policy with a principal and insurance company.
Unlike business service bonds where the choice to get bonded is often voluntary, with a typical surety bond, the obligee requires the principal to get a bond. The bonding requirement is often part of the process of obtaining a professional business license or establishing a commercial entity.
Who do bonds for cleaning businesses protect?
Janitorial bonds protect the clients of cleaning businesses against employee theft. If a client suspects that an employee of the cleaning business has stolen from them, the client can file a claim against the surety bond.
If a cleaning employee is proven guilty of theft in a court of law, the surety company that issues the bond will reimburse the client for the damages. Payouts are limited to the total amount of the bond. For example, if a client successfully proves that $500,000 was stolen but the cleaning service only had a $250,000 bond, the client will only receive $250,000 from the surety company.
In the end, the cleaning business is liable for any losses and must reimburse the surety company for any damages they payout.
Because cleaning bonds aren’t required—and a successful claim makes the business owner liable—you may be wondering why make the effort to get your cleaning business bonded?
What are the benefits of getting bonded for a cleaning business?
While cleaning businesses are not legally required to get a janitorial bond, there are several key advantages to getting bonded for your cleaning business. This includes:
- Competitive advantage: Getting a surety bond makes your business more attractive to clients. In fact, there are many companies that will not even consider a cleaning service unless they have a bond. When you get a bond, you gain a valuable tool to market your cleaning business. When you contact potential clients, your business will stand out compared to all competitors that do not have a bond.
- Give your clients peace of mind: Getting a surety bond gives your clients peace of mind. They can feel comfortable knowing that you have their best interest in mind and that you went out of your way to give them extra protection. In the unfortunate event that misconduct were to happen, they have an assurance of receiving financial compensation.
- Improve your reputation: Trust is key to winning clients as a cleaning business. When you get a surety bond, your business immediately becomes more trustworthy in the eyes of your clients. This can serve as a valuable tool for retaining customers long term.
How much does it cost to get bonded for a cleaning business?
The bond amount for a janitorial service bond represents how much the surety is willing to pay out in the event of a successful claim. Because the bonds are voluntary, the cleaning business can determine its own bond amount based on the coverage required.
When determining the appropriate amount of coverage you should consider the size of your business as well as your clients. If you work with banks or other businesses with valuable possessions, their potential claims could be bigger.
Keep in mind that the bond amount is not the same as the price of the bond. Instead of paying the entire sum, you only need to pay a small portion of the total as a premium. This amount can be as low as $100. Unlike other types of surety bonds, janitorial bonds do not require a credit check so your financial health won’t affect how much you pay.
Other than the size of your bond, the main variable that will impact your premium is your number of employees. More employees tends to equal higher premiums, even for bonds with the same amount.
For example, a $50,000 bond that covers ten employees will have a higher premium than a $50,000 bond that covers five employees.
Get your cleaning business bonded today with EZ Surety Bonds
When you’re ready to take your cleaning business to the next level, EZ Surety Bonds has flexible and convenient bonding services to help you get bonded fast and easy. Apply online today or contact us for more details.