Every state in the country places tight regulations on the alcohol industry. If you plan to open a business in this industry, one involved with producing, distributing, selling, or serving alcohol, you should be prepared to meet numerous requirements before you open your doors, and just as many for as long as you’re in operation. One requirement everyone in this industry needs to be aware of is the alcohol tax bond requirement.
There are many different types of alcohol tax bonds applicable to different types of businesses – producers, warehousers etc. Every state also has different alcohol tax bond requirements. The details of the bonds may be different, but they all work in fundamentally the same way: When a business owner fails to pay the alcohol (and sometimes tobacco) taxes they owe the state, the bond holds them accountable.
The state may file a claim against an alcohol tax bond for an amount equal to the unpaid tax bill. The surety agency that issues and backs the bond will pay for all valid claims. Alcohol tax bonds guarantee the state can recoup tax revenues owed to it even if the taxpayer can’t or won’t pay. When the surety pays a claim, the business owner who holds the bond must pay the surety back in full with interest and fees included. Bonds hold business owners accountable for unpaid tax bills, which creates an incentive to pay on time. All states enforce surety bond requirements on alcohol-related businesses because surety bonds are an effective regulatory tool.
If these requirements apply to you and your business, you will want to obtain an alcohol tax bond ASAP. You gain nothing by waiting. Satisfying the bond requirement gets your business one step closer to being in full compliance with that law and ready to serve customers. Before you apply for your alcohol tax bond, here are five things you should know:
To apply for an alcohol tax bond, you will need to complete a standard bond application with details about your business, business partners, and background. You will also need to submit to a credit check, provide a copy of the exact bond requirements, and possibly turn over other documentation like a financial statement. Try to collect as much of this information and documentation as possible in advance so that the application process runs smoothly and you get a quote quickly.
The Process Moves Fast
Once you submit your application documents, underwriters (risk evaluators) at the surety agency evaluate everything to quote you a price for the bond. You might expect this to be a slow and drawn out process, but it’s just the opposite. When you apply with a surety like Viking Bond Service you can expect to receive a quote in as little as 24 hours after you apply. Fitting bonding into whatever timeline your business is operating on may be easier than you expect. You also aren’t obligated to act on a quote immediately – you have a grace period to consider your options during which the quote remains valid.
Choice of Surety Agency Matters
It’s important to feel confident about your choice of surety agency before you apply. There are lots of options out there. Some are better than others. You will need to have an active alcohol tax bond in good standing for as long as you’re in business, meaning bonds will be something you deal with for years to come. Ideally, the company you’re applying with now can become your long-term bonding partner. Find someone that can handle all your bonding needs, now and later, while making bonding a stress-free experience. Viking Bond Service is eager to earn your confidence.
Your Credit Affects Your Bond Premium
When underwriters evaluate your application, they are mostly trying to determine how risky you are to bond – eg. how likely you are to trigger bond claims and pay the surety back for those claims. Underwriters evaluate riskiness based largely on your credit score and financial history and calculate your bond cost accordingly. You will pay less if you have a score above 700 and no record of bankruptcy or past bond claims. However, your bond premium will go up if you have spotty credit. Rely on Viking Bond Service to help you get approved for an alcohol tax bond at an affordable rate even if you have bad credit. We run a special program for applicants just like you.
Renewal Follows Application
After you apply for and obtain an alcohol tax bond, you will need to renew it on an annual basis. Failure to renew the bond invalidates your state business license and makes it illegal to operate your business. You will receive a renewal application in advance of the deadline. To renew, you will need to submit a new bond application and agree to another credit check. Underwriters will use this information to recalculate your bond premium. The price may go up or down annually depending on changes to your credit score. Make the renewal a part of your yearly business plans and budget.
Viking Bond Service is here to make the alcohol tax bond application process easy for all. We issue bonds in all 50 states, including the bond you need. Start the application at any time. Or get more information first – contact us with questions or call 1-888-278-7389.