Brewer's Bonds
The federal and several state governments require a brewer's surety bond from restaurants and other businesses applying for a liquor license. This type of surety bond is also considered a license bond because it is a mandatory part of the licensing process. The bond guarantees that the bonded company will pay all the applicable government and state taxes on beer sales.
What is a Brewer's Bond?
A brewer's bond is a type of liquor license bond mandated by the Alcohol and Tobacco Tax and Trade Bureau (TTB). Thus, a brewery bond is also referred to as a TTB bond. The surety bond acts as a risk management tool so the government can count on the bonded company to remit the federal excise taxes due on all beer sales.
How Does a Brewer's Bond Work?
Like any surety bond, a brewer's bond is a legal contract between three essential parties, each with a specific role:
- The Principal is the bonded entity, in this case, the restaurant or brewery.
- The Obligee is the entity that requires the bond, in this case, the TTB.
- The Surety is the insurance company that underwrites the bond.
The brewery bond ensures money will be available to pay any taxes the principal fails to remit. The obligee can file a claim against the bond if they determine that the principal has not paid the appropriate tax amount. The surety investigates the claim and pays it in full up to the bond's total value if they find in the obligee's favor. The principal is financially responsible for all claims paid and must reimburse the surety, paying applicable fines and fees as well.
Who Needs a Brewer's Bond?
Any business engaging in brewing, selling, importing, distributing, or storing beer needs a brewer's bond. These companies must file and maintain the bond with the TTB. This is an essential element of the permitting process for your business.
How Much Does a Brewer's Bond Cost?
A surety bond's cost is typically a tiny fraction of the bond's total value. A brewer's bond cost is no exception. The TTB establishes the required bond amount, which may vary based on your business location. The federally mandated bond amount for breweries with an excise tax liability below $50,000 is $1,000. It's essential that you check with the TTB to determine the bond amount you are required to obtain. But your bond premium on a $1,000 brewery bond could be as low as $100.
Your credit score determines whether you are charged at the higher or the lower end of the premium range. This score is the surety company's best guide to how much risk is involved in bonding you. While those with problematic credit pay a higher premium, Viking Bond Service will always work with you to get you bonded for the lowest possible price.
How Can I Get a Brewer's Bond?
At Viking Bond Service, we make obtaining a surety bond a snap. First, complete our online bond application. Then, we'll get you a competitive quote for your brewery surety bond ASAP. Or you can call us at 1-888-2-SURETY (1-888-278-7389) with any questions. We'll get your business serving thirsty patrons in no time!
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