Legal Considerations

Small Business Bonding for Lawn Care

5 min read

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When starting out in the lawn care industry, you may be considering whether or not to bond your lawn care business. It's a matter of personal discretion that a business owner bases on how many clients they intend to take on while in operation. If you are only maintaining a few lawns a year the need for bonding isn’t as prevalent. If you have a larger company with many employees, it's best to invest in the added protection for liability reasons.

The idea that being licensed and bonded makes a business more credible does hold some truth. Some customers believe that it's a requirement for the company that they work with to be both. That isn't necessarily the case because each state dictates the types of licenses, if any, that are needed to be in the lawn care business. Bonding is more for the company than it is for the customer in many cases because of the protection it provides.

What is bonding?

Bonding refers to the guarantee to deliver on what was promised to a customer and a form of protection against damage and theft while employees are on their premises. Lawn care companies that are rather large include information about being bonded in their advertising and marketing materials.

Separate from business insurance, bonding is something that may or may not benefit a business depending on its size and the number of dollars in sales it does each year. Anyone wanting to keep their bottom line low shouldn't take the decision lightly. It can cost a significant sum of money to be bonded, yet be wholly unnecessary especially if a company consists of one or two employees, and they never enter a person's home.

Business insurance would protect a company from loss and theft as well as bodily harm if something were to happen. It's an absolute must because, in some instances, a business could lose everything and not be able to recover without being insured. Anyone who wants to protect themselves, their employees, and their equipment must have a suitable amount of business insurance purchased.

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Different types of bonds

There are different types of bonds a business owner can choose from. The most common is the surety bond. Essentially, it promises payment to the customer that a business has gone into a contract with recently. It is payable by the bonding company if the lawn care company breaks the agreement they have in place with the customer.

The way the bonding company words the bond determines whether it offers a business owner protection or not. If a customer signs a contract for a year and then decides six months to cancel it, a company may be able to charge for the remainder of the contract without issue. Again, it's best for the business owner to discuss the details of the surety bond before purchasing it.

There are four surety bonds: the contract surety bond, the commercial surety bond, the fidelity surety bond, and the court surety bond. Each has its own list of requirements and purposes.

Licensed businesses have commercial surety bonds to ensure that they comply with all enforced codes. Companies that deal with great sums of cash are required to have a fidelity surety bond. It's generally not a requirement for lawn care companies.

A court surety bond protects a company from loss during court proceedings. It's often required for a plaintiff but not necessary for defendants. As long as a customer doesn't take legal action against a lawn care company, it's not something they need.

The types of surety bonds listed here help lawn care businesses know if they need to purchase the extra protection for their companies.

We find customers respond well to the terms licensed and bonded.

Is bonding necessary?

Bonding is a subject that is heavily debated among business owners. Some don't see the need for additional insurance because of how small their operation is. They have a select few customers they provide lawn care to and are the sole employee of their businesses.

Other lawn care business owners have a business model that includes sustainable growth. They have multiple employees and plan to expand their offerings to other nearby cities. The idea of losing everything they worked so hard to achieve because they didn't bond their business is too much for them, so they buy the insurance.

It's a matter of choice when it comes to bonding or not bonding a lawn care business. If you opt to remain unbonded and have an issue with a client, you risk the possibility of losing everything you’ve worked so hard to attain.

We find customers respond well to the terms licensed and bonded. That doesn't mean that it's something that a small operation benefits from, though. Carefully weighing the pros and cons of being bonded can help a company avoid potential pitfalls that damage the reputation and day-to-day operations of their businesses.

Bonding protects companies against lawsuits. It can be helpful if a customer decides to seek legal action against a lawn care company. Feeling prepared and protected helps business owners stay in business despite what happens.

Speaking to a bonding company about the need to bond a small lawn care business is recommended. They'll be able to explain the process in detail as well as the benefits that come with bonding.