What Does It Mean to Be “Licensed and Bonded”?

Being “licensed and bonded” means a business is legally authorized to operate (licensed) and has a surety bond in place (bonded) to protect clients if obligations aren’t met. Licensing requirements differ by state and industry, while bonding serves as a guarantee that customers can be compensated if a business engages in fraud, negligence, or fails to meet regulations.

Getting licensed and bonded is an important step for professionals and business owners who want to prove to their clients that they are qualified to do what they can do. Being licensed ensures that a business has the legal right to practice in their field, and being bonded means they have financial protection in place to support their clients.

In this guide, we’ll take a closer look at what these terms mean, how companies like yours can obtain licenses and bonds, and the costs you can expect to pay.

What “Licensed” Means

Being licensed means a local agency or your state has authorized you to carry out work in your field or industry – however, it’s always worth checking the terms and requirements involved as they can vary by trade and jurisdiction. At Lance Surety, we help you take care of the bonded side of the equation, which is often required before your license can be approved.

The exact process depends on your industry and location. Some businesses must apply for  federal licenses and permits, while most licensing is handled by state or local agencies. In either case, a surety bond is often required before your license can be issued, making bonding a key step in the licensing process before you begin trading.

What “Bonded” Means

Being bonded means you have a financial guarantee in place to protect the public if you fail to meet your license’s obligations or break the law. This guarantee comes in the form of a surety bond, a three-party process covering the principal (you, who carries out the work), the obligee (the government agency requiring the bond to protect the public), and the surety (your bond provider). 

As the surety, our role is to ensure the obligee is compensated if a valid claim is made. As the principal, you are responsible for reimbursing the surety for any claim payments.

License & Permit Bonds (Most Common for Licenses)

License & permit bonds guarantee that your business will comply with all state, local, and federal requirements outlined in your license. They’re commonly obtained by car dealerships, notaries, and contractors, to name a few.

If your business fails to meet these obligations,  for example, by violating regulations, failing to pay required taxes or fees, or committing fraud,  a claim may be filed against your bond. The bond ensures compensation to the harmed party while protecting the integrity of your licensed industry.

Licensed vs. Bonded vs. Insured (At a Glance)

Getting licensed means you’re authorized to carry out a specific type of work, and being bonded means you have financial protections in place if your customers or the public need to make claims. Being insured means your business is covered in case of injuries, accidental damage, and other claims.

The key difference is that insurance covers claims directly without reimbursement, while with bonding, the surety pays the claim and you are responsible for reimbursing the surety.

Who Needs to Be Licensed and Bonded?

Many professionals and service providers require licensing and bonding, such as mortgage brokers, freight brokers, cleaning services, travel agencies, manufacturers, notaries, car dealers, contractors, and certain retailers. Ultimately, if there is a chance the public may be at risk from negligence or fraud, it’s wise to get licensed and bonded. Each authority and industry, remember, carries specific rules and guidelines.

How Much Does a Bond Cost?

The cost of a bond is called the surety premium, and it’s typically a small percentage of the total bond amount. At Lance Surety, clients with strong credit profiles typically pay between 1% and 5% of the bond amount. For example, a $10,000 bond might cost between $100 and $500. Premium rates depend on the bond type, required bond amount, and your credit history, which influences the risk assessment by the surety.

At Lance Surety, we specialize in tailoring solutions for a broad range of credit profiles. Even if your credit score is less than ideal, we work with underwriters to secure competitive rates, ensuring bonding remains accessible without compromising compliance or protection.

Once your application is reviewed, we will provide a clear breakdown of the premium before issuing your bond, ensuring full transparency. Remember, licensing fees vary by state and industry, so it’s best to confirm exact costs with the relevant licensing authority.

How to Get Bonded

To get bonded, you need to decide upon your bond amount, consult and apply with a surety provider, complete necessary paperwork and pay fees, and wait for your bond to be issued. At Lance Surety, we aim to make this process efficient and painless.

Here’s a little more detail on how to get bonded via Lance Surety:

Step 1: Confirm Your Bond Requirements

Determine whether your business or profession requires a surety bond and identify the bond type and amount. Requirements vary by industry, state, and license type - Lance Surety can help you verify exactly what applies to your situation.

Step 2: Submit Your Application

Work with a licensed surety provider like Lance Surety and fill out an online application. You’ll need to provide business information, financial details, and your professional history so we can evaluate your risk and determine your premium.

Step 3: Get a Bond Quote

After a short delay, your provider will analyze and approve your bond if your application is successful. You then need to pay any fees required, and usually within two to three days, you will receive your bond.

The surety will review your application, conduct a credit check, and determine your premium. Once approved, you’ll receive a quote. Upon payment, your bond is issued - often within just 2 to 3 business days.

Step 4: Receive Your Bond

Upon payment, your bond is issued, often within just 2 to 3 business days,  giving you the coverage and peace of mind to operate confidently and compliantly. 

FAQs

Let’s close off our guide with some frequently asked questions about getting licensed and bonded.

What are the benefits of being licensed and bonded for my business?

Being licensed and bonded boosts credibility, builds client trust, ensures compliance with regulations, and protects both your business and your clients. It demonstrates professionalism and a commitment to quality and integrity.

Do all states require bonds for certain licenses?

No. Bond requirements vary by state, industry, and license type. Certain professions, such as contractors, auto dealers, mortgage brokers, and notaries often require bonds, but regulations differ. Lance Surety can help verify your exact requirements.

Can I get bonded for multiple states?

Yes. Some businesses require bonds in more than one state. Each state has its own requirements, so you’ll often need separate bonds or multi-jurisdictional bonds. Lance Surety can coordinate the process to save you time.

How long is a bond valid?

Most bonds are valid for one year, but the term can vary depending on the license requirements. Renewal is typically required annually, along with payment of the premium.

What happens if my bond expires?

If your bond expires without renewal, your license may be suspended or revoked. This can result in fines or other penalties. Staying current is crucial to maintaining your licensed status.

Can my bond amount change?

Yes. Bond amounts can change if licensing requirements change or if your business expands into new jurisdictions. You’ll need to update your bond accordingly.

Sources

Apply for licenses and permits. (n.d.). In U.S. Small Business Administration. Retrieved September 25, 2025, from https://www.sba.gov/business-guide/launch-your-business/apply-licenses-permits

How much does a surety bond cost in 2025? (n.d.). In Lance Surety Bonds. Retrieved September 25, 2025, from https://www.lancesuretybonds.com/learn/surety-bond-cost

How to get bonded. (n.d.). In Lance Surety Bonds. Retrieved September 25, 2025, from https://www.lancesuretybonds.com/learn/how-to-get-bonded

License and permit bonds. (n.d.). In Lance Surety Bonds. Retrieved September 25, 2025, from https://www.lancesuretybonds.com/license-bonds

Online surety bond application. (n.d.). In Lance Surety Bonds. Retrieved September 25, 2025, from https://www.lancesuretybonds.com/surety-bond-quote