How do you get bonded for doing accounting for private residences and what kind of bond do you need?

Just a few years ago, all you needed was a good insurance policy. Today, however, more and more companies are opting to become both bonded and insured

Just a few years ago, all you needed was a good insurance policy. Today, however, more and more companies are opting to become both bonded and insured – including accountants. Bonding usually offers an additional level of protection. You can obtain bonding coverage from either an independent bonding company or through your insurance agent if they provide these services. Check your local yellow pages or ask your business associates for a referral. You should know that a bond for a sole proprietorship that has no employees or independent contractors is totally useless; a bond protects an employer from dishonest acts (such as theft) caused by an employee or independent contractor of the employer. Here’s a loophole that you need to know about. If you bond an independent contractor, the IRS will automatically consider them an employee of your company and you will be obligated to pay workers compensation insurance and withhold taxes. So never bond an independent contractor or you will be dealing with the IRS and your state's tax commissioner. Also, a bond is not paid out like a traditional insurance policy. For a bond to be paid, a covered employee must be arrested, tried, convicted and sentenced. Bottom line, unless you are bringing employees on board, don’t pay for bonding. Invest in a good business insurance and general liability policy. Discuss your options with your insurance agent, attorney or tax adviser.