A surety bond is a financial instrument that provides a guarantee of a specific kind. Depending upon the type of surety bond you secure for your company, you may be guaranteeing a level of service, guaranteeing that you will deliver according to the terms of a contract, guaranteeing that you will pay specific financial obligations, or guaranteeing that you will supply specific items. Surety bonds can provide guarantees for a number of other specific things as well, but not all of those apply to a gas station.
As the owner of a gas station, you may be required to be bonded by your local licensing board. Some localities in the United States require gas stations to be bonded as a way to guarantee that they will pay the appropriate amount of local taxes on fuel, cigarettes or other regulated goods. If your gas station sells lottery tickets, you may be required to be bonded for that service as well.
Here are the specific types of business bonds that your gas station may need:
- Contract Surety Bonds – A contract bond provides a guarantee that you will fulfill obligations that are outlined in a specified contract. If you contract with your local government to provide gasoline to the county road vehicles for example, you may need a contract bond to secure that deal. If your gasoline supply is interrupted due to a severe storm and you are unable to provide the agreed upon amounts of fuel to the county, your surety bond will pay the county for damages and loss.
- Payment Surety Bond – If your gas station contracts with the county or another company to provide fuel, they may require you to have a payment bond. Payment bonds guarantee that you have paid for the materials you are supplying.
- Financial Guarantee Bonds – A financial guarantee surety bond states that your gas station will use fund that it collects in a specified way. If, for example, your gas station sells products that require sales taxes, then the financial guarantee bond provides a guarantee that you will use the funds collected to pay the sales taxes. This type of surety bond may be needed for fuel taxes and lottery ticket sales as well.
- Licensing Bonds – Licensing surety bonds generally cover two areas: Regulations and taxes. A regulatory bond simply provides a guarantee that you are complying with all of the rules, laws and regulations required for your gas station. Tax bonds guarantee that you will collect the appropriate types and amounts of taxes on the goods that you sell.