The Continuous Bond of Seller, commonly referred to as the Sales Tax Bond, is a mandatory Texas surety bond for businesses in Texas engaged in selling taxable goods or services. This bond ensures that sellers comply with state tax laws by collecting, reporting, and remitting sales taxes accurately and on time to the Texas Comptroller of Public Accounts.
The primary objective of the Continuous Bond of Seller is to serve as a financial guarantee that businesses will fulfill their tax obligations. By securing this bond, sellers pledge to adhere to regulations set forth in the Texas Tax Code, thereby protecting the state's revenue interests.
Businesses required to obtain this bond include:
Essentially, any business or individual engaged in the sale of taxable goods or services in Texas may be required to secure this bond, especially if they have a history of delinquent tax payments.
The bond amount is determined by the Texas Comptroller and is based on the seller's tax liability. The required bond amount is typically the greater of $100,000 or four times the seller's average monthly tax liability. For itinerant vendors, the minimum bond amount is $500. Each business is assessed individually to establish the appropriate bond amount.
While the bond amount represents the total coverage, businesses pay a premium to obtain the bond. This premium typically ranges from 1% to 10% of the bond amount, depending on factors such as the applicant's credit score, financial history, and business experience. For instance, a business requiring a $100,000 bond might pay an annual premium between $1,000 and $10,000.
To secure the bond, businesses should follow these steps:
The Continuous Bond of Seller remains valid as long as the business adheres to its tax obligations and renews the bond as required. Failure to comply with tax laws can result in claims against the bond, leading to financial and legal consequences for the business. It's crucial to maintain accurate records, file timely tax returns, and remit the correct amount of sales tax to avoid bond claims and potential penalties.
Operating without the mandated bond can lead to the denial or revocation of the sales tax permit, legal actions, and financial penalties. The state relies on the bond as a safeguard to ensure tax compliance.
Yes, the Texas Comptroller may reassess the bond amount if there's a significant change in the business's sales volume or tax liability. It's essential to stay informed about any adjustments to ensure continuous compliance.
No, the bond premium is typically an annual payment. Businesses must renew the bond and pay the premium each year to keep it active. Some surety companies may offer multi-year options, but terms can vary.
If a valid claim is made, the surety company will pay the state up to the bond amount. However, the business is obligated to reimburse the surety for the full claim amount, which can strain financial resources and affect future bond premiums.
Yes, businesses with less-than-perfect credit can still obtain a bond, though they may face higher premiums. Working with a surety company that specializes in high-risk applicants can improve the chances of approval.
Understanding and securing the Continuous Bond of Seller is a critical step for businesses operating in Texas. It not only ensures compliance with state tax laws but also fosters trust and credibility with customers and regulatory authorities. By fulfilling this requirement diligently, businesses can focus on growth and success within the state's legal framework.
In Texas, a surety bond is often required by law to protect consumers and the general public, help guarantee performance on a contract, or ensure compliance with regulations. The exact reason you might need a surety bond depends on your situation—most commonly, individuals or businesses are required to obtain a surety bond if they are:
Local jurisdictions sometimes mandate surety bonds for activities that carry particular risks—such as certain building, moving, or environmental permits—to ensure compliance with municipal codes and protect public safety and property. Overall, surety bonds offer a layer of protection to the public and encourage businesses to act responsibly and abide by all applicable laws and regulations. If a bonded individual or business fails to fulfill their legal or contractual obligations, claims can be made against the bond to cover damages or losses up to the bond amount.
Obtaining a Texas surety bond is quick and straightforward with SuretyNow. Here’s how our experts help you through the nation’s fastest bonding process:
1. Identify Your Texas Surety Bond Contact the obligee requiring the bond to determine which Texas surety bond you need.
2. Submit Your Free Online Application Fill out our simple application here at SuretyNow for instant review.
3. Receive a Fast Quote We’ll promptly evaluate your application and provide a competitive quote.
4. Pay & Get Your Bond Immediately Once you pay the bond premium, we’ll issue your Texas surety bond right away.
5. Sign & File Your Bond Finalize the process by signing and filing your bond with the obligee. Rely on SuretyNow for a seamless experience every time you need a Texas surety bond.
