What is a Texas Sales Tax Bond?
Certain businesses operating in the state of Texas are required to post a surety bond for sales tax. A Texas sales tax bond is often a requirement for obtaining a business license as it ensures you will pay the sales tax due on all items sold and within the timeframe required by state law. In Texas, any business that violates a sales tax regulation may have a claim filed against them.
If you operate a business as a merchant, a hotel, or an auctioneer, or if you hold a business license for a mixed beverage, private club, or catering company, it is likely you need a Texas sales tax bond to comply with state regulations. This type of bond is a contract between the surety company which provides the bond to the business, the bondholder, and the state licensing authority which requires a bond to be posted.
What Does a Texas Sales Tax Bond Cost?
In Texas, the maximum bond amount required for businesses is $100,000, although there may be instances where a higher Texas sales tax bond is necessary. Fortunately, a licensed business does not have to pay the full amount of the bond. Only a percentage of the bond posted is paid to the surety company for providing the bond.
The cost of a Texas sales tax bond ranges from 1 to 5% for low-risk bondholders. When it comes to surety bonds, low-risk means that you have a strong credit score, financial stability in terms of the business, and minimal claims history. You can still obtain a Texas sales tax bond if you have bad credit, but the price of your bond is likely to be 10% or more.
How Do I Get a Texas Sales Tax Bond?
You can start the process of securing a Texas sales tax bond by submitting a brief application online.