Open a Business Bank Account
Open a Business Bank Account
For legal and financial reasons, it’s important to separate your personal and business expenses and open a business bank account.
Why should I open a separate bank account for my business?
There are many reasons why it is important to open a business bank account. Opening a separate account can help protect your personal finances from business-related expenses. In order to get paid by the City, you will need a business bank account. Additionally, many loan applications and other certifications require you to have a business bank account.
How do I open a business bank account?
The Small Business Administration (SBA) website is a great resource for learning more about opening a business bank account. Visit the SBA’s guide to opening a bank account for more information.
Get Business Insurance
What is Business Insurance?
There are many different kinds of business insurance. Each kind exists to protect your business from unanticipated costs due to accidents, errors, or lawsuits. If you’d like to learn more about the different types of business insurance, the U.S. Small Business Administration has good explanations.
Why should you insure your business?
It’s important to carry at least some basic business liability insurance to provide financial protection against lawsuits due to simple accidents like trips and falls in or around your business location. You can also obtain a policy to protect your business from costs related to errors or omissions made while performing services for customers.
How to get Business Insurance
The easiest way to determine the insurance needs for your business is to find an insurance broker to work with. They will help you identify areas of risk for your business and provide quotes for insurance policies to cover those risks.
How much does Business Insurance cost?
Insurance costs will vary significantly based on your specific business needs. While starting your search for an insurance broker, you should be sure to obtain estimates from a few places to make sure you get a good price.
Get Your Business Bonded
Does my business need to be bonded?
Nebraska Revised Statute 14-365 states that all persons who contract with a city of the metropolitan class for work to be done, or material or supplies to be furnished, shall give bond to the city, with not less than two sureties in an amount not less than fifty percent of the amount of the contract price, for the faithful performance of such work. The sureties on the bonds shall be resident property owners of the county within which the city is located and shall certify under oath that they are worth double the amount for which they may sign the bond, over and above all debts, liabilities, obligations, and exemptions. The city council may also accept security from one or more reliable sureties or guaranty companies for the same amount.
The U.S. Department of Transportation periodically runs the Bonding Education Program to help small businesses get bonded. This program is a good way to increase the bonding capacity of your business.
Additionally, the National Association of Surety Bonding Professionals has an online course for contractors that further explains the bonding process.
Continue learning about different types of bonding and whether or not they apply to you:
Surety Bonding
What is surety bonding?
Surety bonding functions as a sort of insurance policy that helps the City guarantee that your business will complete contract work correctly. The City has an obligation to taxpayers and citizens to make sure City funds are spent responsibly and that infrastructure is properly built. Bonding helps the City see that your business is able to complete quality work in a reliable and timely fashion.
There are four agents involved in a typical bonding agreement:
- The City requires the purchase of a bond. It is listed as the owner of the bond on the bond itself. Any bid with the City of Omaha should list “City of Omaha” as the owner, not the City department or the park, building, etc.
- Your business, or the bonded company
- A Surety Company, who provides the bond
- A Bonding Agent, who helps your business connect with a Surety Company.
Your business pays a premium to the Surety Company, which is a small percentage of the bond total. If your business fails to complete work to the City’s standards, the Surety Company will step in to rectify any issues and reimburse the City up to the full amount of the bond. For example, your business might pay a $100 premium to obtain a $5000 surety bond. The City is then able to recoup up to $5000 in damages from the Surety Company if needed. The Surety Company will then in turn attempt to recoup that amount from your business.
How do I obtain a surety bond?
Once you have found a Bonding Agent, you’ll work with them to get preapproved for a surety bond for your business. The process is similar to the process you would follow to get a business loan. The Bonding Agent will ask for information about the legal structure of your business, finances, ownership structure and professional references. This information allows both the Bonding Agent and the Surety Company to evaluate the reliability and trustworthiness of your business.
How long will it take to obtain a surety bond?
The length of time it takes to obtain a surety bond depends on the specifics of your business and how quickly you can provide the Bonding Agent with the information they need. Occasionally, the Agent will discover information about your business that may negatively impact your ability to obtain a bond. However, a good Bonding Agent should be able to identify these issues early. Generally speaking, the process can take anywhere from a few days to a few months. The process to obtain a surety bond should begin as soon as your business decides to bid.
How much does it cost to obtain a surety bond?
Getting preapproved for bonding should not typically cost anything. However, once you identify a specific project to bid on, you will need to pay a premium to actually obtain a bond. The bond premium is a percentage of the total bond value. This can range from 1% to 15% depending on various factors, including your business’s financial health and the nature of the project.
Bid Bonding
What is a Bid Bond?
A Bid Bond is a kind of surety bond that is submitted along with your bid response. The Omaha Municipal Code requires that all bid amounts of $20,000 or more be accompanied by a Bid Bond, or an acceptable substitute per Omaha Municipal Code Sec. 10-103, such as a cashier’s check, an official bank check, or a certified check from a Nebraska or nationally chartered bank. These bonds or substitutes are typically 5% of the bid amount, unless otherwise specified, and must be submitted at the time you submit your bid. Be sure to check the specific bonding requirements of your project.
- If your bid is unsuccessful, the City will release your Bid Bond promptly after the bid period has closed.
- If your bid is successful, the City will retain your Bid Bond until the completion of the project and subsequent payment.
Bid bonds are different from performance and payment bonds because they insure the project owner in the pre-project bidding process alone, while performance and payment bonds insure the project owner and other stakeholders/employees during the construction process itself. Find a Bonding Agent (detailed in the section below) to learn more.
Performance Bonding
What is a Performance Bond?
A Performance Bond is a type of surety bond that helps the City guarantee the quality of your business’s work. The City of Omaha typically requires a Performance Bond for contracts that require performance over time, such as construction or service contracts. The process for obtaining a Performance Bond can be found below.
Payment Bonding
What is a Payment Bond?
A Payment Bond is a legal contract and financial guarantee that a surety company issues on behalf of a contractor to ensure that all parties involved in a project are paid. This includes subcontractors, suppliers, and employees. The process for obtaining a Payment Bond can be found below.
Warranty Bonding
What is a Warranty Bond?
A Warranty Bond is a financial guarantee made by a builder to protect the owner of a construction project from defects in materials or workmanship that might arise after the project is completed. A warranty bond is also sometimes called a maintenance bond. A Warranty Bond takes this guarantee one step further by creating a contractual obligation that makes the builder financially responsible for correcting any defects in the project for a warranty period specified in the contract.
Find a Bonding Agent
What is a Bonding Agent?
A Bonding Agent can help your business to obtain a bond from a Surety Company. The Bonding Agent helps evaluate your business and pre-approves your business for an appropriate bond amount. You must work with a licensed Nebraska Bonding Agent in order to obtain a bond for your business.
How do I find a Bonding Agent?
There are various ways to find licensed Bonding Agents. If your business is well-established, you will likely not have any trouble finding an agent willing to work with you. However, if your business is newer, you may need to contact a number of different bonding agents or work with the U.S. Small Business Administration, the National Association of Surety Bonding Professionals, or community partners in the Resource Library to find an appropriate match.