Brewer’s Bond: A Complete Guide

Like other license bonds, a brewer’s bond is a three-party agreement between a principal, an obligee, and a surety.

• Principal: The bonded party (brewery) that must abide by the bond contract and operate legally
• Obligee: The governing authority that requires the surety bond
• Surety: The underwriter that issues the bond and pays out claims if necessary

If you break your bond agreement by failing to pay enough taxes, you could face bond claims. Initially, your surety can cover the costs to settle the claim, but you will be held responsible for reimbursing your surety in full. Claims can have costly consequences, damaging your reputation and ability to get licensed and bonded again. 

You can learn more about the purpose and conditions of this bond by reviewing the official Brewer’s Bond form.

The cost of your surety bond will depend on the amount required, which varies by business size and whether you file quarterly or semi-monthly excise tax returns. The minimum bond amount is $1,000, and the maximum is $500,000. See the official bond form posted by the TTB to learn your specific requirements. Here’s an overview:

• Quarterly filers will need a bond equal to 29% of the maximum tax they’re liable to pay during the calendar year.\
• Semi-monthly filers must post a bond equal to 10% of the maximum amount of tax they’re responsible for paying throughout the calendar year.

You will pay a small percentage of the bond amount to obtain your bond from a surety provider. You could pay as little as 1% if you have excellent credit. For example, if you need a $1,000 bond, you might pay as little as $100 per year.