What is a liquor bond?
Liquor bonds (also known as alcohol bonds) are a type of license and permit bond businesses must purchase to guarantee they pay taxes. It also ensures that the licensee follows all applicable rules and regulations concerning their business and liquor license.
There are two categories of liquor bonds: state and federal. Throughout this guide, we’ll focus on state-mandated bonds. We cover what you need to know on the federal side in our guide to federal alcohol bonds.
Depending on your state and specific business, this bond may go by different names. Here are some of them:
- Liquor license bond
- Liquor tax bond
- Beverage tax bond
- Alcohol beverage bond
- Alcohol manufacturer or wholesaler bond
- Liquor permit bond
Get Your Liquor Bond:
- Liquor bonds are a type of license and permit bond businesses must purchase to guarantee they pay taxes.
- The bond is for anyone who wants to sell, transport, manufacture, or warehouse alcohol.
- Typically, applicants with excellent credit could pay anywhere from 1-5% of the total bond amount for their premium.
Who needs a liquor license bond?
Before obtaining your liquor license, you may need this bond (depending on your state requirements). The bond is for anyone who wants to sell, transport, manufacture, or warehouse alcohol. It ensures compliance with applicable regulations, laws, and statutes and payment of all required taxes.
Wineries, breweries, distilleries, some restaurants, and liquor stores must acquire an alcohol bond to obtain and maintain a license to operate.
How does a liquor bond work?
This surety bond is an agreement among three parties:
- Principal: The business or individual who purchases the bond
- Obligee: The party that requires the bond (typically this is the State Department’s department of commerce)
- Surety: The bond underwriter
If a business fails to comply with the agreement, the obligee may file a claim against the bond. For example, say a brewery doesn’t pay all their taxes for their alcohol sales throughout the year. In this case, the government could file a claim to collect any unpaid taxes up to the bond penalty.
The surety can step in and cover the amount owed upfront. Then the principal will be liable for paying the surety back for the same amount.
You may purchase your first liquor bond as part of the licensing process and then renew it annually. The cost will depend on the specific bond type and amount required for your state. Other factors may also impact the price, such as your credit score and financial history.
Typically, applicants with excellent credit could pay anywhere from 1-5% of the total bond amount. So if your bond is for $15,000, you could pay as little as $150 annually (this may vary by state). Conversely, if you have poor credit, you could pay up to 15% of the bond amount.
How to Get a Liquor Bond in Your State
Liquor bonds are considered higher risk than other types of bonds, but we can help you find the best rates available. ZipBonds is the fastest and most secure way to get the bonds you need. We take out the pain of long, complicated applications. Many of our bonds are approved and processed immediately.
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.