Why Does My Construction Business Need a Surety Bond? 

The construction industry in Canada is booming, employing well over 1.4 million people and is solely responsible for roughly $150 billion back to the economy each year. Suffice to say, there’s a lot of value of industry to do with construction, and the construction industry is only expected to grow steadily over the next few years. In order to ensure quality of work and to guarantee that deadlines can be met and projects can be completed on time, most contractors and construction companies are being required to have some degree of performance security. Typically, that comes in the form of a surety bond. 

What is a surety bond, you might ask?  

What is a surety bond? 

As a subcontractor or even a general contractor, you may be asked to secure a surety bond or “surety insurance” by one of your prospect or existing clients. If you work on a public project or a government mandated project, you may be required to purchase a surety bond. 

A surety bond is like insurance, except not. It involves three parties, not just two. Those parties are the business (the principal), the surety (the one issuing the bond), and your client (the obligee.) The surety bond will be paid out to the client, not to the business (this is insurance protecting your client and not you) and, at the tail-end of the bond’s duration, you’ll be expected to pay back the entirety of the surety bond to your surety provider.  

Why have a surety bond? 

Note that there are different types of surety bonds. There are contract surety bonds, commercial surety bonds, and court surety bonds. Contract surety bonds are in-place to guarantee that the obligations of a construction project/contract can be met. Commercial surety bonds are guaranteed to ensure compliance to all the required codes, such as if your company requires a particular license to operate. Finally, a court surety bond is designed to help cover losses should there be a court proceeding. 

A contract surety is the most likely bond to be required in the construction or manufacturing industry. With this type of surety coverage, any consequential costs or remaining costs that may arise from a contract where your business is unable to fulfill the full terms of its terms and conditions is covered by the surety bond. The client can use the money they receive to complete the project and/or significantly mitigate their financial losses. Contract surety bonds often come in the form of: 

  • Labour and Material Payment – This bond guarantees that the principal (business owner) will pay all its suppliers and subcontractors 
  • Performance Bond – This bond guarantees that the principal (business owner) will complete their end of the contract, including all obligations and fulfillments.  

There are also bonds you may acquire for contract acquisition, i.e. bid bonds. These show a potential client that you are qualified for a contract and may put you ahead of other bidders when it comes to the final decision process about which contractor to choose. 

Do I need to have a surety bond? 

Typically, if you work in the construction and/or manufacturing industry, the answer is yes: you need a surety bond. Contractors are often required to purchase bonds, as their clients may require it, or government parties may need it. Private clients can stipulate that all their contractors have bonds. 

Furthermore, having bonds for the tendering stage can make you appear as a more reputable candidate. Bonds are designed to protect the clients, so while you may hesitate on this front due to the fact that it’s not insurance for you, it’s highly necessary for your reputation and perhaps to even acquire work at all. Construction workers, manufacturers, suppliers, and other types of contractors may require the purchase of surety bonds.  

How much does a surety bond cost? 

Calculating a surety bond is a little different than calculating insurance costs. It depends on the provider you go with, for one, as there are different cost structures. You’ll typically pay between 1-15% of the total coverage that is provided by the bond. The riskier you are, the more you’ll pay. 

Bond rates may be determined by the type of bond, length of the bond obligation, your risk level (including personal demographics like business revenue, experience, licenses, financial history, credit score, and so forth) and the overall value of the bond. 

Talk with a surety bond provider or broker if you aren’t sure!  

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6 Things Your Business Insurance in Edmonton Can Cover

Running a business takes a lot of grit, and no one wants anything to happen to the enterprise they have put so much time, money, and effort into. Therefore, we purchase business insurance. Business insurance in Edmonton, Regina, or wherever you live anywhere in the world is a necessity to secure your enterprise against physical losses, liability risks, cyber risks, and so much more. While business insurance in Edmonton may look like many things, too few business owners or professionals fully understand the capacity that their coverage has when it comes to adequately protecting their enterprise.

The list below is dependent on the coverages you purchase, as not every standard policy will include the same protections or covered perils. If you feel you may benefit from a specific coverage, discuss with your broker or insurance carrier.

Here are 6 things your business insurance Edmonton can cover.

Your home office.

You read that right – if you run a business from home, you can insure it. Now, it’s important to note that with any business activity you handle from your home office will need to be insured through a business insurance policy, not a home policy. You may do so with a home insurance endorsement or an entirely separate home-based business insurance policy. If your business has a physical location but you do a lot of work out-of-home, consider extending your contents coverage to include your home office.

Green upgrades.

Want to help out the environment a little? Going green is a great way to do that, and you can start by replacing some of your old building materials with green alternatives. If a loss occurs and you’re forced to rebuild, your insurance may include coverage for the added cost of those green materials to ensure your building can have its energy efficient appliances and environmentally friendly materials rebuilt to full glory once more.

Your belongings on the road.

If you are going to an expo, a business meeting, or anywhere that isn’t your business terf, your business contents insurance may extend to covering your belongings outside of your office. This ensures that any damages or losses to your property on-the-road have a back-up plan.

Loss of revenue due to temporary closure.

Business interruption is a vital addition to have with your business owner’s insurance policy, as it can protect your business from potentially hefty ongoing costs during a period of unexpected closure, such as wages, utility bills, rent, taxes, and so on. This insurance coverage kicks in the moment your business is forced to close its doors following an insurable event, which means you can have peace of mind knowing you can reopen with ease once repairs and restoration have been complete.

Important documents.

If a physical disaster struck which caused you to lose all your important government documents, valuable receipts, ledgers, etc., it could take you a pretty penny – not to mention tons of time – to fully replace. Your records are included in your business inventory and contents which means that they will be covered in the event of an insurable loss, such as a fire or vandalism attempt.

Rebuild costs.

Too few property owners or even business owners understand that labour costs and material costs may shift with time. In addition to this, the bylaw regulations in your neighbourhood or where your business’ physical property is situated may update. Your policy may automatically increase to include additional limits on your building, as well as inflation rates, but they can also include increased repair costs if there are any bylaw changes in your area. Note that your rates may change, and moreover: bylaw changes may only be insured if you have an endorsement known as by-law coverage.

The bottom line

Your business insurance is invaluable to preserving your operations and peace of mind. On Bullfrog insurance You might be surprised at the various things your business insurance in Edmonton can cover, but note that you should never assume your policy covers something. Check with your broker and review your coverage before making any assumptions, otherwise you might be faced with a surprise if you ever need to make a claim.

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Understanding Investment Terms and Concepts

Below are summaries of some basic principles you should understand when evaluating an investment opportunity or making an investment decision. Rest assured, this is not rocket science. In fact, you’ll see that the most important principle on which to base your investment education is simply good common sense.You’ve decided to start investing. If you’ve had little or no experience, you’re probably apprehensive about how to begin. Even after you’ve found a trusted financial advisor, it’s wise to educate yourself, so you can evaluate his or her advice and ask good questions. The better you understand the advice you get, the more comfortable you will be with the course you’ve chosen.

 

  • Don’t be intimidated by jargon

Don’t worry if you can’t understand the experts in the financial media right away. Much of what they say is jargon that is actually less complicated than it sounds. You’ll learn it soon enough, and there is no reason to wait to invest until you know everything.

 

 

 

  • IRAs hold investments–they aren’t investments themselves

As a preliminary matter, let’s address a source of confusion that immediately throws many new investors off: If you have an individual retirement account (IRA), a 401(k), or other retirement plan at work, you should recognize the distinction between that account or plan itself and the actual investments you own within that account or plan. Your IRA or 401(k) is really just a container that holds investments and has special tax advantages. Folks often get confused when that distinction is not pointed out.

 

  • Understand stocks and bonds  

Almost every portfolio contains one or both of these kinds of assets.

If you buy stock in a company, you are literally buying a share of it from an existing owner who wants to sell. You become an owner, or shareholder, of the company. As such, you take a stake in the company’s future. If the company prospers, there’s no limit to how much your share can increase in value. If the company fails, you can lose every dollar of your investment.

If you buy bonds, you’re lending money to the company (or governmental body) that issued the bonds. You become a creditor, not an owner, of the bond issuer. The bond is your IOU. As a lender, your return is limited to the interest rate and terms under which the bond was issued. You can still lose the amount of the loan (your investment) if the company or governmental body fails, but the risk of loss to creditors (bondholders) is generally less than the risk for owners (shareholders). This is because, to stay in business, a company must maintain as good a credit rating as possible, so creditors will usually pay on time if there is any way at all to do so. In addition, the law favors bondholders over shareholders in the event of bankruptcy.

As a matter of jargon, stocks (and stock mutual funds) are referred to as equity investments, while bonds (and mutual funds containing bonds) are often called investments in debt.

  • Diversify–don’t put all your eggs in one basket

This is the most important of all investment principles, as well as the most familiar and sensible.

Consider using several different classes of investments for your portfolio. Examples of investment classes include stocks, bonds, mutual funds, art, and precious metals. These classes are often further broken down according to more precise investment characteristics (e.g., stocks of small companies, stocks of large companies, bonds issued by cities, bonds issued by the U.S. Treasury).

Investment classes often rise and fall at different rates and times. Ideally, in a diversified portfolio of investments, if some are losing value during a particular period, others will be gaining value at the same time. The gainers help offset the losers, and the total risk of loss is minimized. The goal is to find the right balance of different assets for your portfolio. This process is called asset allocation.

Within each class you choose, consider diversifying further among several individual investment options within that class. For example, if you’ve decided to invest in the drug industry, it might be wise to make smaller investments in Company A, Company B, and Company C, rather than put all your chips on one of them.

  • Recognize the tradeoff between the risk and return of an investment

For present purposes, we define risk as the possibility of losing your money, or that your investments will produce lower returns than expected. Return, of course, is your reward for making the investment. Return can be measured by an increase in the value of your initial investment principal and/or by cash payments directly to you during the life of the investment. There is a direct relationship between investment risk and return.

When someone proposes an investment and suggests otherwise, we know, “it’s too good to be true.” Invariably, the lowest-risk investments will be among the lowest-returning at any given time (e.g., a federally guaranteed bank certificate of deposit). The highest-risk investments will offer the chance for the highest returns (e.g., stock in an Internet start-up company that goes from $12 per share to $150, then down to $3).

Between the extremes, every investor searches to find a level of risk–and corresponding expected return–that he or she feels comfortable with.

  • Understand the difference between investing for growth and investing for income

As an investor, you face an immediate choice: Do you want growth in the value of your original investment over time, or is your goal to produce predictable, spendable current income–or a little of both?

Consistent with this investor choice, investments are frequently classified or marketed as either growth or income oriented. U.S. Treasury notes, for example, provide regular interest payments, but if you spend that money, of course, your original investment cannot grow.

In contrast, investing in a new software company, for example, will typically produce no immediate income. New companies generally reinvest any income in the business to make it grow. If they are successful, the value of your stake in the company should likewise grow over time.

There is no right or wrong answer to the “growth or income” question. Your decision should depend on your individual circumstances and needs (e.g., your need, if any, for income today, or your need to accumulate a college fund, not to be tapped for 15 years).

  • Understand the power of compounding on your investment returns

To help make an educated “growth or income” decision, you should have a feel for the result of either approach. With an investment made primarily for the production of current income, you’ll know in advance the size and timing of payments to expect.

To evaluate the “growth” approach, you’ll need to appreciate the concept of compounding. Compounding is what happens when you “let your money ride.” Unlike the income investor, who usually takes his or her money “off the table” as the checks arrive, the growth investor lets investment returns remain invested, thereby earning a “return on the returns.”

A simple example of compounding occurs with a bank certificate of deposit that is allowed to roll over each time it matures. Interest earned in one period becomes part of the investment itself, earning interest in subsequent periods. In the early years of an investment, the benefit of compounding on overall return is not exciting. As the years go by, however, a “rolling snowball” effect seems to operate, and the compounding’s long-term boost to investment return becomes dramatic.

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Simple Rules for Investing


If you are new to investing, here are a few basic rules to keep in mind as you venture forward. As you know, there are no guarantees when it comes to investing, but following these tips–as well as heeding the sound advice of your broker or financial advisor–may help you stay out of trouble.

  • Know yourself, your timelines, and your risk tolerance 
  • Do not invest borrowed money 
  • Stick with investments that you can understand and evaluate 
  • Avoid get rich quick schemes that promise riches without effort 
  • Be willing to keep what you buy 
  • Never accept an investment that must be sold under pressure 
  • Consider investments that have “utility value” (they are useful to someone else) 
  • Do not count on selling the investment to make payments on it 
  • Do not risk more than you can afford to lose
  • Remember–if it sounds too good to be true, it probably is.
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Common Investment Mistakes to Avoid

 

  • Making investment decisions based on emotions and not on facts
  • Choosing investments that are not suited to your goals or investment time horizon
  • Failing to diversify, putting all your eggs in one basket
  • Reacting to short-term events and not to long-term trends
  • Trying to time the market
  • Buying “hot” investments with no sound basis for your decision
  • Allowing fees, expenses, and/or commissions to become the major factors in making an investment decision
  • Allowing fear or greed to drive your investment decisions
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Investment 101 For Beginners

Finance is a big word we as adults often cringe from. We are constantly being nagged with the idea of having to save for future needs, emergency funds, and other bills and utilities we need to pay. It is therefore important that you keep your finances straight and always watch your expenses. There’s no denying that the stock market is the best option to grow money, but because of how complicated it sounds youngsters tend to shy away from it. So let’s discuss some tips for you to better understand the basics of the investment world. If you have extra money, here are some basic investment tips to maximize it and not just let it sleep in the bank.

 

1.There’s no better day than today.

Any kind of investment has a better yield rate when there is a longer time frame, you are never too young to start learning the basics of investment. If you can spare even 20 dollars monthly, then that will be suffice to make earnings grow more. In time you’ll realize that there is a big difference should you have started years earlier. Your monthly investment should be in direct proportion to how much you earn: as your income increases, so should your monthly investment too. Do not settle for the lowest amount but make it a point to reach a certain amount.

 

2. Talk with the pro’s.

There are experts in this field that can help you jumpstart your investment. Have a list of questions, let them know your doubts and have them layout the pros and cons of each type of decision you want to do. Talking with professionals can also make you understand if the stock market really is something you would want to engage in or not. In most cases, they will be able to identify what type of investment is most feasible for you making it less of a worry to research and decide.

 

 

3. Be a regular consumer.

Once you’ve entered the stock market and planning on buying shares, the first rule is to act like a normal consumer would. Start with products or services that you are familiar with: your favorite coffee chain, fast food, and even clothing line. By doing so you can better understand the trends of the market, with the basic knowledge of what you really do patronize. The stocks you buy of course should directly reflect your end goal, if you want long-term investments then set your goals on that path.

 

 

4. Take a risk.

Take a risk and try the investment process by yourself. Start by asking your bank if they have a discount broker that can help you, or even settle for their service. Discount brokers offer the service of buying and selling of stocks at a lower price than a full-service broker. However, you have to compensate for techniques as they do not offer investment advice. This is a great way to immense yourself in to fully understanding the market, start investing a small amount and see if you can facilitate your shares without being tied to a broker.

Financial security is one of the reasons why we work hard every single day, and so we must take every measure to ensure that our hard-earned money is safe and will be properly managed. Start early and explore your options for investing, there’s no better time than now.

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