How to Obtain an Alcohol Tax Bond in California
The state of California requires all business that wants to sell, manufacture or store (warehousing) alcohol to get an Alcoholic Tax Bond. This is often required as a condition to the issuance of a business license or business permit.
Upon the filing of the business license to sell, manufacture or store alcohol, the California State Board of Equalization will determine the kind and type of surety bond you will need, as well as the amount of bond you need to post. The amount of the bond set by the California State Board of Equalization. Most bonds are not less than $500.
However, business establishments which report taxes monthly, the amount of the bond will not exceed double the estimated monthly tax.
Those who want to pay taxes during other periods, (quarterly, semi-annual or annually), the amount will not be more than double the estimated tax during the preferred period of reporting.
What is an Alcohol Tax Bond
The Alcohol Beverage Tax Bond is required by the Obligee (government) to businesses that want to engage in the sale, manufacture or warehousing of alcohol. This particular type of surety bond is designed to guarantee that the company will file and report correct tax payments associated with alcohol sales.
Why Do I Need to Post an Alcoholic Tax Bond?
If you want to start a business concerning alcoholic beverages, state regulators will require you to post an Alcoholic Beverage Tax Bond. The California Board of Equalization will provide you will all the necessary requirements.
With an Alcoholic Beverage Tax Bond, you are telling the Obligee (government) that you are an honest businessman who is willing to comply with all the laws, rules, regulations and statutes of the state. Also, it guarantees that you will pay the exact taxes in the conduct of your business as a seller, wholesaler or dealer of alcoholic beverages.
The state of California can file a claim against the Alcoholic Beverage Tax Bond in case the seller, dealer or wholesaler of alcohol engage in any fraudulent act or make representations on his or his tax amount on alcohol sales.
This type of surety bond gives protection to the state against any alcohol tax fraud. It also provides some security net for the seller, dealer, and importer of alcohol in case they get into tax trouble as the surety bond will initially make payments for the damages until the business owner is liquid again to reimburse the surety.
Why is an Alcoholic Beverage Tax Bond Required?
The government is requiring businesses that are legally licensed to sell, manufacture, import or warehousing to obtain an Alcoholic Beverage Tax Bond as a guarantee that they will strictly comply with all the rules, regulations, laws and statutes associated with their alcohol business.
In cases wherein business owners of alcohol-related establishments fail to comply with any of the rules, regulations, laws or statutes of the state because of illegal actions or inaction, the Alcoholic Beverage Tax Bond can also provide protection to its customers, clients or suppliers. The Alcohol Tax Bond gives an additional guarantee that owners of high-risk businesses to pay proper, correct taxes. It is, therefore, imperative for anybody who wants to engage in the sale, manufacture, import or warehousing of alcohol to rely on experienced, credible and high-risk bond experts when obtaining an Alcoholic Tax Bond.
How Much Does an Alcoholic Beverage Tax Bond Cost?
The amount of premium on Alcohol Tax Bond depends on a case-by-case basis. It is important that a surety company has complete information on the applicant to determine a loss ratio in case a claim is made against the bond. However, if you have a good credit score, you can get as low as between one and three percent value premium of the total bond amount. This means that if you have an excellent credit score and you are required by the California Board of Equalization to post a $10,000 Alcohol Tax Bond, your one-year premium could be as low as $150.
Surety Bond Authority offers an online platform to compute the amount of your premium, and we are happy to provide you financial advice about your business.