Bail bonds businesses provide an essential service in the justice field. When a judge sets a bail amount for the defendant to get released before the trial, the person being held (and their family) often doesn't have the financial resources to cover the cost. A bail bonds business will put up the collateral to obtain their release so they can prepare for their court date away from jail.

These businesses can also provide another service: offering their knowledge of the bail process and court system to families of the accused so they know how things work, perhaps helping lessen their stress about the situation. The good news is that bail bonds is a $2 billion-per-year industry, with a lot of room for growth. Needless to say, there are lots of business opportunities in the field.

The bad news is that the profession comes with a certain level of risk. If the defendant doesn't show up for their court date, you are required to either track them down or pay the full bail yourself. This is why bail bonds businesses almost always demand collateral from their clients, usually in the form of cash, property, or vehicles, turning these into forfeitures.

Here are some important things you need to know about starting a bail bonds business.

Get Your Bail Bonds Business Licensed and Registered

To run a bails bonds business, you will need to be licensed and registered. Requirements change from state to state so you will have to check the regulations for where you live. Some states don't allow the posting of private bonds, while others have very strict licensing requirements. However, all have licensing fees.

Depending on where you are operating, you may be required to become a private detective first or have experience in law enforcement. You will very likely undergo a background check and fingerprinting.

The state often requires an applicant to:

  • Be 18 years old or older
  • Have a high school diploma or an equivalent GED
  • Have bail insurance or the financial means for a surety bond
  • Successfully complete the pre-licensing course
  • Pass the licensing exam

Many states offer pre-licensing courses to prepare aspiring bail bondsmen for the licensing exam. These classes usually cover everything you need to know about acting as a bail bondsman in that state, which includes the basics of how bail bonds work and any related laws and requirements.

Once you pass the licensing exam, you can apply for your bail bonds license through either the state's department of insurance or the police department.

Prep for Launching a Bail Bonds Company

You'll need to do some more groundwork before getting involved in the wheels of the justice system by offering your services to legal defendants, such as:

Research Your Market

First, you need to know who your market is - people who have been charged with crimes but don't have the means to post bail for themselves and look for the services of a bail bonds business.

You will also have to check out the competition, seeing how many bail bonds businesses are already servicing the area where you want to set up and which services they offer.

Every state offers a variety of different bonds, which may include:

  • Surety bonds
  • Cash bail bonds
  • Property bonds
  • Citation release
  • Recognizance release
  • Immigration bail bonds
  • Federal bail bonds

Not all bonds require the services of professional bondsmen. For example, recognizance release bonds don't require any money to be paid. The judge issuing this is basically saying they expect the defendant to show up for trial.

In some cases, bail bonds businesses will add additional services. These might include acting as process servers and private detectives since these are related to what you would do as a bail bonds professional. In some states, you will have to obtain separate licenses and pay additional fees to perform these services.

Determine How You'll Make Money

For the most part, bail bondsmen charge 10% of the bail amount upfront in order to post bail for their clients. Some states have installed a cap of 8% on the amount charged. If your clients don't show up for their court dates, you may need to send a professional bail enforcement agent, also known as a bounty hunter, to try to retrieve them.

Since your bail bonds company will have to pay the bond if you can't bring your client back to face their charges, you will then need to seize the assets supplied as collateral by your client (even those put in by third parties like relatives and friends).

Set Up Your Office

While it may be possible to operate a business from your home, new bail bonds businesses typically choose to lease space close to where their clients are: courthouses and jails. The office will often have a landline that will redirect to your smartphone since the work for this profession often happens around the clock.

Besides office furniture, your office will need computers to keep track of your clients and their check-ins, court dates, and invoices, and to take care of financial transactions.

In a bigger bail bonds office, you might have partners and employees (e.g., administrative staff). You will have to worry about salaries, deductions, benefits, workers' compensation, and more. Bounty hunters usually get paid a percentage of the bail amount, but only if they convince the defendant to return. This is why they are very motivated in their jobs.

Plan Your Bail Bonds Business

To ensure that you have all of your ducks in a row before actually launching your bail bonds business, you should write a business plan that projects three to five years in the future and outlines what you think must be done to grow revenues. The plan often includes:

  • An executive summary - A snapshot of your company profile and goals
  • A company description - What you do and what differentiates your business from others
  • A market analysis - Research related to your industry and competitors
  • Organization and management details - The structure of your business
  • Service details - Describe the service you offer and how it benefits customers
  • Marketing and sales information - Explain how you will advertise, promote, and market your business
  • A funding request - If you aren't funding the business yourself, reveal how you will get the necessary money
  • Financial projections - Necessary for potential funders and yourself, this reveals when and how much money you expect to earn

Before Opening the Doors of Your Bail Bonding Business

Before you start helping people who are in trouble with the law to get their temporary and conditional freedom, you need to show that you mean business by officially setting up an organization. This usually involves naming and setting up a business entity, registering for taxes, obtaining surety bonds, putting a marketing plan in place, and taking care of the day-to-day running of your operations.

Obtain a Name and Business Entity

For legal and tax reasons, you need to select a business structure for your bail bonds startup. The choices include a corporation, limited liability company (LLC), sole proprietorship, and partnership.

LLCs provide limited liability protection separating your personal and business assets. A sole proprietorship is a business owned by an individual, with no separation between the business and the personal finances of the owner. While it is easy and inexpensive to establish, it leaves you with liability issues for any debts and lawsuits that are successfully launched against your business.

How you register your bail bonds business may differ from state to state (and even city to city). Often, you will have to reserve and register a business name, checking with local government registries available through the secretary of state office to ensure your name doesn't match another business too closely. You should also check federal business and trademark databases to see that your business name isn't already taken.

Set Up Tax IDs and a Bank Account

As the owner of a bail bonds business, you need to understand your federal, state, and local small business tax requirements and register for the proper tax IDs. The business structure you set up will determine what taxes you'll pay and how you'll pay them.

You will be required to get an employer identification number (EIN) from the Internal Revenue Service (IRS) if you plan to hire employees and to identify your business for tax purposes (you may also need a separate state ID). Besides income tax, you might have to pay employment taxes (if you have staff), property taxes, sales and use taxes, and others.

It's also a good idea to set up a business bank account (and may be required in some states to launch a business) and a business credit card to keep your business and personal assets separate and to help you build up a positive credit history for your company.

Some banks won't want to work with high-risk companies like bail bonds, so you might have to apply for a high-risk merchant account instead of a standard one. This should help simplify how you collect your payments and minimize financial risks to your business.

Obtain Surety and Insurance Protection

Many states require licensed bail bondsmen and bail bondswomen to prove they can pay for any bonds forfeited because a client missed a court date. This proof usually comes in the form of bail insurance, or surety, underwritten by an insurance company or surety company.

Other types of insurance that your bail bonds business needs may include liability insurance, commercial property insurance, vehicle insurance, workers' compensation, and business interruption insurance.

Register Your Bail Bonds Business

When you're ready, you'll probably need to register your business with courts in the county or state in which you'll be operating. You'll also need to register your new business with the local law enforcement and the county sheriff department where you'll be writing bonds.

You'll need to get yourself on the list for county and local jail bail bonds so you can get business from prison clients who need your help. Each jail may have its own rules about how bail bonds work, so you'll need to do some research.

Advertise Your Legal Services

You'll need to have a marketing plan to get clients and repeat business. Besides registering on jail lists, you should consider introducing your bail bonds business by sending letters and business cards to members of law enforcement, defense attorneys, and other workers in the judiciary. Typical means of promotion might include telephone directory and Yellow Pages listings, listings in online directories, online and offline advertising, signs, and billboards.

You might want to develop a professional brand with a logo and specified standards for your advertising and promotional efforts. This branding can be used on stationery, business cards, promotions, websites, advertising, and more. You could hire a professional design or branding firm or look for experienced freelance talent on an online talent-matching platform like Upwork.

A designer can also help you design a website, which most businesses require these days, to promote their services, answer any questions potential clients may have, and book appointments. You can also build your own website with easy-to-use platforms like Squarespace, Weebly, and Wix.

Another essential online method of promotion is social media, such as LinkedIn and Facebook. These channels allow you to post about your business, interact with potential clients and their families, and monitor conversations about your business and industry.

You can also decide to get your bonds business listed for free on Google My Business, but make sure to respond to requests and reviews (good or bad) quickly and positively.

Other Things That Are Part of the Job

When actually running a bail bonds business, you want to be able to effectively deal with the high-pressure circumstances of helping get people at their lowest ebb released on bond from jail and ensuring they return for their court dates. Still, a lot of day-to-day administrative and financial work also needs to be done to keep the business afloat and growing. It helps to have the right tools in place to expedite these tasks.

For example, a good accounting system like Skynova can help you to stay on top of expenses and income and invoice with a few keystrokes to ensure that there's a steady stream of income. Similarly, custom-branded templates for purchase orders and receipts help facilitate the running of your bail bonds business.

If you have employees, you'll have to have a payroll system and make appropriate deductions for taxes, including:

  • Social Security and Medicare
  • Federal income tax
  • Federal unemployment tax (FUTA)

Help Your Bail Bonds Business Thrive

While the wheels of justice might grind exceedingly slow, Skynova can help you run your business more efficiently and get paid faster. Rather than sending an invoice or purchase order by snail mail and waiting for a response, you can use our online modules for any small business to send these quickly and expedite the entire process (especially if your supplier or client accepts or makes online payments).

Whether you want to provide an estimate to a lawyer or take care of cash flow issues with a full-featured accounting platform, Skynova can help make the part you play in our legal system a success.