Written By: Matthew Phillips | Last Updated: May 17 2021 | Category: Bail
How To Start A Bail Bonds Business (6 Easy Steps)
Are you looking to open your own bail bonds business and earn your cut of an annual 2.3 billion dollar industry? Are you motivated to help families get their loved ones back home to prepare for their court date without being behind bars? If you have found this guide, chances are you want to get the ball rolling, but are not quite sure how to get started. This step-by-step guide will show you exactly what to do to offer bail bond services, so lets get started.
Step 1 - Perform Some Bail Bond Market Research
Why Is This Step Very Important? Much like any new business venture, it is critical to determine the demand for the services you want to offer and the amount of competition in the same locality where you will be based. If you find a number of other bail bond agencies in your local area, this is actually a good sign that there is decent demand for the services you will offer, and all you need to do is offer more value to your potential clients.
How To Do This Market Research: I recommend that start your journey by finding and contacting local sheriffs, police departments, defense attorneys and even judges to gain some perspective on the local bail landscape. Unlike just relying on Google, these individuals will be able to tell you first hand about the local demand for your services, and provided it is allowed in your state, may even result in some referral business in the future.
Limitations/Min Requirements: Please note that some states are unfriendly to commercial bail bonding and has been replaced with alternative systems. These states include Oregon, Illinois, Maine, Wisconsin, Kentucky, Washington DC, Nebraska, and Massachusetts. You will also need a bondsman license to be able to offer your services, and have the backing of either personal wealth or from a reputable surety company.
Step 2 - Register Your Local Bail Bonds Business
What State Should You Focus? In the beginning, unless commercial bail bonds are prohibited, I recommend registering your business in your local state and establishing a strong presence before deciding to expand into other states. In most cases, you will be more profitable doing this than spreading yourself too thin across multiple states. Additionally, each new state will require another registration process, so keep that in mind.
Registration And Startup Cost: The cost associated with registering your business to operate within a state varies between $300 to $1000, and your best bet is to look at your local state website to determine the total fees based on the desired business type (LLC, etc.). Once complete, don't forget to get your EIN directly from the IRS to maintain tax compliance and to open a local bank account for your brand new business.
What Licenses Are Required? Unless you have the goal of employing bail agents from day 1, you will need to earn your bondsman license in order to offer any bail bonds services. This will be covered in more detail in step 3, but I just wanted to mention it here as it is often an overlooked expense for new business owners. In some cases, it might be prudent to attend the required courses and pass your exams before registering a new company.
If you live within a jurisdiction that does not allow bail bond agencies to operate from a home address, renting office space would need to be factored into the start-up costs. Additionally, even if it is allowed, I strongly recommend that you have a short-term goal of separating your work from your personal space (this includes your phone number). While this does add a financial commitment, it also improves your general safety and allows you to better advertise your services (more on this later).
Step 3 - Pass Exam and State License Application
What Are The Min Requirements? While the bondsman licensing requirements do vary per state, you are generally expected to have a clean criminal record (in the last 10 years), hold a high school diploma or GED, be older than 18 years, and must be a U.S citizen or legal resident (sometimes local state residency is required). I also recommend that you ensure you can get financial support from a surety company before going any further.
How Do I Pass My Examination? Although it is not required in every state, I recommend that you first attend an authorized pre-licensing course to help you prepare for your exam, understand the industry, and stay compliant with local laws. When you are ready, you will need to pay around $80 to take the 60 (ish) multiple choice exam that has a score requirement of 70%. Please make absolutely sure that you bring all the needed materials (such as your credit card, course certificate, etc.) to avoid disqualification, and note that some states require a year between exam retries.
How To Apply For A State License? In some states, the process of attending the training course, completing the exam and earning your state license is all bundled into a single system. However, if that is not the case, your next step after passing the exam is to go to your state department of insurance and submit your exam scores, provide evidence of surety company backing your bonding activities (more on this later), and pay for your state license. You may need to renew it every 1-3 years, and you must be working in the bail industry on an ongoing basis to qualify for a renewal.
Step 4 - Partner With A Reputable Surety Company
Do You Really Need A Surety? In short, unless you have wealth that you are willing to risk, a surety company will act as an insurance broker who will pay the bail bond if a defendant skips his or her court date and you cannot recover the money. If you opt to handle the financial backing yourself, keep in mind that around $15k is usually the minimum that you will need, and that the court will see you as the source of payment if it's needed.
What About Bounty Hunters? Many bail agencies employ the services of a bond enforcer, who will help you find the "jumper" (the defendant who skipped the court date) and simply charge a percent share of the bonded amount. If you decide to employ the help of a bounty hunter (presuming that it is allowed in your state), be sure to avoid anyone who may cause your agency to earn a bad name through their actions.
Our Surety Recommendations: The choice of surety largely depends on who is willing to back your new agency, the rates that they offer based on the perceived risk, and if they do business in your state. A few of my personal recommendations are Palmetto Surety, Roche Surety, Crum & Forster, Bankers Surety, Star Insurance Company, Lexington National and Atlantic Surety, but there are others that are also very good.
The application for your state license may require additional fingerprinting and a criminal history check (especially if you are renewing it) and these are usually billed as a separate fee. In some cases, your pre-licensing course could also include the cost of taking the exam (once), and if you have any questions about the process you can contact your local state licensing board.
Step 5 - Find a Reliable Bail Management Software
Why Do I Need To Use Software? While using spreadsheets and various other tools may be fine in the beginning, you will usually run into difficulties with managing defendants, court dates, processing and keeping track of payments, etc. in the medium to long-term. With that in mind, kickstarting your bail agency with the right tool for the job will not only save you time and money immediately, but also help avoid bigger difficulties in the future.
Quick Steps To Get Signed Up: To sign up for Captira 2.0, which is a leading bail software solution in the U.S, click here to register . You will gain access to powerful bail management features that will not only save you time on a daily, weekly and monthly basis, but also help you to easily scale up your agency, or simply manage it much more efficiently in the years to come.
How Much Does Software Cost? Captira costs $99 per month and there are no long-term contracts (month to month, cancel at anytime). Once you have subscribed, you can also make use of various other optional research tools, such as quick background and credit checks, criminal history records, automated defendant watch (which notifies you if they are re-arrested), bulk SMS for outbound marketing, and much more.
Step 6 - Decide On Your Fees And Advertising Goals
What Are The Common Rates? While the way you structure your bail bond fees is completely up to you, a common approach is to charge a percent of the total bonded amount. For example, if the bond is $1000 and you decided that your agency takes a 10% fee, then you will earn $100. The best approach would be to see what other agencies are charging, and while you don't need to be the cheapest, use their prices to help you decide.
Quick Tips For Your Marketing: I recommend that you focus on referral marketing (think local authorities, local directories for bail agencies, etc.), social media marketing (primarily audience building) and making sure that you have a quality website. I also suggest you work on optimizing your Google My Business (GMB) with a focus on getting 5-star reviews, and concentrate on ranking for keywords in the organic Google results.
Any Advertising Restrictions? You are not allowed to use Google Ads to advertise bail bond services as it is a banned category (this is specifically for paid advertising, you can still rank organically for terms). Facebook Ads also has similar restrictions for campaigns targeting bail bonds, and repeated attempts to run them my even get your account restricted.
Although you should have a strong online presence and put a lot of effort into presenting your brand to potential clients via various digital marketing efforts, I recommend that you also put some time into offline advertising. A well-placed billboard, newspaper, magazine or radio feature, or even signage outside your offices can help generate recurring business.
BONUS: How To Manage A New Bail Bonds Startup:
Scale up by adding new staff: While it is perfectly fine to start off solo, try to avoid the situation where you are trading your own time for money in the long-term. Instead, look to hiring bondsman and sales people as soon as possible, and shift your focus to management and scaling your agency.
Keep your license up-to-date: Whether this is your own license or those of your employees, remember that in most states you need to renew licenses on a regular basis to continue offering bail bond services. Don't leave this to the last minute as it can negatively affect your agency.
Template your bail bond forms: If you have not done so already, I suggest that you "templatize" your bail forms so that creating them on demand doesn't create a bottleneck in day-to-day operations. If you have opted to use the Captira bail software, we can help you put those together for you.
Quick Summary And My Concluding Thoughts:
The first step to building a successful bail agency is to start with market research. While this may sound a little boring, it is absolutely critical to determine if commercial bail businesses are allowed and whether there is sufficient demand for your services based on the competition. Once you have crossed that bridge, the next step is to register your bail company and complete all tasks associated with that (IRS, etc.).
Depending on your state, the order of attending classes (which may be optional), passing an examination and earning your license may be different to what was described in this article (it may even be all bundled into one), but the end result is that you are certified to offer commercial bail bond services to your potential clients. I highly recommend reading over step #3 and step #4 for more details.
While it is certainly possible to manage your bail agency with a combination of tools like spreadsheets, etc, you will have a much easier time and grow your business quicker with a solid bail management software. If you are looking for a solution that doesn't break the bank and has all the features you need, consider signing up with Captira by clicking on this link.
Lastly and certainly not least, you need to decide on what your fees will be (10% of total bonded amount is fairly popular), have a solid online and offline marketing plan for your agency (while keeping in mind various restrictions), and dedicate yourself to growing your agency to the point where it ideally takes care of itself without demanding all of your time. Remember, your time is more valuable than money will ever be!
In conclusion, starting a bail bonds business is an exciting prospect and although the task may seem a bit daunting, hopefully this guide will give your effects a huge kick start. If you have any questions about the article (perhaps for your specific state), would like to chat about our other software solutions like our overdue debt recovery), or simply want to learn more about Captira and what we do, please feel free to reach out to us.
