Houston Transient Merchant Bond: A Comprehensive Guide
January 25, 2022
This guide provides information for insurance agents to help their customers obtain Houston Transient Merchant Bonds. All Alabama counties require transient merchants to be bonded. However, this article focuses solely on the bond and licensing requirements for transient merchants operating in Houston County.
At a Glance:
- Average Cost: Either $100 or 0.5% of the bond amount, whichever is greater
- Bond Amount: Either $2,000 or 5% of the wholesale value of any merchandise or services offered for sale, whichever is less
- Who Needs it: All transient merchants operating in Houston County
- Purpose: To ensure the public will receive compensation for any damages should the transient merchant fail to pay all required taxes and fees
- Who Regulates Transient Merchants in Houston County: The Houston County Probate Office
Alabama statute 34-35-3 requires all transient merchants operating in the state to obtain a license in each county they operate in. The Alabama legislature enacted the licensing laws and regulations to ensure that transient merchants engage in ethical business practices. To provide financial security for the enforcement of the licensing law, all transient merchants operating in Houston County must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the Houston Transient Merchant Bond?
Alabama requires transient merchants to purchase a surety bond as part of the application process to obtain a license in the county in which they are operating. The bond ensures that the public will receive compensation for financial harm if the merchant fails to comply with the regulations outlined in Alabama statute 34-35-7. Specifically, the bond protects the public in the event the merchant fails to pay all taxes and fees owed to the county. In short, the bond is a type of insurance that protects the public if the transient merchant breaks licensing laws.
How Can an Insurance Agent Obtain a Transient Merchant Surety Bond?
BondExchange makes obtaining a Transient Merchant bond easy. Simply log in to your account and use our keyword search to find the “transient merchant” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone at (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
Is a Credit Check Required for the Houston Transient Merchant Bond?
No, a credit check is not required for the Houston Transient Merchant bond. Because the bond is considered relatively low risk, the same low rate is required to all transient merchants operating in Houston County regardless of their credit history.
How Much Does the Houston Transient Merchant Bond Cost?
The Houston Transient Merchant Bond can cost either $100 or 0.5% of the bond amount, whichever is greater.
Who is Required to Purchase the Bond?
Alabama requires all transient merchants operating in the state to purchase a surety bond prior to receiving a business license in the county they are operating in. To paraphrase Alabama statute 34-35-1, a transient merchant is any person or business entity that sells goods or services, in a location that they do not own, for a period of 6 months or less.
Exemptions to this definition include:
- Civic and nonprofit organizations, wholesale sales to retail merchants by commercial travelers or agents selling in the usual course of business
- Wholesale trade shows or conventions
- Sales of goods, wares, services, or merchandise by sample catalog or brochure for future delivery
- Fairs and convention center activities conducted primarily for amusement or entertainment
- Any general sale, fair, auction, or bazaar sponsored by a church or religious organization
- Garage sales held on premises devoted to residential use
- Sales of crafts or items made by hand or sold or offered for sale by the person making the crafts or items
- Duly licensed flea markets operating from a fixed location
- Sales of agricultural products, except nursery products and foliage plants
- Sample sales made by a seller at residential premises under an invitation issued by the owner or legal occupant of the premises.
How do Transient Merchants Apply for Business License in Houston County?
Transient Merchants operating in Houston County must navigate several steps to secure their license. Below are the general guidelines, but merchants should refer to the application form for details on the process.
License Period – All Alabama Transient Merchant County Licenses expire 90 days after they have been issued
Step 1 – Purchase a Surety Bond
Transient merchants must purchase and maintain a surety bond with a limit of $2,000 or 5% of the wholesale value of any merchandise or services offered for sale, whichever is greater
Step 2 – Complete the Application
All Houston County business license applications should be mailed to the following address:
Houston County Business License Office
462 N. Oates Street
Dothan, AL 36303
Transient merchants must complete the application in its entirety, and submit the following items:
- The merchant’s, and their registered agent’s, name and permanent address
- A statement describing the kind of business the merchant will conduct, the length of time the merchant will be conducting business in the county, and the business’s proposed location
- Proof that the merchant has obtained all required licenses and permits
- Names company’s owners/officers and its state of incorporation (if applicable)
Merchants are required to pay a $250 fee when submitting their license application.
Do Transient Merchants Need to Renew Their License?
All Alabama transient merchant licenses expire 90 days after they have been issued. Therefore, merchants must re-apply for a business license each time they wish to conduct business in a county.
What are the Insurance Requirements for Transient Merchants Operating in Houston County?
Houston county does not require transient merchants to obtain any form of liability insurance as a prerequisite to obtaining a business license. Transient merchants must purchase and maintain a surety bond with a limit of $2,000 or 5% of the wholesale value of any merchandise or services offered for sale, whichever is greater.
How Do Houston Transient Merchants File Their Bond?
Transient merchants should mail the completed bond form, including the power of attorney, to the following address:
Houston County Business License Office
462 N. Oates Street
Dothan, AL 36303
The surety bond requires signatures from both the surety company that issues the bond and from the transient merchant. The surety company should include the following information on the bond form:
- Legal name and location of entity/individual(s) buying the bond
- Surety company’s name and location
- Bond amount
- Date the bond is signed
- Date the bond goes into effect
What Can Houston Transient Merchants Do to Avoid Claims Against Their Bonds?
To avoid claims on their bonds, transient merchants in Houston must ensure that they pay all required taxes and fees owed to the county.
What Other Insurance Products Can Agents Offer Transient Merchants in Houston?
Houston County doesn’t require transient merchants to purchase any form of liability insurance as a prerequisite to obtaining a business license. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for Houston Transient Merchant Customers?
Houston unfortunately does not provide a public database to search for active transient merchants operating in the county. We suggest contacting the county probate office directly to obtain this information. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.