Are you a professional document preparer looking to protect your clients and your business? This post covers the ins and outs of document preparer bonds, including what they are, why they’re important, how much they cost, how to obtain them, and more.
All n One Bonding and Insurance Inc. stays up-to-date with the latest information to ensure our clients receive the best guidance and support when obtaining bonds.
Let’s get started.
Document Preparer Bonds: What To Know
A Document Preparer Bond, also called a Document Preparation Services Bond, is a type of surety bond that protects your clients from errors you might make while preparing their legal documents. It ensures your clients are compensated for losses incurred—up to a given amount.
Who Needs A Document Preparer Bond?
Document preparation services that offer the following typically need to obtain a document preparer bond:
- Preparation of legal documents, such as contracts, wills, trusts, or powers of attorney.
- Assisting with the completion of certain applications.
- Preparing certain forms, including immigration forms, divorce forms, custody forms, and vehicle registration and title forms.
Note: In some states, tax preparation is included under the umbrella of document preparation services. For example, in Nevada, Assembly Bill 324 (enacted in July 2017) expanded the definition of document preparation services to include those who assist in preparing federal or state tax returns.
Assembly Bill No. 324 states the following:
“(Chapter 240A of NRS) Section 1 of this bill expands the definition of “document 7 preparation service” to include a person who, for compensation, assists a client in preparing all or substantially all of a federal or state tax return or a claim for a tax refund, excluding a certified public accountant who is licensed in this State or a financial planner who is subject to certain state requirements. Section 1 further provides that paralegals are included, under certain circumstances, in the definition of “document preparation service.”
LegiScan, a legislative tracking and reporting service, indicates that the bill was passed on 2017-05-19 and approved by the Governor. Chapter 47.
See the latest bill text on LegiScan, as there may have been updates and changes made.
Why Document Preparer Bonds Are Important
Getting a document preparer bond is a requirement in some states, but beyond this, having a document preparer bond helps you accomplish a few things.
One, you demonstrate your commitment to protecting your clients. Two, you gain trust and credibility in your industry. And three, you protect your business from potential legal claims or disputes.
Let’s expand upon this subject by looking at the two main benefits of document preparer bonds.
Benefit 1: Document preparer bonds PROTECT YOU by ensuring compliance with state regulations
While different states have their own rules when it comes to document preparers, if your state requires a bond, it’s in your best interest to get one. What happens if you don’t secure a bond when it’s required? Well, it depends, as states impose their own penalties.
For example, according to the Nevada Revised Statutes (NRS) Chapter 240A, which governs document preparation services, penalties for violations can include civil penalties.
The Secretary of State has the authority to impose a civil penalty of not more than $1,000 for each violation after a hearing on the matter. This penalty applies regardless of whether the person is still a registrant at the time of the violation.
See section NRS 240A.260 for more information concerning the above.
For notary publics, certain violations under NRS 240.085 can result in a fine of not more than $2,000. Read the Duties & Obligations Of A Document Preparation Service page from the Nevada Secretary of State website for more information.
Benefit 2: Document preparer bonds strengthen your professional reputation
When someone comes to you for help with document preparation, they’re putting a lot of trust in your hands. That’s where a document preparer bond comes into play. Ultimately, this type of bond protects your clients and gives them peace of mind.
Additionally, document preparers who consistently maintain a clean record and avoid claims against their bond enjoy certain benefits, including an easier time renewing their bond or obtaining bonds in the future. This is because surety companies are more likely to work with low-risk professionals.
How Does A Document Preparer Bond Work?
A document preparer bond works by holding the document preparer accountable for fulfilling their contractual obligations and maintaining the highest standards of integrity, honesty, and professionalism in their work.
Keep in mind that a document preparer bond is different from an insurance policy, as the bond involves three parties:
The Principal: The person or business that takes out the bond (in this case, the document preparer).
The Surety: The company that provides the financial guarantee.
The Obligee: The party that receives the benefit if a claim is made against the bond.
Filing A Claim On A Surety Bond
Should a document preparer violate state regulations or engage in fraudulent, unscrupulous, or negligent practices that cause harm to a client, the bond provides a path to recourse.
The wronged client can file a claim against the bond, at which point the surety company will investigate. If the surety determines the claim is valid, they will compensate the client for their losses up to the full amount of the bond.
Tip: To file a claim, your best bet is to reach out to the Nevada Secretary of State Document Preparation Services Division. They’ll be able to guide you through the process and let you know exactly what steps you need to take.
Here’s the thing, though – it’s important to make sure that the document preparer you’re working with is actually licensed by the State of Nevada. If they’re not, you might be out of luck if something goes wrong and you need to file a claim.
So, before you hand over any important documents or sensitive information, always double-check that your document preparer is fully licensed and bonded.
After A Client Is Compensated
After the surety company compensates the client, the company will turn to the document preparer to recover the money paid out to settle the claim. This means that the document preparer is ultimately financially responsible for any claims against their bond.
When A Document Preparer Fails To Pay Back The Surety Company
If a document preparer fails to repay the surety company for a claim paid out on their behalf, the surety company could take legal action against the document preparer to recover their money. This could mean getting slapped with a lawsuit, which is never a fun experience.
But the consequences don’t stop there. When a document preparer doesn’t make good on their debt to the surety company, it’s like a black mark on their business.
It could make it a whole lot harder for the document preparer to get bonded in the future, hindering their ability to do business.
Additionally, the surety company can cancel the document preparer’s bond. Without a valid bond in place, the document preparer might not be legally allowed to operate in their state or jurisdiction. It’s like having their professional license pulled.
Duties and Obligations of A Document Preparer
As a document preparation service, your responsibilities can change quite a bit depending on where you’re operating and the kinds of services you’re offering.
However, there are common responsibilities that these services must adhere to, including:
Contract Development: The document preparation service must develop a contract that meets statutory requirements. This contract should clearly outline the services to be provided, fees, and any other relevant terms and conditions.
Document Preparation: A document preparation service assists with the preparation of documents for self-representation in legal proceedings.
Document Integrity: Document preparation services are responsible for ensuring the integrity of the documents they prepare. This includes organizing documents and adhering to regulatory requirements.
Long-Term Storage Strategy: One of the key responsibilities of document preparers is to develop a well-thought-out system for storing client documents long-term. This means putting together a system for archiving files in an organized way so they can be quickly retrieved whenever a client needs them.
Non-Representation: While legal document preparers can be a valuable resource, they have one significant limitation: non-representation. This means that they cannot represent you in court or offer legal advice tailored to your specific situation. Instead, their role is to provide factual information related to your legal matter and prepare necessary documents.
Education and Registration Requirements: The requirements to become a legal document preparer vary by state. Nevada has specific standards that must be met before one can offer document preparation services, which you can read about here in Document Preparation Services Qualifications.
Cost of Document Preparer Bonds
At All n One Bonding and Insurance Inc., the cost of document preparer bonds is typically 1% of the bond amount, plus additional fees:
- Credit card fee (if applicable).
- $25 bond fee.
For example, if the bond amount is $10,000, the cost would be:
- Bond premium: $100 (1% of $10,000).
- Bond fee: $25.
- Total cost: $125 (excluding credit card fee, if applicable).
Nevada Document Preparer Bond Amounts
The bond amount that is required in Nevada is based on the number of registrants within the document preparation service:
For 1 registrant (or sole proprietorship), the bond amount is $25,000.
For 2-25 registrants, the bond amount is $50,000.
For 26-75 registrants, the bond amount is $75,000.
For 76-125 registrants, the bond amount is $100,000.
For 126-200 registrants, the bond amount is $150,000.
For 201 or more registrants, the bond amount is $200,000.
How To Obtain A Document Preparer Bond From Us
We understand the importance of a streamlined process when obtaining a document preparer bond. Here are the steps you need to follow:
Submit An Application
First, you’ll need to complete our bond application and provide the necessary information about your document preparation service. The process is straightforward, and 99 percent of applicants are approved.
Make A Payment
Once we receive your application, you’ll pay the premium based on your bond amount. You can make a payment through your preferred method, including a credit card (subject to a fee).
Receive The Bond
Once your payment goes through, that’s it! Your bond will be issued. However, it’s important to note that the Secretary of State has specific requirements for document preparers. Read the NVSOS website’s Bond Requirements page for more information.
Depending on your preference, you have four options for receiving your bond:
In-Person Pickup: If you’re in the Las Vegas area, you can choose to have your bond signed by Andrew Renshaw, our CFO and licensed Property and Casualty producer, and pick it up at our Vegas office.
Standard Mail: We can mail your bond to the address you provide.
Overnight Delivery: If you need your bond urgently, we offer overnight shipping for an additional $75 fee.
Email Delivery: For certain types of bonds, such as notary bonds, that don’t require an agent’s signature, we can email the bond directly to you for added convenience.
We’re committed to providing a hassle-free experience for our clients. If you have any questions or need assistance, our team is always here to help.
What To Look For In A Document Preparer Bond Provider
When choosing a surety company for your document preparer bond, make sure they meet the following requirements:
- They are licensed and authorized to issue bonds in your state.
- They have a good reputation in the industry.
- They offer competitive rates and flexible payment options.
- They are communicative, friendly, and professional.
- They provide excellent customer service and support.
Contact All n One Bonding & Insurance For Document Preparer Bonds
All n One Bonding & Insurance is an experienced provider of document preparer bonds. We are fully licensed and authorized to issue bonds in Nevada, meaning you can obtain one with confidence.
Moreover, we believe that exceptional customer service is the foundation of success. That’s why we go above and beyond to ensure that you receive the personalized attention and support you deserve. Whether you need assistance with your application, have questions about your bond, or require urgent delivery of your bond document, we’re here to help.
Don’t settle for less when it comes to your document preparer bond. Choose a provider that meets all the essential criteria and has your best interests at heart. Contact All n One Bonding & Insurance today.
Disclaimer: Nevada may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained in this post. Please refer to official sources.