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What is a Certificate of Good Standing?
A certificate of good standing is a legal document that proves your company is legally registered and legally formed or compliant in your home state. It demonstrates that you are authorized to do business and currently following state requirements.
This certificate is often called a certificate of existence, status certificate, certificate of status, or certificate of authorization. They can be used for different corporations, including a C Corporation.
Here is an article about the certificate of good standing.
Who Needs a Certificate of Good Standing?
A certificate of good standing is generally not required but may be requested from your state. This is not the same as a business license which is a requirement and must be displayed publicly at all times.
A certificate of good standing is not required for a sole proprietorship in any state. However, in some states, corporations and limited liability companies may be required to get one. In addition, partnerships, limited partnerships, limited liability partnerships, and limited liability limited partnerships may or may not need one, depending on your state.
In most cases, the only way you require a certificate of good standing is if you are doing business with someone who needs you to have it. For example:
- If you are applying for a loan/line of credit for your business
- If you are seeking a line of credit for goods and services
- If you are transferring or selling your business
- If you are looking to do business in a state other than the one you are formed in
- If you are soliciting funds from investors
Here is an article with more information on who needs a certificate of good standing.
How to Get a Certificate of Good Standing
For companies looking to get a loan or line of credit or those looking to expand their business to another state, a certificate of good standing may be necessary. The process of getting one can vary from one state to the next.
In some states, such as Alabama or Arkansas, you can request a certificate of good standing from the Secretary of State’s office. There is a fee associated with this though it is small.
Florida offers the document directly online. The fee is less than $10, with differences based on whether you are an LLC or a corporation.
Some states offer a certificate of good standing from their Division of Corporations, which is generally inexpensive but could cost up to $200 depending on the state and the documents needed.
There are online and in-person options to obtain this certificate in many states. In contrast, some states only offer in-person options. Additionally, there are other states where you can request and receive the document via fax or phone.
Here is an article about the different methods of requesting a certificate of good standing for each state.
Image via Pexels by Edmond Dantès
Why Certificates of Good Standing are Important
There are various reasons that a certificate of good standing is essential for different companies and corporations. This document is designed to let others know that you carry out your business legally and adequately and are trustworthy as a business. This can be important for:
- Companies you want to do business with. It assures them you have fulfilled your obligations in the past and are more likely to fulfill them in the future.
- Banks and financial institutions you are looking to receive credit or loans from. This assures them you can be trusted to pay back the money they give you.
- Individuals or other companies that you are looking to sell your business to assure them there is no hidden debt or liability before they make the purchase.
- Other states where you would like to do business as it assures them you run a legitimate company that benefits the people of their state.
- Investors you would like to receive funds from. A certificate assures them that you are not hiding large amounts of debt and can be trusted to use the funds efficiently.
You can also use this document simply to show that your business is operating as it should be and that you have nothing to hide. While it is not often requested by customers and is not required for this purpose, it can still earn increased trust from new customers.
Here is an article about why a certificate of good standing is important.
What Could Cause You to Lose Your Good Standing?
Several things could cause you to lose your good standing, but all of them are factors you would know of at the time. Nothing could cause you to lose good standing secretly or without your knowledge.
For example, you could lose your good standing by:
- Not filing annual reports as required
- Not maintaining a registered agent or office as required
- Not paying franchise taxes as required
- Not making all payments in a timely fashion
- Making mistakes in forms that are filed
- Losing your business or occupational license
- Criminal activity by the business or owner
- Failing to file required documents
Suppose you have missed payments, especially to the IRS or other government entities. In that case, you will find that your application for a certificate of good standing is denied. Getting back in good standing is quite simple in most cases.
Also, the primary reasons that someone will lose their standing are failure to pay a tax or fee or failure to file a specific document. Once these situations are remedied, your good standing is reinstated. This means that it could be a matter of a few minutes to a few hours at most to get your good standing.
However, there are some situations where it may take more work to reinstate your standing. Speaking with your state agency will allow you to find out precisely what is keeping you from getting your certificate and what you need to do to fix the problem.
Here is an article about how you could lose your good standing.
Resolving Poor Standing
If you find yourself in poor standing, you will need to go through resolving any outstanding issues to have a chance to restore your good standing. You may also need to submit additional forms to the state your business is licensed and prove that you have resolved all issues.
The forms will also require a fee to be reviewed, and you will need to check with your state what those specific fees are. The process consists of:
- Determining what outstanding or overdue fees exist.
- Resolving/paying all outstanding fees.
- Obtaining all necessary forms for reinstatement.
- Auditing reinstatement forms to look for errors.
- Submitting completed reinstatement forms.
- Paying required application filing fees.
Once you have completed all of these steps, you may reinstate your business to good standing. However, the application can still be rejected.
Post a project in ContractsCounsel’s marketplace to get help with a certificate of good standing. All lawyers in our network are vetted by our team and peer reviewed by our customers for you to explore before hiring.
Meet some of our Certificate of Good Standing Lawyers
Jason H.
Jason has been providing legal insight and business expertise since 2001. He is admitted to both the Virginia Bar and the Texas State Bar, and also proud of his membership to the Fellowship of Ministers and Churches. Having served many people, companies and organizations with legal and business needs, his peers and clients know him to be a high-performing and skilled attorney who genuinely cares about his clients. In addition to being a trusted legal advisor, he is a keen business advisor for executive leadership and senior leadership teams on corporate legal and regulatory matters. His personal mission is to take a genuine interest in his clients, and serve as a primary resource to them.
Jane C.
Skilled in the details of complex corporate transactions, I have 15 years experience working with entrepreneurs and businesses to plan and grow for the future. Clients trust me because of the practical guided advice I provide. No deal is too small or complex for me to handle.
Thomas G.
https://www.tgravelylaw.com/
Sunnita B.
Experienced sports and entertainment attorney. I specialize in contracts, business formation, licensing, wage disputes, negotiations, and intellectual property.
March 26, 2022
Pankaj R.
I advise clients in the areas of business, trademarks, real estate, employment, and finance. My overarching goals are to unite creative people and companies to assist them in making sound legal and business decisions. I have been fortunate enough to build a fast-growing, 21st-century law firm with an amazing staff by my side. Our focus is not just on providing invaluable legal insight but creating a better all-around client experience. We provide unique subscription pricing and flat-fee options for our clients, providing billing transparency and enhanced value to all of our wonderful clients. Focus areas: contract drafting, negotiations, research, trademarks international law, entertainment, business development, entity choice; business: manager, team builder, leader, motivator. Speaking Engagements: National Business Institute (NBI) - "Business Contracts 101"
March 26, 2022
Neilson B.
Hi, I am the founding member of Son of Brown Law Firm, based in Charlotte North Carolina. Our firm practices in the areas of Business Transactions, Cannabis/Hemp, Personal Injury and Immigration Law.
March 29, 2022
Patrycja S.
Freelance attorney helping others beat overflow work by assisting with legal research, legal drafting, discovery, litigation support and client relations.
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ContractsCounsel User
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Location: New York
Turnaround: Over a week
Service: Prepare & File
Doc Type: Certificate of Good Standing
Number of Bids: 4
Bid Range: $600 - $1,200
ContractsCounsel User
Reinstate Business and File LLC correctly
Location: Maryland
Turnaround: Over a week
Service: Prepare & File
Doc Type: Certificate of Good Standing
Number of Bids: 3
Bid Range: $1 - $1,000
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