As a business owner, a Certificate of Good Standing is crucial to you. The valuable document signifies that your state’s officials verified your business is compliant with mandatory regulations and considers your business in good standing.
This article, which takes only a few minutes to read, lets you know what’s required to get a Certificate of Good Standing. Once you have this document in your possession, you can display it proudly alongside other regulatory certificates.
What is a Certificate of Good Standing?
This Certificate confirms that you submitted the necessary paperwork and paid the required fees to charter and register your business with your state’s regulatory authorities.
When you possess this document, it signifies to businesses and customers that your business entity is legally registered in your state and hasn’t been suspended by the taxing authority.
Depending on where you live, the Certificate of Good Standing can have different names: Certificate of Status, Certificate of Existence, or Certificate of Authorization.
Should I get a Certificate of Good Standing?
Your business structure determines whether you’re eligible to apply for a Certificate of Good Standing. Examples of entities eligible to apply include:
- limited liability corporations
- partnerships and limited partnerships
Not every state requires eligible business entities to register. If you’re uncertain, contact your state’s business filing agency.
The importance of Good Standing
When your business is legally registered in your resident state, having a Certificate of Good Standing erases all doubt in anyone’s mind that your company is legit. Likewise, before you can expand your business to another state, you’ll need this Certificate to register it there.
For example, if you formed a corporation in California and plan to open a business in Arizona, you’ll need to obtain a Certificate of Good Standing in California before registering your business in Arizona.
A business’s reputation in the community and business world gives your business a competitive edge. You stand out among other competitors when customers and businesses trust your company.
What do you need a Certificate of Good Standing for?
- Most commonly, lenders may request this Certificate when a business owner applies for a loan or line of credit to help establish creditworthiness.
- Banks prefer having one when a business opens checking and savings accounts.
- A supplier may want a Certificate when you purchase goods or services from them.
- Individuals or businesses may request a Certificate to establish an ongoing business alliance.
- In most instances, you’ll need the Certificate to renew a business license or pay taxes.
- Investors or buyers interested in your business will make sure you run a legitimate business and abide by your state’s rules and regulations by requesting a Certificate.
Can a Business Lose its Good Standing?
A business that fails to renew licenses, pay fees and taxes, or commit business fraud is nearly guaranteed to lose its Certificate of Good Standing. The Certificate is good until it expires but renewing it would be problematic when a business fails to comply with local and state regulations.
If your business falls on hard times, you should contact your state agency immediately and let them know what’s going on. They can help you restore your Certificate of Good Standing. In most cases, you may only need to pay outstanding fees or complete the necessary paperwork.
How to get a Certificate of Good Standing
When reviewing this list of steps, please keep in mind that the process will vary from state to state.
1. Complete pre-requirements
To get the Certificate, you must have already paid federal and state taxes, filed the required annual state reports, and have in hand any required local and state permits to run your business.
Likewise, your business entity should already be registered with the state. To verify whether your business is in your state’s registration system, you can call the state agency or verify your status online.
Certificates are only issued when an entity is in full compliance meaning a business hasn’t defaulted on corporate rules or been suspended by the state.
2. Contact your state agency
You’ll need to find which agency offers the Certificate in your state. It could be the Department of State, the Secretary of State, or the Department of Licensing and Regulatory Affairs.
When you’re on the agency’s website, you may need to set up an online account to proceed.
Keep in mind that sometimes, you won’t find a direct link to apply for the Certificate because there are only in-person requests at a state agency office.
3. Have information ready when applying online
To apply online, you’ll need your business’s legal entity name and ID number as registered with your state before you can proceed.
Please note that nearly all states charge a fee when requesting a Certificate (it can go up to $50).
4. Request your Certificate
After you complete the form online or when visiting a state office and pay the requested fee, the state will process your request. Depending on each state’s processing system, it’s possible to immediately download your Good Standing Certificate, have it emailed or sent to you through the U.S. postal system.
Processing times vary widely per state.
Online services can obtain a Certificate on your behalf, but as expected, they charge for their assistance and fees for shipping and handling and expedited services.You can find online services like Incfile, My USA Corporation, Incorp, or Harbor Compliance.
However, applying directly with your state filing agency is easy and cheaper. Aslo, you don’t share personal information (such as your name, phone, email, address, entity name, and ID#) with a third-party representative.
How to get a Certificate of Good Standing: California
If you just want to know if your business is in Good Standing and registered, you can look it up here.
The form will require you to fill in really basic information about you and your business (don’t worry, you’ll find detailed instructions on the form).
Applicants can mail or drop off the order form and a check or money order at the designated addresses shown on the order form.
Email and online requests are not accepted at this time.
Don’t delay to get this important document
As you can readily see, a Certificate of Good Standing makes things easier whether you’re ready to expand or sell your business. And what’s also important is that getting one issued to your business is not difficult.
Having the Certificate in your possession could determine whether a lender approves a loan or a supplier fills a large order for your business. Not having one could influence whether your business thrives or stalls out.
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