Why Do Small Businesses Need a Certificate of Good Standing?

How do you know if, or when, your business needs a certificate of good standing?

What’s a Certificate of Good Standing?

This documentation goes by a few different names. Some of these include a certificate of facts, certificate of existence, or certificate of status.

A certificate of good standing is a legal document which proves your business is registered to operate in its state of incorporation. This same document serves as physical proof your business is in existence and in compliance with the state.

Your entity formation, usually a corporation or LLC, has met its legal obligations. Some of these include paying all statutory dues, like taxes and fees, and filing periodical reports in a timely manner. As such, the company may transact business because it is proven to be in good standing.

When Do I Need a Certificate of Good Standing?

There are several occasions where you will need a certificate of good standing. Some of these include the following instances:

Conducting business in a state outside of your state of formation. The original certificate of good standing must be accompanied by a certificate of authority to do business, as you are doing business in a state which is different from the state where you incorporated the business.
Obtaining financing with potential lenders.
Entering into, and performing, business transactions and contracts.
Renewing business license(s) or permit(s).
Opening a business bank account.
Selling a business.

In addition, having a certificate of good standing shows the state of formation has received all fees, taxes, and penalties it may have been owed from the business. It also certifies articles of dissolution have not been filed with the state.

How Do I Get a Certificate of Good Standing?

A state official will issue the certificate of good standing to the business seeking to obtain it. To obtain a certificate of good standing, you need to file an application and include the following information.

The name of the business.
A statement which states your business is incorporated and authorized to do business in that state.
Notice that all fees and taxes owed to the state have been paid.
Notice of the most recent annual report filing for the business.

Remember to pay a filing fee prior to submitting this application. Submit the materials to the proper mailing address or drop off at the appropriate location. If you are unsure where this is, you may check in with the Secretary of State to find out.

What Else Should I Know About the Certificate of Good Standing?

As a final pro tip, remember to keep up with the expiration date for the certificate of good standing. Generally, most certificates are valid for up to 90 days. Afterwards, you may need to pay a renewal fee to restore its status as active.

This certificate is your official evidence your corporation or LLC is in existence. You may now legally transact business within the state, so keep up with its fees in a timely manner.

Obtain a certificate of good standing with MyCorporation. Contact MyCorporation at mycorporation.com or give us a call at 877-692-6772.

Deborah Sweeney

Deborah Sweeney is an advocate for protecting personal and business assets for business owners and entrepreneurs. With extensive experience in the field of corporate and intellectual property law, Deborah provides insightful commentary on the benefits of incorporation and trademark registration. Education: Deborah received her Juris Doctor and Master of Business Administration degrees from Pepperdine University, and has served as an adjunct professor at the University of West Los Angeles and San Fernando School of Law in corporate and intellectual property law. Experience: After becoming a partner at LA-based law firm, Michel & Robinson, she became an in-house attorney for MyCorporation, formerly a division in Intuit. She took the company private in 2009 and after 10 years of entrepreneurship sold the company to Deluxe Corporation. Deborah is also well-recognized for her written work online as a contributing writer with some of the top business and entrepreneurial blogging sites including Forbes, Business Insider, SCORE, and Fox Business, among others. Fun facts/Other pursuits: Originally from Southern California, Deborah enjoys spending time with her husband and two sons, Benjamin and Christopher, and practicing Pilates. Deborah believes in the importance of family and credits the entrepreneurial business model for giving her the flexibility to enjoy both a career and motherhood. Deborah, and MyCorporation, have previously been honored by the San Fernando Valley Business Journal’s List of the Valley’s Largest Women-Owned Businesses in 2012. MyCorporation received the Stevie Award for Best Women-Owned Business in 2011.