Jack DonaldYou have been asked to provide a Certificate of Good Standing, but here’s the problem, you have never faced this document in your business life before. Maybe you have heard its other names, like the Certificate of Authorization, Certificate of Status, Certificate of Existence, and Letter of Good Standing, these are all about one.
This document, which is issued by the state authority, indicates that your business is in full compliance with all government requirements as well as filings. This means that you can prove your company has a strong and good reputation in the state you operate by having this document. Now, let’s take a closer look at what the Certificate of Good Standing is and how to get it.
What Does a Certificate of Good Standing Mean?
A Certificate of Good Standing assures that your business entity (either an LLC or a corporation) was legally established and can perform its business activities in the state. When you have paid all fees and submitted all reports for the formation and maintenance of your company to the Secretary of State’s office, and, therefore, the state has pertinent information about your company in its annual reports, then you actually have nothing to worry about, because the Certificate of Good Standing will attest that you are authorized to commence or/and continue your business operation in that state.
Besides the reasons mentioned above, a Certificate of Good Standing might also be necessary for:
- Providing it to your potential investors or business partners;
- Getting financing from creditors;
- Submitting an application for a foreign qualification to operate in another state;
- Selling your venture;
- Insurance for your business enterprise;
- Entering into a contract with another company;
- The renewal of some business licenses and permits;
- Certain banking transactions.
Bear in mind that a Certificate of Good Standing is not the same as a business or professional license, which also is necessary to be in business lawfully. It is possible for a company to do business in the state where it is launched without getting a Certificate of Good Standing. Although Certificates of Good Standing are optional documents, maintaining a good reputation in your state is still an essential issue. For example, many of the situations above will be important for your business development, so before planning any of these things, we recommend that you get certified first.
Does a Certificate of Good Standing expire?
There is an expiration date for a Certificate of Good Standing. It usually falls on the renewal of registration, periodic filing, as well as registration fees being due. Usually, it is the end of the calendar year or another time of the year when state legislation requires these. Moreover, the period of validity of the document will be also specified by the organization asking for it. Thus, if your bank asks for your company’s Certificate of Good Standing, its validity must not exceed 1 month (for accurate information we advise you to contact your state agency to clarify all the details).
Who Can Get a Certificate of Good Standing?
Furthermore, not all types of businesses must be registered with the state, and, therefore, not all businesses can obtain a Certificate of Good Standing. As an example, if you run your enterprise as a sole proprietorship or you are a partner in general partnerships, then you do not need to be registered with the state, and, accordingly, the Certificate of Good Standing is not necessary. They usually provide documents such as tax returns or financial statements instead.
However, other types of businesses have to be officially state-registered and will be able to get a Certificate of Good Standing. They are the following:
- Limited partnerships (in some states);
- Limited liability companies;
- Limited liability partnerships (in some states);
- Corporations.
Where to Get a Certificate of Good Standing?
If you intend to apply for a Certificate of Good Standing for your venture, you can get one from the state agency where you registered it. In most states, you can ask for the Secretary of State or one of its divisions.
To ease your search, we’ve prepared the information below for you on where to apply for a Certificate of Good Standing in every state and how much it will approximately cost you.
At no cost
Here is the list of the states and the departments where you can obtain a Certificate of Good Standing free of charge:
From $5 to $14 inclusive
If you find your state on this list, then getting a Certificate of Good Standing will not be too expensive, $14 at most:
From $15 to $21 inclusive
Let’s now look at the states with more expensive rates for obtaining a Certificate of Good Standing:
$25 and more
Unless you have found your state in the lists above, then you will probably need to prepare a tidy sum to get a Certificate of Good Standing.
What’s Needed to Get a Certificate of Good Standing?
Before you apply for a Certificate of Good Standing, you would better start with a non-formal check to ensure that your business meets all state rules.
First of all, you have to comply with state, federal, and local licensing regulations. This could cover such a rule as, for example, building permits.
Secondly, running a business means that you are required to pay business-related taxes. Based on your business activity, you must register to pay different types of state taxes. It may be sales, withholding, or unemployment insurance taxes. There are also some states that charge an annual tax which allows companies to keep operating there. It is known as a franchise or business privilege tax.
Next, both LLCs and corporations are required by most states to submit an annual, also called periodic, report. It usually includes information about the finances or up-to-date information about your enterprise. Entrepreneurs are required to file this report annually, but in some states, they do it every two or even ten years.
Finally, once you are sure that your business venture meets all the requirements, you can apply for a Certificate of Good Standing.
If you don’t want to handle the process of obtaining a Certificate of Good Standing on your own, you can entrust it to a professional online business service provider. Companies like LegalZoom and ZenBusiness will do everything for you for a fee of up to $75.
