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What is a Certificate of Good Standing?
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A certificate of good standing is a form that indicates a business is up to date with state-required business filings and/or taxes. Each state’s secretary of state office or similar government entity issues certificates of good standing, which may also be referred to as certificates of existence or certificates of status.
Though not required to legally operate, a certificate of good standing may be needed when you apply for business licenses, take part in a business transaction or open a business bank account. And it’s good to know where your business stands. If your company repeatedly fails to pay taxes or file other paperwork, your state may have the power to revoke your right to operate.
- Certificate of existence vs. certificate of good standing
- What does a certificate of good standing look like?
Do I need a certificate of good standing?
You may need to obtain a certificate of good standing from your state’s secretary of state office if an outside party needs evidence that your business is in compliance with state law and allowed to conduct business statewide. The only businesses that could prove good standing with the state would be those required to register with the state upon formation. Business entities that typically must register in any state where they conduct business include:
- Limited liability companies (LLCs)
- Nonprofit corporations
A certificate of good standing is often required in a business acquisition or sale. For instance, if you decide to sell your business, the buyer would want to ensure your business has authority to operate in your state. Providing a certificate of good standing would be part of the due diligence process, which involves the buyer evaluating all aspects of your business before making a deal.
Some other instances when a certificate of good standing may be required could include:
- Doing business in another state: If you want to expand your business outside of your home state, you would need to register your business as a “foreign entity” in each new state. This process typically includes providing a certificate of good standing from your original state.
- Opening a business bank account: Some large banks, such as Bank of America and Chase, may request corporations to submit documents depicting that the business is currently in good standing.
- Applying for a business loan: Though not common, some lenders may require a certificate of good standing in your business loan application.
- Obtaining a business license: Some states require a certificate of good standing to obtain certain business licenses. For example, a certificate of good standing is required to get a liquor license in Rhode Island.
- Seeking investments: Potential business investors or venture capitalists may want to make sure the business is in good standing before making investments.
- Purchasing business insurance: An insurance provider may request a certificate of good standing before issuing a policy for your business.
A certificate of good standing may not include information regarding state taxes. If your state bases good standing on annual reports or other filings, an outside party could require additional information to prove that you’ve fulfilled your tax obligations. Likewise, if you’re considering doing business with another company, a deeper dive into public records may be necessary. You could also order a company’s business credit report.
Certificate of existence vs. certificate of good standing
Some states give a full picture of a company’s tax status and other public filings, while other state forms only confirm that a business exists. Although, some states provide multiple forms. A certificate of existence simply states that the business has a legal existence and has not filed any documents to dissolve or close.
A certificate of fact, similar to a certificate of existence, from the Secretary of State of Texas is an example:
It’s possible for a business to have a legal existence but not be in good standing within a state. Some states, such as Georgia and North Carolina, only offer certificates of existence. Make sure you understand if your state certifies your business’s existence or your overall standing. A state could certify that your status is active, inactive or dissolved, to name a few.
What does a certificate of good standing look like?
The information included with a certificate of good standing varies from state to state. Generally, a certificate includes information such as the business name, entity type and whether the business is active and authorized to do business in the state.
Some states may include more details. For instance, the Nevada Secretary of State website provides a couple of examples of its certificates of existence. Business owners may request a long-form certificate that lists all organizational documents on file for their company. You may have to pay a nominal fee for a certificate of good standing with long forms sometimes costing a bit more.
How to get a certificate of good standing: State by state
You can typically obtain a certificate of good standing or similar document from your state’s secretary of state office. Keep in mind that the state office may not issue the certificate unless all business reports and taxes are up to date. You may need to file missing reports and tax documents or pay penalties to return to good standing. As we mentioned earlier, you’ll also likely need to pay a fee to secure your certificate. Fees generally range from $5 to $50, depending on details such as your state and entity type.
If you receive an unsolicited request to fill out a certificate of status request form, it could be a scam. Check with your state to be sure.
Here’s where you can request a certificate of good standing or a similar document in each state and the District of Columbia:
Certificate of good standing FAQs
What is a certificate of good standing?
A certificate of good standing is a document that shows whether a business is up to date with all business requirements in its home state. Only businesses that are registered at the state level, such as corporations or LLCs, are able to obtain a certificate of good standing. The name of this document — and the information it provides — varies by state, as some states provide certificates of existence or certificates of status.
What does “good standing” mean?
To be in “good standing” generally means your business has met all of its legal obligations in the state where you operate. In some states, good standing also reflects tax information, such as whether you have paid all state taxes and submitted the required filings. That’s not always the case, so you may need to obtain state tax records in addition to a certificate of good standing.
How do I get a certificate of good standing?
You can request a certificate of good standing from your state’s Secretary of State office, or another government entity that provides certificates and business records. You may owe a fee that could range from $5 to $50 depending on your business entity type, method of delivery for your certificate and depth of information.