What is a Certificate of Good Standing?
Your business may need a certificate of good standing for certain business actions, such as opening a business bank account, applying for a business loan or selling your business. If your company repeatedly fails to pay taxes or file required paperwork, your state may revoke your right to operate.
Here’s everything you need to know about certificates of good standing and how to get one in your state.
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The meaning of a certificate of good standing
A certificate of good standing shows that your business entity complies with your state’s business regulations and has no outstanding tax accounts. Other names for this document include:
- Letter of Good Standing
- Certificate of Legal Existence
- Certificate of Authorization
- Certificate of Status
A good standing certificate differs from a business license, which is typically needed to start a business. Some states impose an expiration date for certificates of standing, whereas others leave it open-ended. However, if your business entity changes, you must apply for a new certificate. Furthermore, some organizations and lenders require certificates issued within a specified time frame, such as the past 30 to 60 days.
You may have to pay a nominal fee for a certificate of good standing — typically no more than $50.
The exact information in your certificate of status varies from state to state. But, it generally includes the business name, entity type and whether the business is active and authorized to conduct business within the state.
Some states include additional details. For instance, the Nevada Secretary of State website provides sample certificates of existence with the option to list all organizational documents on file for your company.
When business owners need a certificate of good standing
A certificate of standing isn’t required for all business types. For example, if you operate as a sole proprietorship, you do not need to register your business with the state. Because of this, sole proprietors can’t request a certificate of good standing.
However, all states require you to register corporations and limited liability companies (LLCs), with some states requiring registration for certain business partnerships. Therefore, certificates of good standing are typically needed for these types of businesses.
However, business owners don’t always need an up-to-date letter of good standing on file. Here are the most common situations when you might need to provide a certificate of good standing:
- Opening a business bank account
- Applying for a small business loan
- Purchasing business insurance
- Conducting business outside your home state
- Acquiring business investors or partners
- Obtaining or renewing business licenses and permits
- Transferring or selling your business
How to get a certificate of good standing in your state
You can typically request a certificate of good standing from your state’s secretary of state office, which should list any required paperwork and associated fees. However, your state office may deny the certificate if your business reports and business taxes are not in good standing.
Here is where you can request a good standing letter from each state and the District of Columbia: