A key part of being a successful business owner is ensuring you have all the necessary documentation. This includes a certificate of good standing, an official document that confirms your company is authorized to do business in your state.
There are many reasons a business might need a certificate of good standing, from requesting a loan or new line of credit to purchasing a new office space. Getting a copy is a simple process, usually handled by the same state agency with which you registered your business.
This guide lays out all the essential information about certificates of good standing, including how to acquire one.
Who Needs a Certificate of Good Standing?
A certificate of good standing is not required for day-to-day business operations, but you might need one to deal with any situation.
When you open a dedicated business bank account, it’s common for the bank to request a copy of your certificate of good standing as part of the process. In addition, business insurance providers, creditors, and lenders often request such a certificate.
If you’re looking to merge with another company, that company will likely wish to see your certificate as proof of your legitimacy. You may also need a certificate of good standing if you’re looking to land a government contract. When selling your business, having your certificate readily available helps brokers and potential buyers assess your credibility.
Routine business transactions, like renewing permits and certificates, may require you to provide an updated copy of your certificate of good standing to complete the process. You will also likely need to produce a copy if you register to do business in other states.
How To Obtain a Certificate of Good Standing
When it comes to obtaining government documents, the process can sometimes be a hassle. Fortunately, getting a certificate of good standing is relatively straightforward, and the steps are similar across the country.
First, it’s important to know that you can only get a certificate of good standing if you registered your business with the state. Not all business types are required to register, so keep this in mind. If your business is a corporation or a limited liability company (LLC), both must register when forming the business, so obtaining a certificate should be fairly straightforward.
However, registration requirements for other business entities, such as partnerships, limited partnerships (LP), and limited liability partnerships (LLP), vary from state to state. In addition, sole proprietorships are not required to register in any state.
In Good Standing
To obtain a certificate of good standing, your business must be in good standing. In other words, you must meet all of your state’s legal requirements and fully comply with state laws. This means that you’ve filed your quarterly and annual reports, filed and paid all your taxes, and acquired all the necessary licenses and permits.
If you’re unsure of whether or not your business is in good standing, most states have a way to check your status online. If you registered your business online, you should be able to log into your state business portal and find the information you need.
Requesting a Certificate of Good Standing
The business filing agency in your state typically also handles issuing certificates of good standing. In many states, the agency is either the Secretary of State or the Department of Revenue, though it may be something else, so refer to your state business guidelines.
Most states allow you to request a copy of your certificate online, although some require a written request form. In addition, you can request a copy in person or over the phone.
Some states have fees associated with obtaining a certified copy, and some business owners hire a legal service company to obtain it on their behalf.
Turnaround times for acquiring the certificate vary greatly, so refer to your state for details.
Once you have a copy of your certificate of good standing, you’ll need to be mindful of the expiration date. Certificates typically expire within 30, 60, or 90 days from the date, but check with your state to be sure.
If you’re planning on doing business in another state, check that state’s expiration dates, as they may differ from those of your home state.
Government documentation can be a hassle, but it’s necessary for business success. Luckily, getting a certificate of good standing is a simple process.
Having a valid copy on file is a great idea, significantly if you’re growing your business through new loans, locations, and major business deals.