What is a Certificate of Good Standing? A Certificate of Good Standing is a document issued by the state that confirms an individual’s good standing concerning their legal obligations. This validation allows businesses and individuals in multiple industries, including real estate, accounting, financial services, and insurance companies, to verify your information quickly and accurately. A Certificate of Good Standing is a document that proves a company or person’s good standing. It can be used for legal purposes and maintain its public image. It is important to keep up with your certificate of good standing because it will help you maintain your status as an active member in the business world. For example, what would you respond if I questioned whether your company operates legally in your state? If you don’t have a certificate of good standing, you won’t be able to respond.
A certificate of good standing is an important document for expanding firms, even if it isn’t always required. It’s simpler to apply for a company loan, create a bank account, or compete for a government contract if you have this paperwork ready to go. What’s even better? Obtaining a certificate of good standing is straightforward and affordable. However, before we move any further, you need to understand the essentials of a good standing certificate.
What Is a Good Standing Certificate?
A certificate of good standing is a state-approved written document that certifies that your firm is properly registered with the state and permitted to do business as of a certain date and for a specific length of time.
A number also knows it of other names, including:
- Good Standing Letter
- Existence Certificate
- Authorization Certificate
- Certificate of Authenticity
- Status Certificate
This document serves as verification that you have legal permission to do business in your state and that you have complied with all state laws, including filing all required paperwork and paying all fees and taxes. Simply put, a good standing certificate verifies that you are a legitimate company. However, it isn’t required for every company, and it isn’t required to be posted publicly.
The Fundamentals of a Good Standing Certificate
This section will discuss The Fundamentals of a Good Standing Certificate to help you understand the nuances related to this specific document.
Elements of Basic Information
A good standing certificate isn’t a one-size-fits-all document. While there is significant variation, there are certain basic characteristics. Your firm name, selected business entity, business start date, and authorized state are all included in the paperwork. To make it official, you’ll also need the Secretary of State’s seal and signature.
Standing Certificates: Long-Form vs. Short-Form
The distinction between long-form and short-form standing certificates is also crucial to notice. A long-form certificate of good standing validates the status of a corporation while also providing all papers on file. Certified copies of these papers, on the other hand, are not automatically attached to the certificate and must be obtained along with it (if needed). A short-form or standard certificate of good standing, on the other hand, merely validates the existence and status of a corporation without identifying the papers submitted. The majority of states do not provide “good standing certificates” that certify the company’s legal existence. Instead, they merely provide certificates certifying the company’s existence in the state’s records. As a result, you should study the certificate carefully to understand what the state is certifying.
Eligibility of a Business Entity
A certificate of good standing may only be requested by businesses required to register with the state. As a result, if your company structure does not need registration, you will be unable to get the document—but you will not require one either.
Corporations and limited liability companies (LLCs) must register in all states, although sole proprietorships are not. In addition, there are different forms of business organizations, including partnerships, limited liability partnerships (LLPs), limited partnerships, and limited liability limited partnerships (LLPs), although whether they must register varies by state.
Requirements Fulfillment
To continue in good standing, every firm must meet compliance standards, regardless of its location. However, these obligations and duties differ from state to state and entity type to entity type.
Here’s a rundown of typical state criteria that will help you keep in good standing:
- On-time payment of federal, state, and local income taxes, sales taxes, and franchise taxes
- Complying with local zoning and regulatory regulations
- Having a registered agent is essential.
- completing required documentation and filing an annual report
- Maintaining a board of directors, following bylaws, having mandatory meetings and correcting minutes, and so on are all examples of corporate rules and regulations.
- Maintaining business and professional licenses.
Many states provide online checking services if you’re ever confused about the status of your company. Alternatively, you might get legal and tax guidance from a company attorney and an accountant.
Another location to receive thorough information is the Secretary of State’s office.
Importance of Documents
At various points throughout their life, agencies and organizations may need a certificate of good standing. The following is a list of reasons why various entities may need one:
- When a business needs to raise capital,
- For establishing a new bank account or requesting a business loan
- When it comes to concluding a contract or other commercial transaction,
- When applying for foreign qualifications, keep in mind that certain states will not allow businesses to operate inside their borders if they are not in good standing with their home state.
- Business licenses and permissions must be renewed every year.
- For the sake of your company’s security
- To entice prospective business partners—or potential customers if you want to sell the company—to form strategic alliances.
- When applying for a government-backed loan or a federal government contract, here are a few things to keep in mind.
- Set up a system that allows you to accept credit or debit cards.
Procedure for Obtaining a Certificate
The Secretary of State’s office or the Department of Licensing and Regulatory Affairs, depending on your state, will issue you a certificate of good standing. Another alternative is to apply online. Once your application is accepted, you will get an email with the certificate. You’ll receive a link to print the document online if you don’t. The whole procedure takes 7-14 business days. You may request physical copies for an extra cost if you desire them.
5 Tips to Help You Get a Certificate of Good Standing
For roughly $50-$100, plus state costs, online legal firms will assist you in submitting for a certificate of good standing in all 50 states. Furthermore, if the necessity arises, these businesses can assist you in resolving issues and reclaiming your good standing (via a procedure known as reinstatement). Here is a list of several company formation services to think about:
1. LegalNature
Whether you’re starting a new company, running day-to-day operations, or managing personnel, LegalNature will help you succeed. Although the firm is most known for its legal papers, which cover various topics, it also offers some outstanding company formation services. Whether you want to create an LLC, C-Corp, S-Corp, or a non-profit, it can entirely automate the creation process. In addition, LegalNature provides various services, including certificates of good standing, articles of dissolution, EIN, articles of modification, and registered agent services, among others. The cost of forming a company is $40, and legal document plans are $84. However, you must pay extra for additional services, which start at $20 for certified copies and $125 per year for registered agent services.
2. LegalZoom
With over 4 million users, LegalZoom is one of the most well-known company creation services. It has higher brand power than most of its rivals because of its aggressive advertising technique. It can manage a huge number of LLC forms and other types of businesses with ease. LegalZoom has a long variety of services, including a good standing certificate. Additional services include company licenses, federal tax identification numbers (EINs), seller’s permits, and 501(c)(3) applications. For busy enterprises, the extended customer support service may be very beneficial. Packages with LegalZoom start at $79 plus filing costs.
3. Incfile
Look no farther than Incfile if you’re seeking a low-cost company creation service with a solid reputation in the industry. Several individuals in my network strongly suggest this service because of its excellent features and low cost (Several people on my network highly recommend this service for its impressive offerings at a shocking cost of $0 (for the first year).). (for the first year). You know, all Incfile packages include a free year of registered agent service, after which you’ll be charged $119 a year, which is still less than competing business formation services. Keep in mind that state-by-state differences exist in the basic subscription options. Name availability verification, online status monitoring, next-day processing, and article prep and submission are all included in Incfile plans. Certificate of good standing is available as part of Incfile’s premium add-ons, which must be purchased separately from the standard plan.
4. ZenBusiness
ZenBusiness is a well-known brand in the company formation industry, with a lengthy list of pleased and satisfied clients. ZenBusiness, as its name suggests, aims to make launching a company as stress-free as possible. It takes a novel approach, using technology and automation to make the LLC and Corp registration process easier. ZenBusiness provides a comprehensive range of services, including LLC, registered agent, and incorporation services, as well as DBA, EIN, good standing certifications, and company name reservation. While the monthly price begins at $49 (minus state costs), obtaining a certificate of good standing will set you back an extra $75 (plus state fees).
5. The Authority of Inc.
If you plan on forming an LLC, I highly recommend using The Authority of Inc. to set up your company. What is the reason behind this? To begin with, the LLC services are completely free. All you have to do now is pay the state fees, and you’re good to go.
Second, when you establish your free LLC, you have access to many valuable services, including a free registered agent for a year, a company name check, tax planning advice, digital document storage, Form 2553 preparation and filing, and entity formation document management. As for a certificate of good standing, not only can The Authority of Inc. help you file the document on your behalf in all 50 states, but it can even help you obtain reinstatement by addressing your business issues.
Three Ways to Get a Certificate of Good Standing
As previously said, obtaining a certificate of good standing isn’t difficult if you know what to do and choose the correct online legal agency. I’ll show you three tips to simplify the procedure in the sections below.
1. Ensure that your company meets all requirements.
The purpose of obtaining a good standing certificate is to verify that your company is “in good standing.” Keeping up with your state’s compliance obligations often include the following:
- Adherence to federal, state, and local licensing requirements (e.g., health permits and building permits)
- registering for several types of state taxes
- Filing a periodic report summarizing your company’s finances — or just updating your company’s basic details.
While the specifics differ by state, the bottom line is that you must pay all of your taxes and fees and submit all of the proper documentation.
2. Recognize the Reinstatement Procedure.
Following the established laws and regulations helps you remain in good standing with the state, making your life less stressful and unpleasant. However, it is impossible to rule out the risk that your company would lose its excellent position.
If this happens, you should be aware that you may take steps to restore your company’s good standing. The reinstatement procedure varies per state. However, the following is a broad outline:
- First, determine the basis for your company’s non-compliance.
- Then, on behalf of your firm, submit a reinstatement form to the Secretary of State’s office (or the equivalent agency).
- Before filing all of the needed compliance documentation, be sure you have paid all of your due taxes, penalties, and fees.
3. Keep an eye on the certificate’s expiration date.
If you wish to do business in a state where you aren’t registered, you’ll need to file for foreign entity registration and present a certificate of good standing from your home state. The trouble is good standing certificates have state-specific expiry dates that vary depending on your objective. In most cases, the certificate is valid for up to 90 days. However, this is not always the case. As a result, before submitting, you should always check to see how long your certificate of good standing is valid.
Here’s a quick breakdown of the acceptable periods in each state:
- Arkansas, Michigan, New Jersey, New Mexico, South Carolina, Vermont, Washington, D.C., and Wyoming have less than 30 days.
- Arizona, Hawaii, Illinois (for LLCs), Indiana, Missouri, Nebraska (for Corps), New Hampshire, Oklahoma, Oregon, Rhode Island, Tennessee, and Wisconsin (less than 60 days).
- Connecticut, Florida, Georgia, Idaho, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Nevada, North Dakota, Ohio, South Dakota, and Washington have less than 90 days.
- California, Delaware, Mississippi, Montana, Nebraska (for LLCs), North Carolina (less than six months).
- New York, West Virginia: less than a year
Note that LLCs are not required to have a standing certificate in Alabama, Alaska, Colorado, Kentucky, Minnesota, Pennsylvania, Texas, Utah, and Virginia.
Conclusion
I’m going to presume you submitted a certificate of good standing for a specific purpose. This might include creating a business bank account, filing for a business loan, or renewing your company license, among other things. After obtaining the certificate of good standing, you should naturally ponder why you need it in the first place. If you were to apply for a business loan, for example, you’d need to present the document to the bank along with the rest of the needed papers. Similarly, if you wanted to sell your firm, you’d have to display the certificate to potential purchasers as proof that you’re a genuine company that follows the law.
Frequently Asked Questions
How do I write a certificate of good standing?
A: A certificate of good standing is a type of official document that states the status of an individual or entity concerning certain legal requirements, such as having a valid trade license.
What should a letter of good standing include?
A: A letter of good standing is a formal document issued by an official body stating that the person to whom it is written has no known legal recourse against a particular individual or entity. It may be required for some types of business transactions, such as when you are going through bankruptcy proceedings and need someone’s signature on your paperwork to protect yourself from creditors.
What is the purpose of a certificate of good standing?
A: The certificate of good standing is a document issued by an organization that confirms its status as a legal entity and the existence of authorities in charge. This can be used for various purposes, such as proof to establish one’s identity with customs officers or banks.
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