LLCs and corporations need a certificate of good standing to prove that their business is run in a compliant manner and has no outstanding debts with the state. To know what is a certificate of good standing and how to get a certificate of status, keep reading.
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What is a Certificate of Good Standing
The certificate- of good standing is also sometimes called a “certificate of existence”, a “certificate of status”, a “certificate of compliance”, or a “certificate of authority.”
A Certificate of Good Standing is an official document that confirms that a company is up-to-date with its filings and has no legal issues preventing it from conducting business.
In other words, this official document verifies that:
- Your company is registered correctly,
- Your business is in good standing with the state,
- Your company has no pending fees or outstanding debts,
- You run your company in a state-compliant manner.
Who Issues the Certificate of Good Standing
Certificates of Good Standing are typically issued by the state government, and they can be used to demonstrate compliance with various regulations.
For example, many banks require businesses such as LLCs, corporations, LLPs, etc., to have a Good Standing certificate before opening a business account.
Obtaining a Certificate of Good Standing is usually a simple process, and it can be obtained online or by mail. Some states charge a fee for the certificate, while others provide it free of charge.
Why You Need a Certificate of Good Standing
Unlike business licenses and permits, the certificate of status is not mandatory to operate your LLC or corporation. However, there are certain circumstances where you might need a Certificate of Good Standing. Here are a few of the most common:
- You are opening a business bank account
- You’re applying for a business loan or line of credit from a bank
- You’re trying to lease commercial space
- You are soliciting funds from potential investors
- You want to register your LLC or other business in another state as a foreign or out-of-state LLC
- You want to transfer or domesticate your business to another state
- You’re selling your business, and the buyer wants proof that the company is in good legal standing
- You are contracting with another company
- You need to show compliance with government regulations in any other situation
If you’re not sure whether you need a Certificate of Good Standing, it’s always best to check with the concerned authority you are dealing with at that particular time. They will be able to advise you on whether this document is required for you or not.
Documents Needed to Apply for Certificate of Good Standing
Different states have different rules for business entities. So, the specific documents you’ll need to apply for a Certificate of Good Standing vary by state, but they typically include:
- The company’s Articles of Incorporation in case of S or C corporation or the corporation’s registration number
- Certificate of Formation in case of LLC or the company’s registration number
- The company’s most recent annual report
- A resolution from the board of directors authorizing the application for a Certificate of Good Standing
- The application fee (if applicable)
Once you have all the required documents, you can begin the application process.
How to Apply for a Certificate of Good Standing
Applying for a Certificate of Good Standing is typically a simple process. In most cases, you can apply online or by mail. Some states charge a fee for the certificate, while others provide it free of charge.
If you’re applying for a Certificate of Status online, you’ll need to fill out an application and submit it electronically. Once the application is processed, you’ll typically receive the certificate by email.
If you’re applying by mail, you’ll need to send the required documents and application fee (if applicable) to the appropriate state government office. Once your application is processed, you’ll receive the certificate of existence by mail.
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