Certificate of Good Standing: Why Do Businesses Need This Document?

What is a certificate of good standing — and how do you know if, or when, your business needs this documentation?

Certification of Good Standing



What’s a Certificate of Good Standing?

You might have heard of this term before. If not as a certificate of good standing, it may be referred to as a different name such as certificate of facts, certificate of existence, or certificate of status.

A certificate of good standing is a legal document that proves your business is registered to operate in its state of incorporation. This same document also serves as physical proof that your business is in existence and in compliance with the state.

That means your entity formation, usually a corporation or LLC, has met all legal obligations. Some of these include paying all statutory dues, such as taxes and fees, and filing periodical reports in a timely manner. As such, the company is authorized to transact business because it has proven to be in good standing.

When Do I Need a Certificate of Good Standing?

There are several occasions where you will need a certificate of good standing. Some of these include, but are not limited to, the following instances:

  • Conducting business in a state outside of your state of formation. The original certificate of good standing must be accompanied by a certificate of authority to do business, as you are doing business in a state that is different from the state where you incorporated the business.
  • Obtaining financing with potential lenders.
  • Entering into, and performing, business transactions and contracts.
  • Renewing business license(s) or permit(s).
  • Opening a business bank account.
  • Selling a business.

In addition, having a certificate of good standing shows that the state of formation has received all fees, taxes, and penalties it may have been owed from the business. It also certifies that articles of dissolution have not been filed with the state.

How Do I Get a Certificate of Good Standing?

A state official will issue the certificate of good standing to the business that is seeking to obtain it. In order to obtain a certificate of good standing, you will need to file an application and include the following information.

  • The name of the business.
  • A statement that states your business is incorporated and authorized to do business in that state.
  • Notice that all fees and taxes owed to the state have been paid.
  • Notice that the most recent annual report for the business has been filed.

Remember to pay a filing fee prior to submitting this application.  Submit the materials to the proper mailing address or drop off at the appropriate location. If you are unsure where this is, you may check in with the Secretary of State to find out.

What Else Should I Know About the Certificate of Good Standing?

Congratulations on obtaining your certificate of good standing!

As a final pro tip, remember to keep up with the expiration date for the certificate of good standing. Generally, most certificates are valid for up to 90 days. Afterwards, you may need to pay a renewal fee to restore its status as active.

This certificate is your official evidence that your corporation or LLC is in existence. You may now legally transact business within the state, so keep up with its fees in a timely manner.