A certificate of good standing is an important document that some businesses require at some point during their operation. However, not all businesses will require a certificate of good standing. To decide whether your business needs one, we encourage you to review the following information.
What is a certificate of good standing?
The best way to think of a certificate of good standing is to think about it like it was a passport for your business. Essentially, this document shows that your business is in good standing with your state and is legally and officially registered to do business in that state.
Depending on your state, a certificate of good standing could be called a certificate of status, good standing certificate, certificate of authorizations, or a certificate of existence. No matter what your Secretary of State’s office calls the certificate, it proves that your business is authorized to conduct business in your state.
Who needs to file for a certificate of good standing?
There are several situations where you will need to file for a certificate of good standing with your Secretary of State’s office, including:
- You are asked to provide one by a lender or bank to prove your creditworthiness or the existence of your business to open a line of credit, credit card, take out a small business loan, or open a bank account for your business.
- Potential investors that are considering investing in your business or becoming a partner will often ask for a certificate of good standing to ensure your business is in compliance with your state.
- You can need a certificate of status when you need to obtain or renew certain business permits, licenses, and certificates.
- You will need to provide a certificate of authority if you are expanding your business in another state. That state will request one to verify you are in good standing with your state.
- If you ever decide to sell your business, you will need to provide a certificate of good standing to your sales agent so they can provide it in your portfolio that potential buyers will see.
- Other businesses can ask you to provide one when you are establishing lines of credit with them.
How long is a certificate of good standing valid for?
A certificate of good standing has a limitation on the number of months it is valid. Most Secretary of State offices will issue the certificate and have it be valid for 90 days. At the end of that time, you would need to apply for a new one if one was needed later.
Why is a certificate of good standing only valid for such a short period?
The status of your business could potentially change in the future. As such, states want to ensure you maintain your good standing with the state. However, for businesses that are no longer able to do this, the state wants to ensure they are not able to obtain a certificate of status until they bring their business back into good standing with the state.
In other words, the short valid period helps protect other businesses, investors, and parties that require one.
Does my business need a certificate of good standing?
Limited liability companies and corporations frequently need to obtain a certificate of good standing for various reasons. Small businesses that operate as sole proprietorships or partnerships may not need one as often.
However, some states require business entities to obtain one as part of the processes of registering their businesses and obtaining their business licenses. So, when you are first starting a new business, it can make sense to obtain one because you will most likely want to open a bank account and apply for a business credit card or a line of credit for your business.
How can FastFilings help me obtain a certificate of good standing?
FastFilings can help you save time obtaining a good standing certificate from your Secretary of State’s office. We have streamlined the process of applying for one and take the guesswork out of knowing what form to complete, let alone completing it correctly.
It takes about five minutes to complete our secure online form. After you submit the form, we review it and use this information to fill out your certificate of good standing application. As long as everything is in order, it is possible to have your certificate of good standing delivered electronically to you the same business day.
To get your certificate of good standing, fill out our online application form today! You may also contact FastFilings using our online contact form if you have any questions or require additional assistance.