The Importance of a Certificate of Good Standing

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Issued by the Secretary of State, a certificate of good standing is a document that confirms your company is authorized to do business in that particular state. It proves that your business is compliant when it comes to filing an annual report, as well as paying franchise taxes and state fees.

Below is some very useful information that every business owner should know about certificates of good standing:

The certificate of good standing—also called a certificate of authorization or certificate of existence—is vital for several reasons:

-Enables you to open a business bank account and make certain bank transactions, including applying for a business loan

-Can be helpful when trying to obtain financing from investors

-Required when applying for the foreign qualification (registering to do business in another state)

-Necessary to renew particular licenses and permits

-Vital when selling the business

-Useful when seeking business partners or applying for a government contract

To obtain a certificate of good standing, a company must:

-Be registered as a legal entity in your state

-Not be in default of corporate rules or suspended by the state

-Be current on all tax filings and obligations

Corporations, LLCs, limited partnerships and limited liability partnerships can obtain a certificate of good standing because these entities are registered with the state. The state is not able to issue a certificate of good standing to sole proprietorships and general partnerships because these types of businesses do not need to register with the state.

Obtaining a certificate of good standing is not a difficult process. The Secretary of State in your home state provides these documents in person, via phone, online, by email, by fax or by mail. Some states will send you an original document to attach to your application for foreign qualification, while other states will ask you to print the certificate from an online account. Keep in mind that some states require original copies of certificates.

Because the certificate of good standing shows that your business entity is legally authorized to do business and is compliant, it is a vital document to have. Online legal services, such as Inc. Authority, can file a certificate of good standing on your behalf in all 50 states. And if your business is not in good standing, Inc. Authority can help you address your business issues and obtain reinstatement.