When you finally take that step to incorporate your company, the initial filing is only the beginning. You will also be responsible periodically for documenting the company’s progress—for instance, by completing an annual corporate report.
A Certificate of Good Standing, otherwise known as a “Certificate of Authorization,” or a “Certificate of Existence,” is a document issued by the state where you registered your LLC, S corp, or C corp, showing that the business has met this and any other statutory reporting requirements and is permitted to do business. The document confirms that your business has paid all the necessary state fees, filled the annual corporate report requirement, and paid any franchise taxes it may owe.
When Would You Need a Certificate of Good Standing?
Although some corporations order a copy of the Certificate of Good Standing, simply to keep for their records, this document may also be required for the following reasons:
- A bank or other lender may require a Certificate of Good Standing when you apply for a business loan to determine your creditworthiness.
- A company may need to present their Certificate of Good Standing to renew certain licenses or permits.
- If you are attempting to expand your business by applying as a foreign entity, the states in which you want to do business in may ask to see your Certificate of Good Standing.
- A Certificate of Good Standing may be required as proof of your company’s legitimacy if you want to market or promote your business.
- You may need the Certificate of Good Standing when you file your business taxes.
- If you want to sell your business, brokers may request to see the Certificate of Good Standing in order to have proof of the company’s history of compliance and good standing.
How Do You Obtain a Certificate of Good Standing?
You can order the Certificate of Good Standing from the Secretary of State where you registered your business. Fees range from free to $100, depending on the type of business you have. Many states allow you to download the certificate immediately; others impose a wait period. The one-page document is generally good for three months from the time you received it.