A certificate of good standing is a document that certifies that your business has been properly registered with the state, is up to date on all state registration fees, have made the required document filings, and is permitted legally to engage in in the state your business is located. Some states also refer to this certificate as a certificate of status or certificate of existence.
A certificate of good standing usually will have an expiration date, which is usually when your business registration is due to be renewed, or when periodic documents or registration fees are due. In some cases, this may be the end of a calendar year. However, some states may require this to be done at other times of the year.
A business that was formed in the state you are doing business in can be issued a certificate of good standing. Additionally, a business that was formed in another state can be registered as a foreign entity in a different state.
While it is good practice to apply for this certificate, keep in mind that a business can legally conduct business in a state where it is registered without obtaining a certificate of good standing.
Since not all businesses are required to register with their state, not all types of entities will be able to obtain a certificate of good standing.
For example, if your business is operating as a sole proprietorship, you will not be required to register your business in any state, nor will you need to obtain a certificate of good standing. Corporations and limited liability companies (LLCs) on other hand are required to register in their state and therefore can obtain a certificate of good standing.
When it comes to other types of business entities such partnerships, limited partnerships, limited liability partnerships (LLPs), and limited liability limited partnerships (LLLPs) you should check with your state's laws to determine whether registration is required.
The state agency where your business is registered is the one that will issue your business a certificate of good standing. In most states, this will be the secretary of state, or one of its subdivisions. This agency may go by a different name in certain states.
Information about how to obtain a certificate of good standing and required fees can be found on the website for your state’s agency.
Generally, are two common situations where you will be asked for a certificate of good standing, they are:
You are asked for one by an individual or organization with whom you have a business relationship. Some common examples of this may include opening a business bank account, setting up credit or debit card processing of customer payments, or applying for credit in the name of the business.
You've applied to register your business in another state as a foreign entity. In order to register your business as a foreign entity, it is common for that state to require a certificate of good standing from the state your business was originally formed.
If your business is not required to register with the state, you will not be able to or need to obtain a certificate of good standing. If your business is registered, you only need a certificate of good standing if one is requested.