Any business owner will tell you that there are a lot of legal documents involved in managing your company and keeping your business operating from day to day. Depending on the type of business you own and the state where you are located, there are all sorts of licenses, certificates and other such documents that you need to obtain so that you can legally operate your business.
Broadly speaking, a Certificate of Good Standing — sometimes known as a Certificate of Existence — is a document that serves as official proof that the business is up to date and compliant with filing all the necessary paperwork and paying all the fees required by the state.
Possessing a Certificate of Good Standing shows that your business entity is still active and adhering to all statutory regulations that pertain to paying business fees, renewing operating licenses and any paperwork filing the state requires for your business entity.
These certificates are issued by a state government agency — usually the Secretary of State's office. Since they are designed to provide a “snapshot” of a business entity’s current status with the government, they are only valid for a brief window of time, usually no more than three to six months.
This is important to keep in mind, depending on the type of business endeavor you’re involved in. It might make sense to keep a valid Certificate of Good Standing on hand throughout the year, which would require your business to periodically renew it.
How to Get a Certificate of Good Standing
Getting a Certificate of Good Standing issued by the state requires a few steps. First, make sure your business is legally registered with the Secretary of State or other relevant government agency. Then, remember to file all the appropriate paperwork with the state as required throughout the course of doing business. This includes submitting annual reports and maintaining an active registered agent for the business entity as well.
In some states, good standing also reflects whether you are up to date on your state tax payments. Obviously, those are always important to stay on top of, even if you aren’t applying for a Certificate of Good Standing.
If your business fails to meet the criteria for this document, be prepared to rectify this by filing the necessary paperwork and paying any penalties/outstanding fees.
If you use Incfile's Certificate of Good Standing service, we will contact you and provide details as to the status of your corporation or LLC and can even provide assistance in bringing the entity back to good standing.
Why You Need a Certificate of Good Standing
One of the most important reasons to get a Certificate of Good Standing is purely financial. Without a Certificate of Good standing, your company might not be able to secure a business loan from a bank. Most financial institutions will require a business to have a Certificate of Good Standing before they will issue a loan.
If you are looking to establish a line of credit from a bank in order to grow your company, you will almost certainly need this crucial document. Even opening a banking account for your business typically requires this, so save yourself some time and a lot of hassle — make sure that your business is fully compliant and properly certified before you go talk to the bank.
Aside from obtaining financing, if your business is planning on acquiring some real estate, a Certificate of Good standing is commonly required during this process as well. Some licensing agencies may ask you to provide this certificate, and some states require it for tax-related matters.
As you can see, having a Certificate of Good Standing when you need it is essential for numerous important business affairs.
How Long Does It Take to Get Your Certificate?
It can be hard to predict exactly how long it will take to obtain a Certificate of Good Standing from your state authorities, whether you have requested it yourself or used Incfile's service. It depends on a lot of variables, but even assuming that your business entity is fully compliant with all statutory regulations, be prepared for the process to take anywhere from several days up to several weeks.
Some states will let you apply for the certificate over the phone or through online government portals, while others require you to apply in person or through the mail. Your best bet is to do a little research and look into what your specific state requires from applicants. Check out the state’s website or make some phone calls to ensure that you have all the right documentation to proceed with the application.
Also, make sure that you plan ahead. Some state agencies get busier towards the end of the calendar year and during tax season. If you think that you might need a Certificate of Good Standing sooner than later, it’s probably best to get the ball rolling and start the application process. Obtaining this integral document can help your business in a variety of very useful ways.
To save time and get professional assistance with filing the necessary paperwork for your Certificate of Good Standing, talk to Incfile today!
Ben Gran is a freelance writer from Des Moines, Iowa. Ben has written for Fortune 500 companies, the Governor of Iowa (who now serves as U.S. Secretary of Agriculture), the U.S. Secretary of the Navy, and many corporate clients. He writes about entrepreneurship, technology, food and other areas of great personal interest.