What Should I Do When My Certificate of Good Standing Expires?
Whenever you start a company (be it a limited liability company or otherwise), you’re eligible to receive a Certificate of Good Standing. Issued by your Secretary of State office, this document — also known as a Certificate of Authorization, Certificate of Status and other names — officially declares that your business is in compliance with all rules and regulations.
Consider it proof of your registration, as it legitimizes your company and authorizes you for operation in your state of incorporation. Typically, these last as long as three months, but in what circumstances would you need a Certificate of Good Standing? Let’s dive into the hows and the whys of these documents.
How Certificates of Good Standing Work
So we know a Certificate of Good Standing means that, well, your business is in good standing (i.e., registered, authorized and compliant) with your home state. But it’s important to know exactly what requirements you need to meet to be able to claim this.
Granted, these may vary based on your state, but for the most part, you need to remain up to date with all registration and renewal fees (which may be annual or biennial), file all your reports fully and on time and maintain payment on all other business fees or franchise taxes statewide.
Once you meet these requirements, you need only to file the right form to get your Certificate of Good Standing. The length of this process varies greatly depending on the state and the government agency you’re working with. However, most organizations that will request a certificate will ask that it is no more than 30 days old. For this reason, you may wish to exercise caution when submitting requests for a Certificate of Good Standing to ensure that they remain timely.
Of course, these certificates aren’t issued without reason. Sometimes, you may need one as official proof of the existence or compliance of your business. For instance, if you are applying for a business loan, filing your business taxes or renewing a particular business license, a Certificate of Good Standing may be necessary to proceed and secure whichever item you are seeking.
While there are a variety of uses for these certificates, they most often come into play when finances and regulations are involved, such as when you’re looking to attract investors or obtain permits. In any case, the Certificate of Good Standing is a useful tool in keeping your business’s future in line — especially when you’re looking to take it to that elusive next step.
What if Your Company Loses Good Standing?
Considering how much your Certificate of Good Standing says about the status of your business, you may be wondering about some of the particulars involved in holding these certificates.
If, for any reason, your business is not in good standing, you will enter a process known as reinstatement where you will endeavor to remedy whatever issues are holding your company back from “good standing” status. Any requests for a certificate will be refunded and assistance forthcoming.
The reasons why you may lose good standing are, as you might expect, mostly tied to your inability to settle fees, file required reports or submit forms tied to your business. However, carelessness can also wreak havoc on your company in other ways.
If you have lost a business license critical to your operation or even if errors have been discovered in the paperwork, this too can be cause for your good standing to be stripped away. Although certificates are valid once issued, you may not be issued a new one if any of these issues are present.
If this happens, the aforementioned reinstatement process kicks in, and your business has the opportunity to rectify whatever obstacle is holding it back from securing a certificate and restoring its good standing. How long that takes will depend on the reason behind the loss of good standing.
If you have any questions about what needs to be done, contact your state agency for details, and they’ll work with you to resolve it as quickly and as painlessly as possible.
Still (Good) Standing
Now that you have a better understanding of Certificates of Good Standing, hopefully you can see how these documents can play a vital role as a building block for your company’s growth strategy. Truly, their applications are many, and knowing their function will only help you to better govern your future.
If you have any questions about acquiring a Certificate of Good Standing, you can always reach out to Incfile. We aim to provide small business owners like yourself with the resources and assistance to fine-tune your organization before incorporation and beyond. To learn more about how we can help, check out our website and get started today!