After you form your business entity, it’s important to stay up-to-date on filing your annual report, biennial report, or other required forms and compliance paperwork specified by your company’s home state. You might be required to prove that your business exists and is in compliance with relevant laws and regulations by proving that your business has a Certificate of Good Standing. Just like having a driver’s license or other forms of personal ID, a Certificate of Good Standing proves that your business is officially registered and authorized to operate in your home state.
A Certificate of Good Standing is often required in order to obtain a loan, renew a business license or to file your business taxes. The Certificate of Good Standing is an official document issued by your state’s secretary of state office to verify that your business is compliant within the state of incorporation and therefore is in “good standing.”
To stay in good standing, your business needs to meet a few key requirements, depending on the state, such as:
Also known as a Certificate of Existence, Certificate of Authorization, or a Certificate of Status, the Good Standing Certificate is a one-page document provided by the secretary of state and provides conclusive evidence of the status of your business entity. In many cases it can be valid up to three months.
There are a few key reasons why your company might need a Certificate of Good Standing. Sometimes this document is requested by:
Simply put, the Certificate of Good Standing helps you prove that your business exists, and that you are a law-abiding business owner who complies with the rules. It helps enhance your trustworthiness and credibility with potential partners, investors and lenders. Obtaining a Certificate of Good Standing is a simple but sometimes necessary step in maintaining your business’s good reputation and branching out your business operations into new areas.
To obtain a Good Standing Certificate, the business entity must be registered as a legal entity with the secretary of state, and cannot be in default of corporate regulations, suspended or revoked by the state.
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