What is a Certificate of Good Standing?

October 15, 2020
Business Basics
What is a Certificate of Good Standing?

If you have been asked to obtain a Certificate of Good Standing you might wonder what that is and whether or not you actually need one to operate a business. The good news is that a Certificate of Good Standing is relatively easy to obtain, very affordable, and it is not required in order to legally operate your business. Read further to learn how you can obtain a Certificate of Good Standing for your business.

What is a Certificate of Good Standing?

A Certificate of Good Standing, sometimes referred to as Certificates of Existence, of Facts, or of Status, is an official government document issued by the Secretary of State that certifies that a company is still in existence. The state in which a company is registered under will issue this certificate.This certified document is not required for the day to day business operations of a limited liability company (LLC) or corporation. Instead it is used to prove that the LLC or corporation is in good standing in a given state. This document declares that the business has satisfied the requirements of that state in order to operate as an LLC or corporation and has not fallen to bankruptcy. If your company is registered in another state and you wish to prove that this is the case, then you would need to get another Certificate of Good Standing in that state. If you were formed in one state or foreign area but now operate in a different state, you can obtain a Certificate with that state but will be required to provide additional paperwork to prove that you are a legally registered business. This certificate can be easily and quickly obtained, and usually at a nominal fee. For example, when requesting a certificate from Arizona, the fee is only USD 10 and it will take anywhere from a few days to a couple of weeks. A Certificate of Good Standing usually expires after 90 days or by the end of the calendar year. These specificities, unfortunately, vary by state, so it can be difficult to stay on top of them, especially if you operate businesses in multiple states.

Why Would You Need a Certificate of Good Standing?

Primarily a Certificate of Good Standing is issued to confirm that the company has not been dissolved or merged with another company (or companies). There are penalties and fees for operating a business that is not legally eligible or registered to be operating within a certain capacity and in a certain state.  In general, a company may need a Certificate of Good Standing when they want to do something on behalf of the business, such as open a business bank account, obtain a loan, complete a major transaction, or register to do business in another state. There are two main reasons why you would need to obtain a Certificate of Good Standing:

  1. You are applying to register your business as a foreign entity in another state.
  2. You’ve been asked by an individual/organization with whom you wish to have a business relationship with; examples include applying for credit under the business’ name, setting up credit and debit card processing for client payments, and opening a business bank account.

But you never know. You may also need to obtain this Certificate if there is a dispute regarding the business or domain name. Note that a Certificate of Good Standing is not required to legally conduct business, and it should not be confused with a business or occupational license. Instead, consult whether a business or occupational license must be obtained to legally operate your business. Since not all business entities need to register with the state, then not all business entities would be required to get this Certificate. If you are a sole proprietorship or partnership, it is likely that you would never need to obtain a Certificate of Good Standing. However, since all LLCs and corporations are required to register in each of the 50 U.S. states, LLCs and corporations would be able to obtain a Certificate of Good Standing when required.

How Do You Obtain a Certificate of Good Standing?

In most states, obtaining a Certificate of Good Standing is relatively simple and can be done online through a business portal with the Secretary of State (which may go by a number of different names depending on your state). You can always submit a request for this certificate by submitting a Records Request Form (or the equivalent name) to the Secretary of State. You can only request a Certificate of Good Standing from your home, registered state. If you are operating in another state, then you will need to file for foreign qualification in that state. You will generally only need your business license number and business owner’s name, contact information, and mailing address, in addition to paying the fee. A company like Northwest Registered Agent can be used to file this paperwork on your behalf. You’ll also have to continue the annual requirements requested of LLCs and corporations for that state, which includes submitting annual reports and maintaining an active registered agent. If you haven’t done any of this, you might not be issued a Certificate of Good Standing. Therefore, be sure to check all of your business requirements before filing this paperwork. If you fail to meet the criteria to be considered in Good Standing, you can rectify this by paying the penalties, paying outstanding fees, and filing the necessary paperwork. States may allow you to file the request form in-person, online, over fax, verbally over the phone, or online through a government portal. You can also request that your registered agent file the Certificate request on behalf of your company.

How Long Does It Take to Get A Certificate of Good Standing?

Since every state operates on its own timelines and uses its own processes, it can be extremely difficult to predict how long it will take for a business to receive their certificate. It might also depend on how you submit this request - whether it was by mail or online - and whether or not your state is prepared to accept requests over the internet. Even if your business is fully compliant and you have followed all of the statutory requirements, it might take up to a few weeks for the certificate to be issued and in your hands. However, it could be as little as a few days. It all really just depends. In considering this, try to plan ahead. Because a Certificate of Good Standing can be valid for a number of days, ranging from 90 days to six months, you can request a Certificate earlier so you have it on hand. For example, you may need this form at the end of a calendar year or during tax season. Go to your state’s Secretary of State department website and begin the research process. If the Certificate is valid for longer than 90 days, you can order your Certificate early on to be prepared for tax season. Since a majority of businesses might need the same Certificate for tax season, you can imagine that the Secretary of State office would be overloaded at that time so it is beneficial to complete the process in advance.

State Filing Fee
Registered Agent
Prepared for Me
No items found.
Certificate of Good Standing|Good Standing|Certificate
Mentorship Icon

Business Courses coming soon! 

We are launching courses on entrprenureship, marketing, business operations, and SaaS. Sign up to receive an email about when the courses go live. We will be giving away copies of the courses to some of our email subscribers.