Importance of Certificate of Good Standing in Business
A certificate of good standing proves a business is legally registered and able to operate in a state. It may also be called a certificate of existence or letter of good standing. For UK businesses, it is requested from Companies House. It shows the business is compliant. Anyone can request the certificate.
Issued by the state, it verifies you are a legally registered entity, compliant on all filings, fees and business requirements. You typically renew it yearly or after significant business changes.
You may need it to do business in another state, open a bank account, or enter contracts since it shows your business is legitimate. LLCs and corporations must register with the state to obtain it.
Process of Obtaining a Certificate of Good Standing
To obtain a certificate of good standing, you simply need to request one from your state through the agency where your business is registered, usually the Secretary of State. You can fill out an online form, and some states charge a fee.
Lenders and creditors likely won’t work with a business whose status isn’t verified. States have different requirements for getting one, and each certificate will look slightly different. This document may also be called: certificate of existence, letter of good standing, certificate of status, certificate of authorization.
Requirements for Maintaining Good Standing
Whether you have a certificate or not, you’ll need to remain in good standing to continue doing business in a state. However, you may be asked to provide it for some transactions.
Step 1 is to ensure your business is compliant with licenses, permits, filing fees, and other state requirements.