What is a Certificate of Good Standing?
A certificate of good standing is official certification from the state that a company is legally registered and following all rules. It shows lenders, investors, or partners that a company is trustworthy and credible, helping it expand. Lenders often require this certificate before financing.
Reasons to Obtain a Certificate of Good Standing
- Lenders demand to see it for financing.
- It proves legitimacy.
- It allows opening bank accounts.
- Partners may require it.
What’s Included in a Certificate of Good Standing
A certificate of good standing certifies a company is properly registered, up-to-date on fees and filings, and legally permitted to operate. It confirms registration, tax payments, and compliance.
It has names like certificate of existence, compliance, or status. But all refer to the same documentation.
The validity period depends on the situation. Some last a business’s lifetime. Often, requesting agencies or states determine validity, commonly certificates last 60-90 days.
Getting a Certificate
Eligible structures include corporations and LLCs. Sole proprietors often don’t qualify. Each state handles certificates through the Secretary of State. Costs are generally under $50.