Importance of Good Standing Status
Maintaining a good standing status for your LLC or corporation with your formation state and all states in which you do business is critical to your business’ success. Lenders, investors, and vendors often require a Certificate of Good Standing before doing business with any company.
What is a Certificate of Good Standing?
A certificate of good standing typically includes your business name, type of business entity, the date your business was formed, the state where you’re authorized, and the Secretary of State’s seal and signature. Whether or not you need a certificate of good standing — or have the ability to get one — depends on your business entity. Here are the businesses that can request a certificate of good standing: Limited liability companies (LLCs). Partnerships.
Benefits of Obtaining a Certificate of Good Standing
Obtaining a Certificate of Good Standing can enhance your business’s reputation and credibility. It shows that your business is in compliance with state laws, has paid all required fees, and is authorized to operate in a particular state. This document can give customers, suppliers, and partners peace of mind that they’re doing business with a legitimate and trustworthy company. Another important reason why a Certificate of Good Standing is essential for your business is that it’s required by banks for opening a business bank account. Banks need to verify that your business is legitimate and in good standing before opening a bank account.
A Certificate of Good Standing, signed by an state official is conclusive evidence that a corporation or LLC is in existence or authorized to transact business in the state, and that the company is in compliance with all state-required formalities.
Obtaining a Certificate of Good Standing
If you want to get your own Certificate of Good Standing, simply go to the Secretary of State website for your state and perform a business name search for the company in question, or use our free business name search to identify the availability of business names for forming an LLC or corporation.
Use Cases for a Certificate of Good Standing
- Setting Up a Business Bank Account
- Investing in Property or Equipment
- Receiving Government Contracts
Ohio offers a streamlined way to obtain your certificate of good standing through their online business portal. After accepting the legal terms, a certificate can be requested and then downloaded or printed. A standard copy is $5 and a long-form version costs $25.
Understanding Good Standing
What does it mean for a business to be in good standing? If a small business is in compliance, that means it is in good standing. This defines the status of the company. Essentially, businesses in good standing are up-to-date with their fee payments and filing periodical reports.
Requirements for Good Standing
In short, a letter of good standing serves as proof of a company’s business compliance status. To qualify, your business must:
- Pay applicable state and local business fees.
- File taxes on time.
Staying in good standing requires fulfilling state compliance responsibilities which vary by state and entity type. Before the year ends, make sure you take care of filing an annual report.