Definition of Good Standing for a Company
"Good standing" means that a company is up to date on filing its state reports, obtaining its state licenses and permits, paying its state taxes and fees, and complying with other statutory rules for operating the business entity. In short, a letter of good standing serves as proof of a company’s business compliance status.
Financial Standing of a Company
Generally speaking, a ratio of 2:1 or greater indicates a stronger financial standing.
Certificate of Good Standing
When you apply and qualify for a certificate of good standing, you’re effectively saying your business is in “good standing” within the state you operate. Demonstrating your organization’s good standing is a normal part of doing business. Whenever you open a bank account, expand into new states, or apply for a license, a certificate of good standing is usually part of the required paperwork. 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.
Definition of Bad Standing
What does it mean if a business is not in good standing? A business not in good standing fails to comply with state requirements. The status returns to good by addressing noncompliance. Reasons include unpaid taxes and fees, unfiled reports, and resigned agents. Risks include lawsuits, financing issues, tax liens, name rights, and penalties. To revive a business, file past due returns, pay balances, and comply.
Clarification on Good Standing Status
"Good standing" means that a business has paid all the fees, filled all the forms, and met the requirements laid out by the secretary of state’s office to operate in a particular state. The good standing status is officially registered with the secretary of state’s office.