What is Good Standing?
“Illinois corporation not in good standing” refers to a corporation that has failed to comply with the state’s requirements for reporting and paying fees. The certificate of good standing confirms that the company has paid all taxes and fees to the state and is authorized to do business.
When Good Standing is Necessary
Agencies and organizations that might request a Letter of Good Standing:
- State government – When applying for foreign qualification.
Typical business transactions that require a Certificate of Good Standing:
- Loans or financing.
Causes of Not Being in Good Standing
- Failure to comply with state reporting and fee requirements.
- Failure to pay taxes and fees.
- Voluntary termination of the business (which is irrevocable).
Consequences of Not Being in Good Standing
- Inability to commence a lawsuit.
- Risk of another company taking the business name.
- No significant change in property ownership or contract rights.
- Potential personal liability for individuals conducting business on behalf of the company.
How to Return to Good Standing
To return a business to good standing:
- Address the manner in which the business is out of compliance.
- If applicable, pay any outstanding fees (including reinstatement fees) and update filings.
Maintaining Good Standing
Annual LLC Checklist:
- Maintain complete formation with all supporting documents.
- Hold an annual meeting and record notes.
- Renew your LLC entity with the proper state authority.
Certificate of Good Standing
A certificate of good standing is an official document proving a business entity is registered and in compliance with state rules to conduct business.
How to Formally Dissolve an Inactive Corporation
Company owners must learn to dissolve a corporation that is no longer conducting business to avoid losing good standing status.
Reviving a Forfeited Entity
Even a forfeited entity can often be revived and brought back to good standing by addressing compliance issues and contacting the relevant legal group for assistance.