Definition and Purpose
A certificate of good standing proves a business is legally registered and able to operate in a state. It may also be known as a certificate of existence or letter of good standing. It verifies that a company is compliant with state laws and all filings, fees, and business requirements have been met. LLCs and corporations typically need to be registered with the state to obtain this certificate.
You may need a certificate of good standing to open a bank account, enter contracts, or conduct business in another state. It provides proof that your business is legitimate and adheres to regulations. It is common practice to renew this certificate annually or after significant changes within the business.
Reason for Obtaining a Certificate
- You must legally register with your state to receive it.
- It can be required by lenders for financing.
- It’s needed for opening bank accounts.
- It may be requested by partners.
Key Details Included and Eligibility
What’s Included:
A certificate of good standing ensures that a company is properly registered, up-to-date on fees and filings, and legally permitted to operate. It serves as confirmation of a company’s registration status and its adherence to tax payments and state laws.
Validity and Cost:
The validity period of a certificate can vary. Some may be valid for the lifetime of a business, but more commonly, certificates last between 60-90 days. The specific duration is often determined by the requesting agencies or states.
Eligible Business Structures:
- Corporations
- LLCs
(Sole proprietorships generally do not qualify for a certificate of good standing.)
Certificates are managed by the Secretary of State in each state, with costs usually under $50.
Note for UK Businesses
For businesses operating in the UK, the equivalent certificate is requested from Companies House, confirming compliance with local regulations.