1. California Certificate of Good Standing: Everything You Need to Know 
2. California LLC Certificate of Good Standing
3. Good Standing Status Requirements
4. Reasons for the Need of Certificate of Good Standing
5. Why There's a Need to Check That the Business is in Good Standing

California Certificate of Good Standing: Everything You Need to Know 

A California Certificate of Good Standing is a legal document that is used to show that your business has complied with all rules established by the state.

When a business possesses a Certificate of Good Standing, they are allowed to do business in the state of California, have met licensing and corporation requirements, and have not received a suspension from the Franchise Tax Board. This certificate is also used to show that required taxes have been paid and required reports have been filed with the California Secretary of State.

California LLC Certificate of Good Standing

The name for this type of certificate in California is a “Certificate of Status.”

Provided by the California Secretary of State, this official document proves that a business has met three important LLC requirements:

  • All required documents have been filed.

  • All taxes and initial required fees have been paid.

  • The business is up to date with current state fees.

The only agency that is legally allowed to issue a Certificate of Good Standing in the State of California is the California Secretary of State. When a certificate is issued, it will include the authorized signature of the Secretary of State and a Seal of California imprint. Some companies may want to request a Certificate of Good Standing to prove that the company was either dissolved or suspended.

A company also has the ability to request a certified collection of recorded entity filings, which can include:

Good Standing Status Requirements

In order to be approved for a Certificate of Good Standing, LLCs in California must meet the following requirements:

  • The LLC must be legally registered.

  • All current rules established by the Franchise Tax Board and Secretary of State must be met.

Reasons for the Need of Certificate of Good Standing

Here are the reasons an LLC may need a Certificate of Good Standing:

  • The business wishes to do business in another state and the certificate is a requirement for registering as a Foreign LLC.

  • A Certificate of Good Standing may be a bank requirement for opening a business checking account.

  • A lending institution may wish to check that the LLC has fulfilled reporting requirements and is legally registered as an LLC.

  • The certificate provides verification to vendors and suppliers that the LLC is allowed to operate in California.

  • A Certificate of Good Standing provides legitimacy to prospective business partners.

  • It serves as a legal document when a company is bought, acquired, or merged with another company.

Being approved for a credit line or business loan often requires proof of good standing, and it may also be needed to handle tax matters. It is important to understand that it is possible for a company to be in good standing while owing taxes, but they cannot be non-compliant with tax laws.

A business's Certificate of Good Standing should be no older than six months, although many companies prefer to have a more recent certificate. To make sure your business has a recent certificate, you should submit your request at least a month before it is needed. While certificates do not expire, many organizations will not accept a certificate whose date is older than sixty days.

Why There's a Need to Check That the Business is in Good Standing

Lenders depend on Certificates of Good Standing to make sure they are providing financing to a dependable institution. Requesting and receiving a certificate before it is needed is a much better solution than attempting to acquire the certificate while loan negotiations are ongoing.

A Certificate of Good Standing is also an important tool for expanding your business, as it is a requirement to register in most states. If your company does not possess a certificate, many states will not allow you to do business within their borders. It is also common for states to require that your certificate be dated within 90 days before you will be allowed to do business.

Possessing a Certificate of Good Standing may also help you to avoid some fees and penalties; many states levy penalties when a business does not comply with its regulations. When it is discovered that a business is not in good standing, they may lose state business protections, protections for employees working out of state, and may face dissolution.

If you need help requesting your California Certificate of Good Standing, you can post your legal needs on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.