1. How to Obtain a Certificate of Good Standing
2. Why Good Standing is Important
3. What a Certificate of Good Standing is used for

A Certificate of Good Standing LLC is a certificate that is issued by the Secretary of State’s office that proves a business is in good standing, and as such, has complied fully with all relevant regulations. The Certificate of Good Standing can be provided for any type of business structure (partnership, corporation, etc.), and not just an LLC. Furthermore, the Certificate of Good Standing provides that your business is both registered and authorized to conduct business in that particular state.

After you form your business, you’ll want to remain compliant with all of the federal, state, and local regulations and laws, including the annual and biennial report, as well as other required forms and paperwork that is necessary in your company’s home state. You must also be up-to-date on all tax payments and licensing/permit authorization and renewals. Therefore, if you have remained current on all requirements and fees, then you can easily obtain a Certificate of Good Standing.

How to Obtain a Certificate of Good Standing

In order to obtain this certificate, your business must meet the following criteria:

  • Your business must be a legal entity within the state that it was formed
  • Your business cannot be in default or suspended for any reason
  • Your business must be up-to-date on all tax filings and other requirements, i.e. employment tax, franchise tax, sales and use tax, annual reporting, periodic filings if required by the state, etc. While not all such items are required, it will depend on the industry in which you operate, how you operate, if you have employees, and the state in which you operate as to what is required of your business.

Some states indicate that the certificate must be dated within 30 days; however, other states allow up to 90 days, while others allow a certificate up to 6 months old. This means that, if a bank requires that you provide this certificate before opening a new business banking account, then you will need to adhere to the date requirement, and ensure that you bring a certificate that is not dated past the allowable timeframe.

Keep in mind that vendors or banks allow you to present a copy of the certificate, whereas others require a Certificate of Good Standing in its original form. Furthermore, you might even need to present this certificate to another state, especially if you plan on registering as a foreign business in another state in which you generally operate. Therefore, you might need to provide the state with your domestic Certificate of Good Standing.

Why Good Standing is Important

Maintaining good standing is important because it might mean that you cannot open a business bank account, obtain lending from a financial institution, or even renew business licenses and permits for your business. In order to remain in good standing, you must comply with all federal, state, and local rules and regulations. An example of failing to be in good standing includes not filing an annual report, filing the annual report late, or failing to pay required fees to the state.

What a Certificate of Good Standing is used for

There are several reasons that a Certificate of Good Standing might be requested, and different issues that it could be used for. For example, most financial institutions require a certificate from any business prior to doing business with them, i.e. obtaining financing, entering into a loan agreement, etc. Below are some additional reasons as to why your company might need this certificate:

  • Licensing agencies might require a certificate before you can renew licenses
  • Regulators might require a certificate before you can renew permits
  • Brokers or potential buyers might require a certificate before purchasing property from your LLC (assuming you have property to sell or even investment property to rent out)
  • Investors might ask for a certificate before contributing to your LLC
  • Business vendors and suppliers might ask for a certificate before entering into an agreement with your business
  • Other states might require this if you want to form a foreign business in those states

If you need help obtaining a Certificate of Good Standing, or if you need help maintaining compliant with the requirements established by your LLC’s home state, you can post your legal need 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.