How long is a certificate of good standing valid? It varies depending on your situation, but in most cases, it's valid for up to three months. In rare cases, states issue perpetual certificates of good standing that last for the lifetime of your business.

You might know a certificate of good standing by these alternate names:

  • Corporate certificate of status
  • Corporate certificate of existence

Whatever its name, a certificate of good standing is an official certification from the state that says you are following all local laws of incorporation and are a legally registered entity. Basically, it provides proof that your company is up to date with all franchise taxes and follows all rules in the state.

Why Get a Certificate of Good Standing?

When potential lenders, investors, or partners see that you have a certificate of good standing, they'll see your company as more trustworthy and credible. This can help you branch out into new areas and expand your company to new markets. Here are a few specific reasons why you should consider a certificate of good standing:

  • Many lenders demand to see a certificate of good standing before they provide you with any financing. Instead of waiting until the need arises, obtain a certificate of good standing so you'll always be prepared if you need emergency funds.
  • Many states require you to obtain a certificate of good standing if you're looking to expand to new territory. If you can't prove you were following all the laws in your home state, a new state may not permit you to transact business within its borders. What's more, most states require the certificate of good standing to be from the last 90 days, as it ensures you are up to date with all taxes and fees.
  • Some states penalize business owners with a fee if they can't prove they have followed state regulations.
  • Licensing regulators and agencies often like to see a certificate of good standing before they issue or renew your licenses or permits in certain fields.
  • If you're ever looking to sell your business, buyers or brokers appreciate seeing the full history of your business. A certificate of good standing proves that you always followed the rules and don't owe any extraneous fees or taxes.

How to Get a Certificate of Good Standing

To get a certificate of good standing, you'll usually need to apply to the Secretary of State in your operating state. Exact procedures vary, so always check with local regulations to be sure. However, there are a few key requirements that are the same in all states:

  • Your business must be up to date with all annual or biannual fees.
  • Your business must file all annual or biannual reports.
  • Your business must pay any other necessary fees as required by the state.

You also cannot get a certificate of good standing if you're a sole proprietorship or DBA, as these types of businesses are not registered with the state to begin with. If you're not one of these business types and are being denied by your state, you'll need to contact your local agency to find out what the problem is and how you can fix it.

The fee for obtaining a certificate of good standing typically ranges from $50 to $100. How often you need to apply for a certificate of good standing varies, but most states require either biannual or annual reporting.

What Happens If You Don't Get a Certificate of Good Standing?

If you decide a certificate of good standing is not necessary for your business, you could face several problems. The biggest issue is the loss of limited liability protection from the state. The state may decide to remove their protection for your business and its employees, leaving you vulnerable to financial losses. What's more, they may even take action to dissolve your business, preventing you from legally making transactions in the state.

Not sure if your business already has a certificate of good standing? Luckily, there's a way to check using your state's local database. Usually, you'll just need the name of your entity when you registered it with the state.

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