When you formed your Limited Liability Company (LLC) or Corporation, you established a separate legal identity for your business. Maintaining that identity in good standing is perhaps the most crucial ongoing requirement for protecting your personal assets and ensuring smooth operations.
A Certificate of Good Standing (sometimes called a Certificate of Existence or Certificate of Status) is a formal document issued by your state’s filing authority (usually the Secretary of State) that verifies your business is legally registered and compliant with all state requirements. Without this certificate, you can face severe hurdles that limit growth and expose you to liability.
Why Is a Certificate of Good Standing Essential?
The Certificate of Good Standing proves to banks, partners, and other states that your business is legitimate and authorized to operate. Here are the most common scenarios where you will absolutely need one:
- Opening a Business Bank Account: Banks require this certificate to verify the legal existence of the entity before allowing you to open new accounts.
- Securing Financing or Loans: Lenders and venture capitalists use the certificate as a primary due diligence document to ensure the business is a stable legal entity.
- Registering as a Foreign LLC: If you plan to expand your business operations into a new state (i.e., registering as a Foreign LLC), the new state will require a Certificate of Good Standing from your home state.
- Selling or Transferring the Business: During any major transaction, such as selling the company or merging with another entity, the certificate is mandatory for closing the deal.
- Securing Large Contracts: Government agencies and large corporate partners often require the certificate as part of the bidding process.
Step-by-Step Guide: How to Obtain Your Certificate
The process for obtaining a Certificate of Good Standing is standardized across most U.S. states, though the specific names and fees may vary slightly.
Step 1: Ensure Your Business is Compliant
Before submitting a request, you must confirm your LLC or corporation has met all statutory compliance requirements. If you have any overdue filings or fees, your request will be rejected, and your business may be in "Bad Standing" or "Delinquent" status. This typically means you must have:
- Filed and paid all required annual reports or biennial statements of information.
- Paid all state-level franchise taxes, minimum annual fees, or business license fees.
- Maintained a valid Registered Agent with a physical address (not a P.O. Box) in the state.
Step 2: Locate the Correct State Agency
In most states, the Certificate of Good Standing is issued by the Secretary of State’s office, the Division of Corporations, or a similar department. Navigate to the specific government website responsible for business filings in your state. Look for links labeled "Business Services," "Certificates," or "Good Standing Request."
Step 3: Complete the Request Form
You will need to submit a formal request that includes:
- The exact legal name of your LLC or Corporation.
- Your Entity/File Number (assigned by the state upon formation).
- The specific type of certificate you need (Standard, Apostille, etc.).
- Your payment for the filing fee (fees typically range from $10 to $75).
Many states now offer this service online, allowing you to pay and download a digital copy instantly.
Step 4: Choose the Correct Delivery Method
Depending on your needs, you can often select from several processing options:
- Standard Processing: Typically takes 3–10 business days.
- Expedited Processing: Usually costs an additional fee but delivers the certificate within 24–48 hours.
- Digital Download: The fastest option, often providing a PDF copy immediately upon payment.
Be aware that the certificate usually expires shortly after it is issued—often within 30 to 90 days. Lenders or other parties require a recently issued certificate to ensure continuous compliance, so timing your request is important.
What If Your Business Is Not in Good Standing?
If you discover your LLC or corporation is listed as "delinquent," "suspended," or "not in good standing," it means you have failed to meet a mandatory compliance requirement (usually an annual report or state tax payment). The consequences of this status are severe, as your liability protection may be compromised, and you could lose the ability to file a lawsuit or contract in the state.
To fix this, you must file a Certificate of Reinstatement. This typically involves:
- Filing all delinquent annual reports or statements.
- Paying all associated state fees, including the back taxes and accumulated late penalties.
- Confirming or updating your Registered Agent information.
Once all past obligations are fulfilled and fees are paid, the state will issue a new Certificate of Good Standing, restoring your legal status and the crucial liability shield your LLC provides.
Proactive compliance is the cornerstone of responsible business ownership. Regularly check your entity's status with your Secretary of State and keep track of annual reporting deadlines to ensure your Certificate of Good Standing remains readily available whenever your next growth opportunity requires it.