How to get Certificate of Good Standing
If you are an entrepreneur and want to open a company, one of the first things Registering your business is all that is required. That is easy and can be done online. But You might also need another certificate: a Certificate of Good Standing.
This article will explain what this document means, how to get it and why it might be helpful for your business.
What is Certificate of Good Standing?
You may have heard of a Certificate of Good Standing before. It’s a document that shows an entity has been legally formed and is in good standing with the state.
Companies usually use the certificate to show their good standing with the government. Nonetheless, it can also be utilized by other companies and organizations.
It’s not uncommon for non-profits to keep track of their status with a Certificate of Good Standing instead of just keeping track on paper or in an Excel spreadsheet.
Why Would You Need a Certificate of Good Standing?
A “Certificate of Good Standing” document certifies that your business is in good standing with the state. It’s a required document for particular transactions, such as applying for a loan, a license, or insurance.
A lender will check your company’s Certificate of Good Standing before giving you money, so they know it’s safe to lend to you. For other kinds of enterprises, the same holds.
Who Qualifies for an Affidavit of Good Standing?
A Certificate of Good Standing is typically requested by businesses seeking to obtain a loan, acquire absolute property ownership, or operate licenses in another state.
It can also be used as proof that you are a legitimate business, not an individual trying to use your company name as personal identification. The following types of entities are eligible for certificates:
- Corporations
- Limited Liability Companies (LLCs)
- General Partnerships
Types of business entities that can get the certificate
In general, most types of business entities can get this certificate. If you have one of these entities:
- Limited liability companies (LLCs): In all states except Montana, LLCs must maintain their existence by filing annual reports and paying franchise taxes.
- Corporation
- Limited partnerships
- Limited liability partnerships
Types of businesses that don’t need a certificate of good standing
There are several types of companies that don’t need a certificate of a good place, including:
- Sole proprietorships
- General partnerships
- Limited partnerships
- Limited liability partnerships (LLPs)
- Limited liability companies (LLCs) and limited liability corporations (LLCs)
How to Obtain a State Certificate of Good Standing
It would be best if you first had a registered business entity to get a Certificate of Good Standing.
Once your business is in good standing, you can apply for a Certificate of Good Standing from the state agency that handles company formations and filings.
The fee varies depending on which state office you’re filing with (for example, it costs $50 in California).
Conclusion
A document that serves as proof of good standing verifies that your business has been legally incorporated in its registered state.
The document can also verify whether or not any liens have been filed against your business, whether there are pending lawsuits against it, and more.