Certificate of Good Standing: What To Know

Your business may need a certificate of good standing for certain business actions, such as opening a business bank account, applying for a business loan or selling your business. This document essentially verifies that you’ve complied with state law and are authorized to do business there.

If your company repeatedly fails to pay taxes or file required paperwork, your state may revoke your right to operate.

Here’s everything you need to know about certificates of good standing and how to get one in your state.

What is a certificate of good standing?

A certificate of good standing shows that your business entity complies with your state’s business regulations and has no outstanding tax accounts. Other names for this document include:

• Letter of Good Standing
• Certificate of Legal Existence
• Certificate of Status

A good standing certificate differs from a business license, which you typically need to start a business. Some states impose an expiration date for certificates of standing, whereas others leave it open-ended. However, if your business entity changes, you must apply for a new certificate. Also, some organizations and lenders require you to provide a certificate issued within a specified time frame, such as the past 30 to 60 days.

You may have to pay a nominal fee for a certificate of good standing — typically no more than $50.

Do I need a certificate of good standing?

You may need a certificate of good standing to prove your business complied with state regulations and is authorized to operate. Here’s a breakdown of when you might need one:

• Business expansion. You may need a certificate of good standing from your home state when you apply to do business in another state.
• Opening a business bank account or merchant account. The bank or credit card processor may require a certificate when you open an account to ensure your business is legitimate.
• Applying for a business loan. Lenders often request a certificate of good standing before approving financing.
• Entering contracts or partnerships. Potential vendors or business partners might require a certificate to confirm your business is in good legal standing.
• Renewing licenses or permits. Some state or local jurisdictions require proof of good standing before renewing professional or business licenses.
• Selling your business. Potential buyers might request this document to verify your business is operating legally.

How to get a certificate of good standing

The exact process for getting a certificate of good standing varies by state, but it usually looks something like this:

1. Register your business. Make sure your business is registered with the appropriate state agency — usually the Secretary of State.
2. Ensure you’re in compliance. Confirm your business filings, licenses and taxes are up to date.
3. Submit a request. File a request for the certificate through your state’s business portal or the Secretary of State’s office.
4. Pay any fees. Complete the process by paying any applicable fees.