Why Your Business Needs a Certificate of Good Standing

A company’s standing as a legitimate business can be determined by asking the different stakeholders involved, the company’s suppliers, creditors, customers, employees and prospective investors. The government is keenly interested in knowing where your business stands in terms of compliance and on time tax filing. No company wants to break state tax laws and other legal obligation imposed on the companies by the federal government. A Certificate of Good Standing is an excellent way to prove to the state government and other businesses that have been a sturdy, compliant, law abiding company.

So, what is the Certificate of Good Standing all about?

The Certificate of Good Standing is an official document that promotes the transparency of your organization and ensures accountability among companies too. The Certificate of Good Standing is issued by the state itself and it officially means that your business has maintained a decent corporate standing, has abided by all tax laws, paid all the state taxes and fees. It also declares that the company has consistently filed the annual report.

New businesses now start their hunt to acquire this Good Samaritan certification as soon as they start their mainstream operations. In fact, plenty of states allow the business incorporation to get its Certificate of Good Standing online! Here is a list of information that you will need for acquiring your own Certificate of Good Standing.

·         Company name (as filed on the articles)

·         Date of formation

·         State of formation

·         Business address

·         Registered agent name and address

·         Federal tax identification number

·         Unemployment insurance number 

Did you know that you need a Certificate of Good Standing as a new state registration part, in case you move your business into another state?

Which begs the question, do all the states require the Certificate of Good Standing? Well, not really. If you register your corporation as a foreign business in the state of Alaska, Colorado, Kentucky, Minnesota, Pennsylvania or Texas, then you don’t need to have a Certificate of Good Standing to prove your business’s reliability or legitimacy. However, most states do require the Certificate of Good Standing since they are stricter about having only established transparent companies to operate in their jurisdiction. You need to be diligent with the timeline though.

A few states (Arizona, Hawwai, Illinois for LLCs, Indiana, Missouri, Nebraska for corporations, New Hampshire, Oklahoma, Oregon, Rhode Island, Tennessee and Wisconsin) requiring the Certificate of Good Standing only accept certificates issued within 60 days of submission. Some states (Arkansas, D.C, Michigan, New Jersey, New Mexico, South Carolina, Vermont and Wyoming) only allow certificates to be dated back to no more than 30 days before being filed with the secretary of state.

The message being conveyed to other states through the Certificate of Good Standing is that your company, be it a Limited Liability company, corporation, non-profit or limited liability partnership is and has been in good standing in its home state. It shows that no fees or tax return annual files have been overdue. Additionally, the Certificate of Good Standing can also serve as an authentic document to verify the date of formation of the business.


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Business A1 by Xohaib