Certificate of good standing: What it is, do you need one + how to get one

Is your business in good standing with your state? It needs to be for things like opening a small business bank account. It’s an official document, usually issued by the secretary of state, showing your business is authorized to do business in the state. 

While not always required, a certificate of good standing is often needed for specific scenarios. Think of it as a seal of approval for your business. Let’s look at what a certificate of good standing is, why you need one, and how to get one in your state.

Jump to:

• When do you need a certificate of good standing?
• Who is eligible for a letter of good standing?
• How to get a certificate of good standing
• Fees by state for a certificate of good standing
• What does a certificate of good standing include?
• Why you need to keep your business in good standing
• Run your business with confidence
• Certificate of good standing FAQ

When do you need a certificate of good standing?

A certificate of good standing is not a routine document you carry around, but it plays an important role in various business scenarios. It serves as proof that your business is in good legal standing and enhances your credibility. 

Here are some common situations when having a certificate of good standing is essential:

• Opening a business bank account: Many banks require a certificate of good standing to ensure the business is legally compliant. 
• Applying for a business loan or credit: Lenders typically request this certificate as part of their due diligence process.
• Getting funding from investors: Investors often want to see a certificate of good standing as an indicator of a legally compliant business.
• Registering in another state: If you plan to expand your business operations to another state, you'll likely need to provide a certificate of good standing from your home state.
• Obtaining business licenses or permits: Certain licenses and permits may require a certificate of good standing as part of the application process.

A certificate of good standing is typically only needed if it’s required by someone or an entity you do business with.

Who is eligible for a letter of good standing?

Not all business structures are eligible for a certificate of good standing. Typically, the business structures that can get a letter of good standing: 

• Corporations like C-corp and S-corp
• Limited liability companies (LLCs)
• Limited partnerships (LPs) 
• Limited liability partnerships (LLPs) 

Sole proprietorships and general partnerships are typically ineligible as they are not registered entities. Then, to get a certificate of good standing, your business must meet specific requirements set by the state.

Common eligibility requirements for getting letters of good standing include: 

• Up-to-date annual reports: Ensure all annual reports or filings required by your state have been submitted. This often includes information about your business's officers, directors, and registered agents.
• Paid franchise taxes: All franchise taxes or fees owed to the state must be paid in full. These taxes vary from state to state and are based on your business's income or other factors.
• Current registered agent: Maintain a registered agent with a physical address in the state where your business is registered. The registered agent is responsible for receiving legal documents and official communications on behalf of your business. 
• Compliance with state regulations: Ensure your business complies with all other state regulations and laws applicable to your industry and entity type.

Certificates of good standing may have expiration dates that vary by state and purpose—certificates are usually valid for up to 90 days.

How to get a certificate of good standing

While the general process of obtaining a certificate of good standing is similar across most states, the specific procedures and requirements can vary. 

Here's a breakdown of the steps involved: 

1. Confirm you are in good standing: Before applying, ensure your business is in good standing with the state. This typically means you've filed all required annual reports and paid applicable state and sales taxes and fees. You can usually check your business's standing online through the secretary of state's website.
2. Get the required Information: You'll need to provide certain information when requesting a certificate, such as your business name and registration number. The specific requirements may vary by state.
3. Research state-specific procedures: Visit your state's secretary of state website or business registration agency for detailed instructions and any necessary forms. 
4. Complete the application: Fill out the application form accurately and completely. Be prepared to pay a filing fee, which can also vary by state.

The processing time for a certificate can range from a few days to several weeks, depending on the state and the method of request.

Fees by state for a certificate of good standing

The cost of getting your certificate of good standing will depend on the state you need it from. The fee for a certificate of good standing can range from just $5 to over $100. Some states offer expedited processing for an additional fee.

Lenders or creditors may have specific requirements regarding your certificate's validity, such as requiring it to be no older than 60 or 90 days.

What does a certificate of good standing include?

A certificate of good standing is a relatively simple document containing basic information that verifies your business's legal compliance. Specific details may vary slightly between states, but here are the typical elements you'll find on a certificate of good standing:

• Business name: The legal name of your company.
• Entity type: The legal structure of your business.
• Date of issuance: The date the certificate was issued.
• State of authorization: The state issuing the certificate.
• State seal and signature: Seal of the state's governing body and signature of an authorized official.

Other information that might appear on the certificate includes the formation date of the business and expiration date.

Why you need to keep your business in good standing

Having your business in good standing is more than just a formality. Adhering to state regulations, filing annual reports on time, and paying state fees ensures your business operates smoothly without interruptions. 

Being in good standing can help you: 

• Build credibility and trust: A certificate of good standing proves that your business is legitimate and reliable. It assures potential investors, partners, and customers that you’re trustworthy.
• Gain access to opportunities: Many business opportunities, such as getting loans or contracts, require a certificate of good standing. Good standing can open doors to growth and expansion.
• Avoid penalties: Failing to maintain good standing can result in fines, penalties, or loss of your ability to conduct business in the state. By staying compliant, you can avoid costly consequences.

Not being in good standing with the state could mean you have difficulty getting permits or licenses from government agencies. In some cases, losing good standing can lead to legal action by the state or other entities.

A certificate of good standing is not a one-time achievement—it requires ongoing diligence and adherence to state regulations.

Run your business with confidence

A certificate of good standing ensures you meet compliance requirements for your state. It’s a key requirement for business activities like securing loans, bidding on contracts, or expanding into new markets. 

Keeping your business in good standing means hitting tax deadlines. Accounting software like QuickBooks can help you keep track of your finances and tax dates—ensuring you meet all requirements for legal compliance.

Explore what you can do with QuickBooks