What is a certificate of good standing, and how do you get one?

A successful business is built on reputation, and also abides by important regulations. A certificate of good standing demonstrates both of these aspects. Most business owners will be asked to provide a certificate of good standing at some point. We’ll explain how to get one and when you’ll need to use it.

What is a certificate of good standing?

A certificate of good standing is a state-issued document that shows you’re authorized to do business in that state. While it won’t disclose whether you’re behind on any tax obligations, it offers proof that you’re complying with state laws — you’re up to date on state fees, taxes, business filings, and more.

All of this means that your business is active and in “good standing.” For most business types, it's an essential document to get a business bank account, credit card, loan, and much more. Lenders and creditors likely won’t work with a business whose status isn’t verified.

You must legally register with your state to receive a certificate of good standing. States have different requirements for getting one, and each certificate will look slightly different. This document may also be called a:

• Good standing certificate
• Letter of good standing
• Certificate of existence
• Certificate of status
• Certificate of authorization
• Certificate of authentication

In this article, we’ll continue to refer to it as a certificate of good standing as it’s the most common name. In most cases, your Secretary of State office will issue your certificate.

What does a certificate of good standing include?

Although there’s some variability, every certificate has a few primary elements. A certificate of good standing typically includes your business name, type of business entity, the date your business was formed, the state where you’re authorized, and the Secretary of State’s seal and signature.

Whether or not you need a certificate of good standing — or have the ability to get one — depends on your business entity.

Who needs a certificate of good standing?

When you register your company, you’ll choose the business structure that best suits your needs. Some business entities can get a certificate of good standing, and others can't.

Here are the businesses that can request a certificate of good standing:

• Limited liability companies (LLCs)
• Partnerships
• Limited partnerships (LP)
• Limited liability partnerships (LLPs)
• Limited liability limited partnerships (LLLPs)
• Corporations

The reason these businesses can get certificates is because they're required to register with the state. From that point, the government is tracking their compliance with state regulations. The state can easily verify whether these businesses are active.

On the other hand, businesses that aren't required to register cannot get a certificate of good standing. If you own a sole proprietorship, for example, you won't be able to demonstrate good standing in this way. In the U.S., sole proprietorships don’t have to be registered. However, there are other documents you can use to verify that your business is compliant.

If you discover that you need a certificate of good standing, follow the steps below.

How to get a certificate of good standing.

There are a couple of ways to get a certificate of good standing. You can work directly with your state government using their website or mail services. Or, you can choose a paid online legal service like LegalZoom, which will file documentation on your behalf. This is also known as using a "registered agent." 

1. Register your business.

If you aren’t a sole proprietor and you’re being asked to supply a certificate of good standing, there are two likely scenarios:

• You’ve already registered your business as a corporation, partnership, LLC, or other entity. You’re applying for a business bank account or small business loan, and you’re ready to go.
• Your business isn’t registered, but you’re trying to apply for a business bank account or small business loan. You’ll have to hold off on this.

If you’re in the latter group, you need to register before applying for your certificate. The Secretary of State office is typically responsible for this process. Here’s an overview of how to register a business: 

• Choose a business structure and business entity name
• Submit your business documents, such as articles of incorporation
• Pay registration and filing fees
• Register a “doing business as” name (DBA), if you’ll use one
• Request an Employer Identification Number (EIN) from the IRS
• Apply for any federal licenses or permits
• Apply for state and local tax IDs, licenses, and permits

If you do business in more than one state, also known as a "foreign entity," you may need to register there as well. Many states will request that you show a certificate of good standing from your "home state," the state where you formed your business. Then, you can get your foreign qualification. 

2. Check that you've met all requirements.

“Good standing” generally means that you’re up to date on your state taxes and fees. It verifies that you’ve accurately provided all the requested documentation. Depending on the state, you may need to file an annual report as well. This report provides a comprehensive breakdown of your business activities. It includes financial data, market segment information, new product or service plans, and more. 

Good standing also refers to the fact that your business has existed continuously since the date you registered it. Together, this information proves that you (and your business partners) are authorized to sell goods and services in your state. 

Fortunately, there’s a way to check your firm’s standing before you mail off documents and pay fees. Most state filing agencies have a business entity database on their website. There, you simply type in your business name (the legal name, not the DBA). You should see your current status and which tasks, if any, you need to complete. 

Even if you think you’re in good standing, don’t skip this step. You could easily discover a mistake by the state that needs to be rectified. 

3. Request your certificate from the state.

Request a certificate of good standing from your Secretary of State office, or the equivalent government agency or subdivision in your state. (In Delaware, for example, you go through the Division of Corporations.)

As we mentioned earlier, you can handle this process on your own. It's fairly easy because you're only requesting a document — you should have already registered your business and double-checked your standing. 

You can request your certificate online or by phone, mail, email, or fax. Using agent services is another option, and could save you some time. 

In any case, you'll pay a filing fee. The amount is determined by your specific state agency. For example, it's $25 in New York, but only $11.50 in Idaho. 

Getting your certificate online is the fastest method. After you pay your fee, it's usually available to download right away. You may also receive a certified copy by mail in several business days.

It’s also worth noting that some state certificates have an expiration date. Yours could expire after one year or just one quarter. But keep in mind that you don't need to have a certificate of good standing on hand at all times. In fact, lenders, creditors, and investors often ask for certificates of good standing that are less than 30 or 60 days old. 

11 situations when you may need a certificate of good standing.

A certificate of good standing protects your business in many ways. For instance, LLCs are required to keep business finances and personal finances separate. But banks will want to see your certificate before you can open a business bank account. Each day you're mixing your finances, you put your business at risk. 

Equally, your good standing will open a lot of doors. Having a valid certificate of good standing allows you to: 

1. Open a business bank account

Banks typically require a certificate of good standing when opening a business bank account. This requirement serves as proof that your company is legally formed and compliant with state requirements.

LLCs and corporations must keep business and personal finances separate to maintain their legal protections. Banks will only open a business account after verifying the business's good standing status, which confirms the entity is active and legitimate. The certificate demonstrates to the bank that your business exists as a legal entity separate from you as an individual.

Mixing personal and business funds without an official business account can jeopardize your company's limited liability protections. Courts can "pierce the corporate veil" if you fail to maintain proper separation between personal and business finances, potentially making you personally liable for business debts. Having the certificate ready helps ensure smooth account setup and protects your business from these legal and financial risks. Most banks will reject business account applications that lack this documentation, so obtaining it before your bank appointment saves time and prevents delays in establishing your financial infrastructure.

2. Establish business credit

A certificate of good standing is often needed to begin establishing business credit. It serves as evidence to lenders and credit bureaus that the business exists in good standing and can be trusted financially.

When a business applies for its first credit card or line of credit, creditors may ask for this certificate to confirm the company's legal compliance. This verification helps separate the business's credit profile from the owner's personal credit. Credit card companies and lenders use the certificate as part of their underwriting process to verify that they are extending credit to a legitimate entity rather than a shell company or inactive corporation.

The certificate demonstrates that your business has met its obligations to the state, suggesting it will likely meet its obligations to creditors. Without this document, many financial institutions will not process credit applications, as they cannot verify the business exists as a separate legal entity. Maintaining good standing enhances your company's credibility, which is fundamental for building business credit history. A solid business credit profile, separate from your personal credit, opens doors to better financing terms, higher credit limits, and more favorable vendor relationships as your company grows.

3. Apply for payment processing

To accept customer credit card payments or set up a merchant account, payment processors often request a certificate of good standing. This requirement assures the processor that the business is properly registered and operating lawfully.

Payment processing companies conduct due diligence similar to banks to mitigate fraud and risk. Verifying good standing is part of their checks to ensure the business is legitimate and compliant with regulations. Processors face significant liability if they enable transactions for fraudulent or non-compliant businesses, so they scrutinize applicants carefully. The certificate helps them confirm that your business is not only real but also authorized to conduct business in your state.

Without proof of good standing, a business might face delays or denial when trying to enable credit and debit card processing, which can hinder sales and cash flow. Many processors will automatically reject applications that lack this documentation, forcing businesses to operate on a cash-only basis. This limitation can significantly reduce revenue, as studies show that businesses accepting cards typically see 20 to 30 percent higher sales than cash-only operations. Having your certificate ready when applying for payment processing prevents these delays and ensures you can accept payments from day one.

4. Secure investor funding for your business

Potential investors commonly require a certificate of good standing during funding rounds or due diligence. It reassures them that the company is legally sound and up-to-date with its obligations.

Providing this document demonstrates the business has no outstanding compliance issues such as unpaid taxes or lapsed filings that could pose risks. Investors, whether venture capital firms or angel investors, see a current good standing certificate as a sign of a well-maintained and credible company. The certificate becomes part of the standard documentation package alongside financial statements, cap tables, and corporate bylaws. Professional investors view the absence of this basic document as a red flag that suggests poor corporate governance or administrative neglect.

During due diligence, investors' legal teams will verify that your company can legally enter into investment agreements and issue shares. A company not in good standing may lack the legal authority to execute these transactions, potentially invalidating the entire investment. Failing to present a certificate can delay investment deals or even deter investors entirely. Smart founders keep current certificates on hand throughout the startup fundraising process, as requests often come with tight turnaround times. The few days it takes to obtain a certificate from the state could mean the difference between closing a round and losing investor interest.

5. Secure a lease on office space

Commercial landlords or property management companies may ask for a certificate of good standing before finalizing a lease agreement with a business. This document helps verify the tenant business is legitimate and registered.

Landlords want assurance that the company signing the lease is in active good standing, which means it's authorized to do business and capable of meeting lease obligations. They may be less willing to rent to a business that cannot prove its legal status. From the landlord's perspective, a company that has failed to maintain good standing with the state might also fail to pay rent or could dissolve unexpectedly, leaving them with an empty space and unpaid obligations. Property managers use the certificate as a screening tool alongside credit checks and financial statements.

Including a copy of the certificate in a lease application can streamline the approval process. It shows professionalism and gives the landlord confidence in the tenant's stability. Many commercial leases span multiple years and involve substantial financial commitments, so landlords conduct thorough vetting of potential tenants. A current certificate of good standing signals that your business maintains proper records and meets its regulatory obligations. Without this document, landlords may require additional security deposits, personal guarantees from owners, or simply choose another tenant who can provide proper documentation.

6. Protect your limited liability status

Maintaining good standing is essential to protecting the limited liability status of an LLC or corporation. A certificate of good standing is proof the business has upheld all legal requirements, serving as a safeguard for its limited liability protection.

If a business falls out of good standing by missing annual report filings or fees, it risks penalties or even dissolution by the state. This could expose owners to personal liability for business debts, undermining the very purpose of forming an LLC or corporation. States can administratively dissolve companies that fail to maintain good standing, which means the business legally ceases to exist. Once dissolved, the owners lose their liability protection and can be held personally responsible for company obligations incurred after the dissolution date.

Regularly obtaining or renewing the certificate isn't just bureaucratic paperwork but a confirmation that the company's liability shield remains intact. Good standing status must be actively maintained to keep legal protections in place. Some states require annual filings while others require biennial reports, and missing these deadlines can quickly cascade into serious legal problems. Business owners who neglect these requirements may find themselves personally named in lawsuits that should have been directed at the company. The cost of maintaining good standing through timely filings and fees is minimal compared to the potential personal exposure from losing corporate protection.

7. Renew business licenses and permits

Many jurisdictions require a current certificate of good standing when a business renews certain licenses or permits. This requirement ensures the business remains compliant with state laws since the last licensing period.

Agencies issuing licenses may request the certificate as part of the renewal application. It's a quick way for them to verify that the company has no outstanding legal or tax issues. City business permit offices, professional licensing boards, and regulatory agencies use this document to confirm that the entity applying for renewal is the same one that received the original license and that it remains in legal operation. The certificate acts as a master verification that eliminates the need for agencies to independently check multiple state databases.

When renewing a liquor license or an industry-specific permit, businesses might need to show proof of good standing. Planning ahead to obtain this document can prevent delays or interruptions in operations due to lapsed permits. Some licenses take weeks or months to renew, and discovering you need a certificate of good standing at the last minute can shut down operations. For businesses in regulated industries like healthcare, construction, or food service, an expired license means ceasing operations until the renewal is complete. Having a current certificate on file and knowing your state's processing times helps avoid costly business interruptions.

8. Sell your business

When an owner plans to sell the business, whether entirely or a portion of it, a certificate of good standing is typically required during the sales process. Buyers will ask for it as part of their due diligence.

Prospective buyers or acquiring companies use this certificate to confirm the business is in compliance and free of state-imposed problems like pending dissolution or major compliance fines. It provides assurance that they are purchasing an active, legally sound entity. The certificate becomes part of the representations and warranties in the purchase agreement, where the seller guarantees the business is in good standing. Buyers' attorneys will insist on seeing a recent certificate, usually dated within 30 days of closing, to ensure no compliance issues have arisen during negotiations.

Having an up-to-date certificate on hand can speed up the sale or transfer of ownership. If a business cannot produce one, it may need to resolve compliance issues first, which can delay or jeopardize the deal. Reinstating good standing after falling out of compliance can take weeks and may require paying years of back fees and penalties. Some buyers will reduce their offer price to account for the cost and risk of bringing a company back into good standing, while others will walk away from the transaction entirely. Sellers who maintain current certificates throughout the sale process demonstrate organizational competence that can strengthen their negotiating position.

9. Get business insurance

Insurance providers may request a certificate of good standing before issuing certain types of business insurance policies. This helps the insurer verify that the company is properly registered and in good legal standing.

From an insurer's perspective, a company that isn't in good standing could be a higher risk. It might be inactive or facing legal problems. Insurers use the certificate to ensure the business is legitimate and current on its obligations before extending coverage. Insurance companies worry that businesses failing to meet basic state requirements may also neglect other responsibilities, leading to more claims. The certificate provides objective proof that the business maintains minimum standards of corporate compliance.

Some business insurance policies, particularly liability or property coverage, might not be granted or could be voided if the company falls out of good standing. Insurance contracts often include provisions that coverage depends on the insured maintaining all necessary licenses and legal status. If a claim arises and the insurer discovers the business was not in good standing at the time of the loss, they may deny the claim entirely. Staying compliant is not only important for legal reasons but also for maintaining insurance coverage. Business owners should verify their good standing status before renewing policies each year to avoid gaps in coverage or claim denials.

10. Improve your business credit score

Maintaining a certificate of good standing can indirectly help improve a company's business credit score. Good standing status boosts a business's overall credibility in the eyes of lenders and credit rating agencies.

When a business is in good standing, it has access to credit-building opportunities such as loans, credit cards, and vendor credit lines. Every time the business responsibly uses and repays credit, its credit score can improve. These opportunities often require proving the business is legitimate and compliant. Lenders report payment history to business credit bureaus like Dun & Bradstreet, Experian Business, and Equifax Business, but only for companies they can verify as legitimate entities. Without good standing status, businesses cannot access the credit products that build credit history.

While a certificate itself isn't a direct credit score factor, losing good standing could hurt the score. If the business cannot obtain financing or if public records show compliance issues, credit bureaus might view the company less favorably. State records of administrative dissolution or tax liens become part of the public record that credit bureaus monitor. These negative marks can remain on business credit reports for years, making future financing more expensive or impossible to obtain. Staying in good standing is part of running a financially healthy, creditworthy business that qualifies for the best rates and terms from lenders.

11. Apply for a loan

Most lenders, from banks to the SBA, will ask for a certificate of good standing when a business applies for a loan. It is often a mandatory document in loan applications to verify the borrower's legal standing.

Lenders use the certificate to confirm the business is active, properly registered, and not facing dissolution. It provides assurance that the company has been following regulations and is likely to continue operating for the duration of the loan. Banks include the certificate requirement in their standard loan checklists because lending to a business that lacks legal authority to operate would violate banking regulations. The certificate also confirms the business has the legal capacity to enter into loan agreements and grant security interests in its assets.

This requirement applies to various financing types, whether it's a small business loan, a line of credit, or equipment financing. The lender's due diligence checklist usually includes confirming good standing status. Having an up-to-date certificate ready can streamline the loan approval process, whereas lacking one may result in delays or denial of funding. Some lenders will conditionally approve loans pending receipt of the certificate, but most will not release funds until they have this document in hand. For businesses seeking quick funding for opportunities or emergencies, maintaining a current certificate eliminates a potential bottleneck in the lending process. The time and expense of obtaining the certificate are negligible compared to the cost of missing out on needed financing.

If you lose your good standing, it damages your ability to do business. Fortunately, the same online legal services that can help you request a certificate can also provide guidance on getting your good standing back.