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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
  2. Establish business credit
  3. Apply for payment processing
  4. Secure investor funding your business
  5. Secure a lease on your first office space
  6. Protect your limited liability status
  7. Renew business licenses and permits
  8. Sell your business
  9. Get business insurance
  10. Improve your business credit score
  11. Apply for a loan

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. 

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The bottom line on certificates of good standing.

As you can see, a certificate of good standing is a vital document for any business owner. It demonstrates legitimacy and ensures smooth operations, especially regarding banking and credit. But maintaining good standing with your state is just as crucial. Staying up-to-date on regulations, tax laws, and reports is essential for running a business.

At Brex, we understand the importance of both. That's why we offer a powerful all-in-one solution: a corporate card to simplify spending and earn rewards, a business account for effortless cash flow management, and integrated spend management software to keep you in control. Whether you're a startup or a seasoned business, Brex helps you navigate the financial complexities and focus on what matters most – growing your company.

What if your money could work harder for your business? See how it can by signing up for a Brex account today.

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