Business Certificate of Good Standing: What it is and How to Get One
If you're a small business owner developing a consistent cash flow, the administrative side of your business will get periodically checked by banks, platforms, partners, and even your state. These groups want to make sure that your company’s up to date on all document filings and is legally permitted to engage in business activities. Ultimately, they need to make sure you’re in “good standing”.
A certificate of good standing is a document that helps third parties verify an entity is active and meeting state compliance expectations. This certificate is important for companies who need a business bank account or loan, as lenders and creditors will often deny an entity whose status isn’t verified. It’s also necessary for legal reasons – businesses that aren’t in good standing will often face serious consequences from the state they operate in.
In this guide, we’ll learn what a certificate of good standing is, why you may be asked for it, who can get it, what it includes, where to request it, and the practical steps to get it quickly when someone asks. Plus, if you’re a resident of New Jersey or Delaware, you’ll need a certificate to open an account with Slash, an all-in-one business banking platform that makes it easier to manage your finances and keep your corporate compliance up to date.¹
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What is a Certificate of Good Standing?
A certificate of good standing is a state-issued certificate that confirms an entity is properly registered, up to date on required filing and fees, and currently authorized to do business in that state. Keeping track of your state fees, documents, and business filings is not only important for tax compliance purposes, but for your company’s right to keep its doors open in the first place.
Depending on your state, a good standing certificate can go by a few other names, including certificate of existence, certificate of status, or certificate of fact. No matter the name, it’s a document used to verify your business’s activity and credentials.
On the surface, a good standing certificate seems similar to a business license, but they’re two separate documents. A business license is a permit given to a person or entity that grants them permission to begin business, while a good standing certificate is requested to confirm that an entity that’s been doing business is compliant and up to date with filings. Unlike a license that’s kept on hand, it’s typically only pulled when requested. Tax clearance letters from the Department of Revenue can also be conflated with certificates, but they're a completely different document exclusively focused on tax compliance.
Why are businesses asked for a certificate of good standing?
A good standing certificate may be requested by your state during moments of increased growth, as the state is responsible for making sure businesses are legally registered and aligned with baseline compliance expectations. If your state finds that you aren’t in good standing, you may face severe consequences such as loss of access to the courts, heavy fines, and even complete dissolution of your company.
Your state isn’t the only entity that may request a good standing certificate from you. Here are some other situations that may call for a certificate:
Common Situations That Call for Good Standing Certificates
- Banking or financial platform reviews: Actions like opening a business bank account or applying for a loan may lead to your lender requesting a certificate of good standing, as they’ll want to make sure your business’s compliance is in order before entrusting you with assistance.
- Expanding into another state: Certificates are often required when bringing your entity over state borders, as new states want to make sure your business complies with your old state. Even though that move is contained within the U.S.A, you will technically be registering as a “foreign entity” in your new state.
- Contracts and partnerships: If and when you team up with a business partner, they may want to see your certificate of good standing before entering into an official contract with your company.
- An acquisition or sale: Similarly, if another entity is acquiring your business through a purchase or merger, they’ll want to do their due diligence and ensure all your compliance-related ducks are in a row.
It’s important to note that a newer good standing certificate is usually better. Requesters are less likely to accept a certificate that’s a couple years old, as enough time has passed for your documentation and filings to have lapsed. In fact, for official matters like cross-state expansion, most states require a good standing certificate that’s 90 days old or newer.
Who Typically Needs a Certificate of Good Standing?
Any business entity that is formally registered with a state can request a certificate of good standing, since the state is able to verify that the company has met its filing and compliance requirements. These structures commonly include:
- Partnerships
- Limited Liability Companies (LLCs)
- Limited Partnerships (LPs)
- Limited Liability Partnerships (LLPs)
- Limited Liability Limited Partnerships (LLLPs)
- Corporations
On the contrary, if your business wasn’t required to register with the state, you can’t receive a certificate because there isn’t an equivalent state registration record to be certified against. The most common example of this is a sole proprietorship, in which there is no legal distinction between the owner and the business itself.
Sole proprietorships only have one owner who is solely responsible for the business’s assets, liabilities, and debts. This is not the same as a single-member LLC; a single owner can still register their business with their state, thus incurring limited liability protection. In short, if you registered your business with the state, you can expect to eventually need a good standing certificate.
The standard in finance
Slash goes above with better controls, better rewards, and better support for your business.
Where Do You Get a Certificate of Good Standing?
There are actually six states that do not require a certificate of good standing – Alaska, Colorado, Kentucky, Minnesota, Pennsylvania, and Texas. In the rest of the United States, the issuing authority for certificates is almost always the state office responsible for business registrations, which tends to be the Secretary of State.
For those in the other 44 states, the process for requesting a certificate of good standing will likely be consistent: find your entity in the state registry, confirm the record, then request the certificate through the state office tied to that listing. Typically, the official state site tied to the business registry entry is the best avenue to do this through.
Some states allow you to download your certificate of good standing online, while others send it through the mail. Since you may need your certificate in a pinch, it’s smart to familiarize yourself with which method your state uses before submitting a last-minute request.
How to Get a Certificate of Good Standing in 4 Steps
Obtaining a certificate of good standing is usually straightforward, but small issues can cause delays. Before you submit a request, make sure your business entity is properly registered and up to date with state requirements. The steps below outline how to secure your certificate efficiently:
1. Register Your Business
This may seem obvious, but it can be an easy mistake to think your certificate of good standing will arrive alongside your initial registration. Before requesting a certificate, your business must be fully registered with a chosen structure, federal licenses/permits, and tax IDs.
2. Ensure your business is compliant
To be in good standing, your business must have paid all state fees and taxes and filed all requested documents. Some states also require entities to submit annual reports that break down business activities and financial data.
You can lose the status of good standing by letting legal requirements lapse; late fees, expired permits, and missed annual reports will all result in the denial of a certificate of good standing. Another requirement that some states have is a registered agent, which is a person or entity that receives official legal, tax, and service of process documents for a given small business. Details vary widely by state, so be sure to research your state’s rules and regulations.
A helpful tip is to check your state’s business entity database to learn more about your compliance. Once you find it, search your entity’s registered name, and you’ll see your current status and tasks you need to complete.
3. Request the certificate from the state
Once you’re confident that your business is compliant, locate its record in the state database, choose the “Request” option, and submit the request along with a small fee. The state you request your certificate from must be the state it originally registered in. As mentioned before, the ensuing delivery may be either virtual or by mail.
4. Receive and use the certificate
If you received your certificate of good standing digitally, save a copy of it to a secure folder on your computer and send it over to the person or entity that requested it. If sending to a government or state agency, they may have a dedicated portal. If you have a paper copy, then you can mail it to them, or even deliver it by hand if it’s a new partnership and you work together with the requester.
What Information Does a Certificate of Good Standing Include?
A good standing certificate typically includes the following details:
- Legal name of the entity
- Type of entity (corporation, LLCs)
- Confirmation of active status
- Statement that required filing obligations are current
- State where you’re authorized
- Issuing office name and seal (often Secretary of State)
- Date of issuance
The date of issuance is arguably the most important aspect; if your certificate is over 90 days old, it may be out of date in the eyes of the requester, especially if you’re giving it to the state.
Support Ongoing Business Operations With Slash
Unpaid fees, missed annual reports, and disorganized finances can lead to your certificate of good standing being denied. When you’re a founder of a new small business, it’s easy to lose track of expenses and fees, leading to non-compliance and inaccurate annual reports. This is where the Slash business banking platform can help. Our all-in-one dashboard provides deep visibility into cashflow, allowing first-time founders to keep track of their finances and stay compliant.
The Slash Visa® Platinum Card automatically sorts all business expenses into appropriate categories, making tax deductions simple and freeing up time to focus on more pressing aspects of growth. For companies that entrust spending to multiple employees, our card comes with granular spend controls that can limit transaction amounts and be customized to specific vendors. Additionally, the Slash card offers up to 2% cashback, which can open up thin margins for new companies.
Our business banking platform can transform your company’s financial toolset. With Slash on your side, you’ll be able to take steps to compliance so routine reviews can be completed and you can fully focus on expanding your small business.
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FAQs
Does a certificate of good standing cost money?
There is a fee associated with requesting a good standing certificate, and as with most of the details we've discussed, it varies by state. The highest you'll see in any state is $50 (Connecticut, Delaware, Nevada) and the lowest you'll see is $5 (Ohio, New Hampshire, Iowa, California).
How long is a certificate of good standing valid for?
While there isn't a true expiration date to a good standing certificate, the passage of time makes it less acceptable, since requesters want to know about your business's status right now. Even if your state's certificate is named a certificate of existence, your continued existence doesn't make it valid for any extra length of time.
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