What constitutes a Certificate of Good Standing?
Certificate of good standing is a business document, similar to a credit score, that restores your reputation if you are not in compliance with the secretary of state. It can be labeled as a certificate of status, certificate of facts, or certificate of existence.
What does a certificate of good standing accomplish?
To demonstrate their existence, incorporation, and authorization to conduct business in the state, business entities use certificates of good standing. Good standing status indicates that an entity is up to date with the secretary of state's office filing requirements, as well as its corporate franchise taxes. During the financing process, banks frequently ask for a certificate of fact from a business.
Who is responsible for issuing a certificate of good standing?
The secretary of states is responsible for issuing a good standing letter for your business. This certificate may not be eligible for a sole proprietorship and partnership. To ensure compliance with corporate laws, entities are only allowed to receive certificates of good standing by the secretary of state.
How often is it necessary to obtain a certificate of good standing?
Obtaining this document at least once a year is highly recommended because it is usually valid for only six months in most states. Hence, you can remove any stain that exists on your report similar to your credit score.
The primary functions of a Certificate of Good Standing:
- Verifies that your business has complied with all state requirements, including the filing of annual reports and payment of necessary fees.
- Displays your business's legal standing and enhances its credibility and reputation.
- Enhances your business's credibility and reputation by demonstrating its legal standing.
- In the event that a business fails to comply. Restoring its reputation and demonstrating that it is back in good standing can be achieved by obtaining a Certificate of Good Standing after addressing any issues.
