The importance is attached to documents with the names Certificate of Status, Letter of Good Standing, Certificate of Legal Existence, and Certificate of Good Standing. They serve as proof that an organization is in “good standing,” or compliance, with the state in which it operates.
A Order Certificate of Good Standing attests to the legal establishment, maintenance, and continuous existence of a corporation. It’s critical to distinguish it from a certificate of tax compliance or status, which verifies the current state tax filings and payments made by an organization.
Who Qualifies for a Letter of Good Standing?
In most states, registered business entities such as corporations, partnerships, LLCs, and limited liability partnerships can request a certificate of good standing. Before requesting a certificate, businesses must be up to date with their annual reports, fees, and registered agent designation.
Businesses that operate as sole proprietorships or general partnerships are not incorporated. Because they are not registered with the state, they are not eligible to get a certificate of good standing.
It is not necessary for owners to worry about maintaining a letter of good standing on hand in order to conduct regular operations. But at some time during an entity’s existence, obtaining a certificate will most likely be necessary. A certificate of good standing could be necessary for the following typical reasons:
opening a company bank account and applying for business funding
soliciting funds from potential investors registering a firm in a different state
striking a contract with another company
Transferring or selling a business
A company’s accurate state registration, current payment of all registration fees and required document filings, and legitimate capacity to do business in the state are all attested to by a certificate of good standing. In certain places, it’s referred to as a certificate of status or existence.
Typically, a certificate of good standing bears an expiration date, which is the date the registration is due to be renewed or the date periodic paperwork or payments are due. This may happen at the end of the year or at any other time that periodic filings or renewals are required by state law.