Does an LLC Need a Certificate of Good Standing?

If a person owns a limited liability company (LLC), they may be required to provide a Certificate of Good Standing to be able to complete certain actions with their business. While a Certificate of Good Standing isn’t something an LLC will need on a frequent or consistent basis, it’s good to know what exactly this certificate is and what it allows a business to do.

What is a Certificate of Good Standing?

A Certificate of Good Standing is a simple document that provides proof from the state government that a business is registered with the state and that it has fulfilled all of its legal obligations there. This means that the LLC has paid any applicable formation and maintenance fees and is current on its annual report filings.

There are some other names for this document in some states, including a Certificate of Status, a Letter of Good Standing, or a Certificate of Existence. In most locations, though, this document is simply referred to as a Certificate of Good Standing.

Does an LLC need a Certificate of Good Standing?

One common business task that almost always requires a Certificate of Good Standing is registering an LLC as a foreign LLC in a new state. While there is a small handful of states where foreign registrations can be acquired without one, most states require LLC owners to produce a Certificate of Good Standing from their domestic state when registering as a foreign entity.

Furthermore, there may be an additional requirement dictating that the Certificate of Good Standing needs to be recently obtained within a specified timeframe before applying for a foreign registration. Some states require a Certificate of Good Standing that is no more than 30 days old, some give up to a year’s grace period, and some have no time-based requirement. It’s important for entrepreneurs to check with the specific state to see what exactly is required before they start the foreign qualification process.

There are also some business activities that require a Certificate of Good Standing. For example, banks will sometimes request one if the business is opening a business bank account. An LLC might also need one to set up a credit or debit card payment system or to apply for a loan.

In general, a business owner might need a Certificate of Good Standing in the LLC’s early days or when it’s expanding or moving into other states.

Recommended article: Does a business need a Certificate of Authority?

How can an LLC obtain a Certificate of Good Standing?

In most states, an LLC owner can acquire a Certificate of Good Standing from the Secretary of State’s office or the equivalent state agency. They’ll likely need to pay some sort of fee as well. Most states (with the notable exceptions of Colorado and Wyoming) require a fee to request a certificate.

There are typically several different ways to get these certificates, and depending on the state, an entrepreneur can probably acquire them online, in person, by mail, or by fax. Entrepreneurs would also be wise to remember that some states require an original Certificate of Good Standing, while others will accept copies.

Can an LLC owner hire someone to acquire their Certificate of Good Standing?

If an entrepreneur would rather not obtain their own Certificate of Good Standing, they can have an online business services company like ZenBusiness acquire one on their behalf.

Recommended articles:

• What if a business is denied a Certificate of Good Standing?
• Does a business owner need an LLC?
• Does an LLC need a Business License?
• What if a business loses its Certificate of Good Standing?

In Conclusion

Certificates of Good Standing come in handy more often than one might think. They’re a vital component of registering an LLC in a foreign state, and several banking activities (like opening a business bank account, applying for loans, setting up credit card processing, etc.) often require Certificates of Good Standing as well.