Starting and maintaining a business requires more than just passion and hard work. For those who have formed a limited liability company (LLC), it’s crucial to understand how to keep the LLC in good standing.

In this article, we’ll explore what it means for an LLC to be in good standing, the reasons it’s important, and provide a guide to help you maintain your LLC’s good standing.

What is good standing?

When we say an LLC is in “good standing,” it means that the business is compliant with all the legal requirements and obligations imposed by the state. This includes filing necessary documents, paying fees and taxes, maintaining accurate records, and adhering to specific regulations. Being in good standing is vital for the LLC’s credibility, legal protection, and ability to conduct business smoothly.

Reasons to Stay in Good Standing

There are quite a few reasons an LLC will need (and want) to stay in good standing. Let’s walk through them. 

  • Incurring fines: Failure to maintain good standing may result in penalties, fines, or other legal consequences imposed by the state.
  • Losing liability protection: If an LLC falls out of good standing, it may lose the limited liability protection that shields the personal assets of the owners from business liabilities.
  • Inability to get a Certificate of Good Standing: A Certificate of Good Standing is an official document that verifies an LLC’s compliance and is often required for various purposes, such as expanding into other states, obtaining loans, or securing certain licenses and permits. An LLC not in good standing may face difficulties in obtaining this certificate, which can be an issue for an LLC that needs it.

In short, good standing isn’t just a “stamp of approval” from the state. It’s an essential part of keeping your business stress-free and moving in the right direction.

How to Keep an LLC in Good Standing

Keeping an LLC in good standing doesn’t have to mean you just hope for the best. Stick to these best practices for business compliance, and you’ll be well on your way to staying in good standing.

File your Articles of Amendment whenever changes occur

Whenever there are significant changes in your LLC, such as a change in business name, address, or ownership, it’s important to file Articles of Amendment with the state. This helps ensure accurate and up-to-date information, helping you stay in good standing.

Keep your registered agent information current

A registered agent is responsible for receiving important legal documents and notices on behalf of your LLC. It’s crucial to keep the registered agent’s information current with the state to ensure proper communication and compliance.

File annual or biennial reports on time

Many states require LLCs to file annual or biennial reports to update their information and confirm ongoing compliance. Failing to file these reports on time can result in penalties or even the loss of good standing. 

Don’t mix business and personal funds

To maintain good standing and protect your personal liability, it’s essential to keep your business and personal finances separate. Maintain separate bank accounts and clearly document all transactions related to your LLC.

Renew business licenses and permits

Certain licenses and permits are necessary for conducting specific types of business activities. It’s crucial to renew these licenses and permits promptly to help ensure compliance and avoid any disruptions.

Renew your DBA

If your LLC operates under a “doing business as” (DBA) name, it’s important to renew the DBA registration as required by the state. This helps maintain accurate records and demonstrates your commitment to compliance.

Resolve any criminal charges against the LLC or its members

Criminal charges against the LLC or its members can have a severe impact on its good standing. It’s crucial to address any legal issues promptly and take necessary actions to resolve them. A proactive approach is best.

Pay all taxes

Complying with tax obligations is vital for maintaining good standing. Ensure timely filing and payment of federal, state, and local taxes. Additionally, make estimated quarterly tax payments to avoid penalties.

We can help!

ZenBusiness is here to assist you at every step of your LLC journey so you can stay compliant easily. With our LLC formation service, we make the process of starting your business seamless and hassle-free. And our worry-free compliance and annual report services help you stay compliant with ease, allowing you to focus on what you do best: growing your business.

Need a Certificate of Good Standing? We can help with that, too.

Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.

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Written by Team ZenBusiness

FAQs About Keeping an LLC in Good Standing

  • To stay in good standing, your business needs to fulfill all the legal requirements and obligations set by your state. This includes timely filing of necessary documents, paying fees and taxes, maintaining accurate records, and adhering to specific regulations. Keeping your registered agent information up to date, renewing licenses and permits, and separating business and personal finances are also crucial for maintaining good standing.

  • When your business is in good standing, it means that it’s compliant with all the legal requirements and obligations imposed by the state. This includes being up to date with filings, fees, taxes, licenses, and permits. Being in good standing enhances your business’s credibility, maintains its liability protection, and allows for smooth operations and opportunities such as obtaining loans, expanding into other states, or securing licenses and permits.

  • Several factors can lead to a business not being in good standing. Failure to meet filing deadlines, neglecting to pay fees or taxes, not renewing licenses or permits, and not maintaining accurate records can all result in a loss of good standing. Additionally, criminal charges against the business or its members can also cause it to fall out of good standing.