If you find yourself wondering what the meaning of “not in good standing” is, you’re not alone. Being in good standing isn’t too difficult to maintain. But if you somehow lose good standing, it’s crucial to understand what it is, how it happened, and how to get it back.
In this guide, we’ll cover all the basics of good standing, and what to do to get your Certificate of Good Standing back as smoothly as possible.
A Certificate of Good Standing is a state-issued document that confirms a business is in good standing. Some states call this form a Certificate of Status or Certificate of Existence. When a business is in “good standing,” it has fulfilled all its obligations with the state, from annual reports and licenses to taxes.
Typically, a business that’s in good standing can request a Certificate of Good Standing from its Secretary of State at any time. They’re usually cheap to obtain, and most states process them within a few business days.
You don’t need a Certificate of Good Standing to run a business compliantly; it’s simply a certification that you have been operating compliantly. For most typical business transactions, a certificate isn’t necessary. But there are a wide variety of reasons business owners might need one, such as getting a business loan, getting a foreign qualification in another state, starting a new business contract, and more.
Businesses that lose their good standing risk a lot of potential issues. In many states, a business that’s not in good standing can’t initiate a court case. Getting funding or establishing relationships with new business partners can prove challenging, too.
If you’re hoping to qualify as a foreign corporation or foreign limited liability company (LLC) in another state, you’ll be unable to until you can get a Certificate of Good Standing. And, of course, businesses who fall out of good standing also are likely to incur fines and penalties.
Every state has slightly different reasons a business entity could lose its good standing status. Some of the most common reasons could be not filing your annual report, failing to maintain a registered agent, not maintaining a required license, or not paying certain business taxes. Basically, if your state has a statutory compliance requirement for your business structure and you don’t uphold it, you could lose your good standing. Criminal activities like fraud can also compromise your good standing.
The good news? Often, you can correct your standing in a few steps.
Getting back into good standing can seem like a hassle, but in many cases, it’s doable. Every state has slightly different requirements, but here are the basic steps you can expect.
To be sure that you’ve met all the state requirements for getting back in good standing, we recommend consulting with your Secretary of State (or equivalent government agency). If there are any outstanding compliance failures, they’ll let you know.
The easiest way to maintain compliance for your LLC or corporation? Never lose it to begin with — and ZenBusiness can help you do that. We handle the red tape aspects of business so you can focus on making it succeed. Whether you need help with worry-free compliance, a new registered agent, or even help starting a new limited liability company, we have your back.
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.
When a business loses good standing, they aren’t automatically forced to close down. They’re still in operation, but the “not in good standing” classification warns that the business entity (and people doing business with them) that one or more requirements haven’t been met. If a business stays out of good standing for too long, the state might enforce administrative dissolution. Check your state’s business laws to learn more about the full procedure in your area.
Certificates of Good Standing technically expire, but it depends on the state you received it from. Generally, most certificates are good for 30 to 90 days depending on your location.
Sometimes, the person asking to see your Certificate of Good Standing will want to see a very recent one. For example, they might want to see a certificate that’s less than 30 days old. If your requester asks for that — even though your certificate is technically valid — you’ll need to obtain a new one.
Technically, a Certificate of Good Standing is valid for up to a year in California. However, if the person asking to see your certificate wants a more recent one, then you’ll need to request a new one.
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