Importance of Good Standing
"Good standing" means that a company is up to date on filing its state reports, obtaining its state licenses and permits, paying its state taxes and fees, and complying with other statutory rules for operating the business entity. A letter of good standing serves as proof of a company’s business compliance status.
Definition of Good Standing
In the strictest sense, good standing means a business has satisfied all legal obligations with the secretary of state. It serves as proof that the entity exists and is authorized to transact business in the state.
Qualifications for Good Standing
What does it mean to be in good standing? A business in good standing is compliant with laws and regulations, is up-to-date on fees, and has met filing requirements. To qualify, your business must:
- Pay applicable state and local business fees
- File taxes on time
Maintenance of Good Standing
Staying in good standing requires fulfilling state compliance responsibilities which vary by state and entity type.
Renewal and Documentation
A certificate of good standing certifies that a company is properly registered with the state, up to date on fees and filings, and legally permitted to engage in business activities. It typically has an expiration date when registration is due for renewal.
Compliance Requirements
Before the year ends, make sure you take care of filing an annual report to maintain your company’s good standing.
Consequences of Good Standing
If a small business is in compliance, that means it is in good standing, defining the status of the company and demonstrating its commitment to fulfilling legal obligations.
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