What is a Certificate of Good Standing?
A certificate of good standing is a document proving a business is legally registered and able to operate in a state. You must legally register with your state to receive a certificate of good standing. This document may also be called a good standing certificate, letter of good standing, or certificate of existence.
For businesses in the UK, a certificate of good standing is requested from Companies House, who will post the signed certificate to your registered business address or an alternative address. It shows a business is in ‘good standing’. The certificate can be requested by anyone, for example another organisation planning to go into business or the company itself to keep up with their own filing records.
This document is issued by the state agency handling business registration to show the official existence of a registered entity like a corporation or LLC and that it’s legally registered and authorized to operate in the state. Most states use the term certificate of good standing but other names like certificate of existence refer to the same thing.
You may need a certificate of good standing when you want to do business in another state, open a bank account or enter into contracts and partnerships since it shows your business is legitimate. You typically need to renew it at least yearly, although more often if there are significant business changes.
How to Obtain a Certificate in the USA
To obtain a certificate of good standing in the USA, a business must be up to date on all filings and fees, and permitted to do business in your state. LLCs and corporations must be registered with the state to obtain the certificate. Although not mandatory to conduct business, it is commonly used to verify the legitimacy of a business.
Understanding Certificates for Individuals
For individuals, a certificate of good standing proves a business they are associated with is compliant with state laws and regulations. Just as with businesses, individuals may need it to enter contracts or conduct financial activities that require proof of good standing. The process for obtaining this certificate for a person involves ensuring that any business they are connected to is properly registered and compliant with the state requirements.