Losing the ability to obtain a certificate of good standing for your company can cause problems with such things as opening business financial accounts, making arrangements for processing credit and debit card payments, and registering to conduct business in other states. Fortunately, in most situations, this problem can be quickly remedied.
Certificate of Good Standing
A certificate of good standing is a written statement from the state agency that regulates certain types of business entities. It verifies that a business entity is legally registered with the state and is authorized to do business there. In some states, it is called a certificate of status or certificate of existence. A certificate of good standing typically has an expiration date, which is usually when the registration is due to be renewed, or when periodic documents or registration fees are due.
A certificate of good standing can be issued to an entity that is formed in the state, or to one that was formed in another state and is registered as a foreign entity in the state.
A certificate of good standing is not like a business or occupational license. A business or occupational license must be obtained in order to legally conduct business, but a company can legally conduct business without obtaining a certificate of good standing.
Loss of Good Standing
A business entity can lose its good standing for several reasons, including:
- Failure to pay a registration renewal fee
- Failure to file a required periodic document, such as an annual report or renewal form
- Failure to pay various types of state business taxes or fees
- Mistakes made in a filed form, such as not signing the form or not fully completing it
- Loss of a business or occupational license
- Criminal activity, including fraud, committed by the business or an owner
To be technically accurate, a business does not lose a certificate of good standing. Once a certificate of good standing is issued, it is valid until the date it expires. What typically happens is that the business will be denied a new certificate of good standing after a current one expires.
Recovering Your Good Standing
In most cases, it is fairly easy to remedy whatever problem caused the loss of your ability to get a certificate of good standing. The two most common reasons for not being issued a certificate of good standing are that the business failed to pay some fee or tax, or failed to file some type of document. Usually, a certificate of good standing will be issued as soon as the document is filed, or upon the payment of the fee or tax, plus any interest and fines.
Of course, recovering your good standing could be costly and time-consuming if the reason for not being issued a certificate of good standing is due to something like the loss of a business or occupational license, insolvency of the company, or criminal activity.
In all but the most extreme cases, losing the ability to get a certificate of good standing can usually be remedied quickly by contacting the state agency that is denying the certificate of good standing. They can tell you the nature of the problem, and what to do to resolve it. Most often, it is a simple matter of filing a form or writing a check.