What is a certificate of good standing?

Learn more about this business document and how it may even give you a leg up on the competition.

If you’re looking to set up a new business, you’ll soon find that the process involves a lot of paperwork and documents to be signed. While you may feel like dealing with the bare minimum so you can get your business up and running, there’s an additional document that may give your business a boost.

Let’s explore what a certificate of good standing means and how it can help your business.

A certificate of good standing explained.

As its name implies, a certificate of good standing is a type of business document that shows that you’re up to date on all important business marks — for example, that your business is registered with the state, authorized to perform business, and is current with its fees and filings. In short, it proves to others that you’re a legit business.

A certificate of good standing is not a license, meaning that you don’t have to obtain one to do business. You can legally operate your business in your registered state and do not necessarily need the certificate. However, you may need one in certain circumstances — like insuring your business or competing for a government contract.

Who can apply for one?

Generally speaking, the only businesses who may apply for a certificate are ones who must also register with the state. This includes corporations, limited liability companies, and partnerships. Some states may require registration for other types of business entities, but these can vary from state to state, so it’s important to check with your particular state.

If you’re operating as a sole proprietor, you’re not required in any state to register as a business, and therefore you can’t (and don’t need to) apply for a certificate of good standing.

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