Of all the certificates and awards that businesses can seek and show off to the world at large, a Certificate of Good standing is the one that is commonly overlooked. If a business is in good standing, that certificate proves that the organization is in compliance with taxes and state laws. However, a Certificate of Good Standing has offers many other benefits to businesses of all sizes and in all industries.
How Does a Business Get a Certificate of Good Standing?
A Certificate of Good Standing may also be called a Certificate of Status, a Certificate of Existence, or simply Tax Compliance. These certificates are issued in the state where your business exists. In many cases, businesses can obtain a Certificate of Good Standing by filling out a form and paying a small fee. While the guidelines may vary from state to state, the information businesses need to submit includes:
The company name, as used for taxes
The formation date
The location of the business, including its home state
Registered owner’s name and address
Federal tax identification number
Unemployment insurance number
Most certificates of good standing last for 30-90 days, depending on state laws, to prevent businesses from presenting outdated information.
How to Use a Certificate of Good Standing
A Certificate of Good Standing is required when businesses want to establish themselves in states other than where they were formed. Additionally, the certificate helps businesses obtain financing, permits, licenses, and conduct large transactions.
Keeping in Good Standing
In order to maintain the status of good standing, your business must be in compliance with state taxes and laws. Registration, licenses, permits, reports, fees, and taxes must all be filed on time. Missing a deadline can place your business in bad standing with the state, which could lead to hefty fines at the very least, and complete dissolution of the business at the more severe end of the scale.
While obtaining a Certificate of Good Standing is rarely discussed among business owners, the advantages it offers to small and growing organizations are very important to long-term success.