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The Importance of Certificate of Good Standing For Your Business Growth

Starting a corporation or a limited liability company(LLC) is not easy, but keeping it afloat maybe even harder. Authorities require business entities to always comply with the laws and regulations governing establishing a business or company and its operations. Also, other private entities may require you to ascertain your worthiness through a Certificate of Good Standing to do business with you.

Certificate of Good Standing

A Certificate of Good Standing is a document that the government issues to a business entity such as a corporation, a limited liability company, or any other business entity after fulfilling specific compliance standards with state filings, fees, and other requirements.

A certificate of good standing serves as proof that your business entity exists, is duly registered, and is authorized to transact in the state.

Importance of Having a Certificate of Good Standing

When you form a corporation or a limited liability corporation, it’s essential to fulfill all the government requirements to obtain a good standing status. However, even after receiving the good standing status, you need to ensure you maintain the Goo Standing status to help you keep afloat and also enjoy some benefits;

1.      Retain Use of Your Name and Avoid Business Identity Theft

A valid certificate of good standing will enable you to retain your limited liability name identity. When you lose Good Status Standing, you lose the right to use the name in the state, which might be detrimental to your business. Once you seize the legal ownership of your company name, thieves might use business identity theft to perform illegal trade using your company name. You can search for a certificate of Good Standing California for professional assistance.

2.      Enables You Expand into the Other States

For another state to allow your company to operate, you must be having a valid certificate of good standing from your state of registration. In this case, your company is local to your state of registration and foreign to any other State.

·         Certificate of Authorization

If your certificate of good standing is valid, you are legible to register as a foreign company through foreign qualification. Once you get registered and authorized, you get a Certificate of Authorization to operate in another state as a foreign company. However, the requirements for each state are different.

3.      As A Requirement for Loans

Before lenders qualify you for a loan, they will first confirm your compliance levels with the authorities. Hence, a certificate of Good Standing is suitable proof of your compliance level, thus making it a necessity before acquiring loans from lenders.

4.      To Avoid Fines

States may impose fines and penalties on your business for non-compliance. Some government states may even go further and charge some individuals for knowingly acting on behalf of a company without the Good Standing Status.

Reasons Why You Might Lose Good Standing Status

You might lose your good standing status due to various reasons, which include;

  • Failing to pay taxes on time
  • Failure to file annual reports on time
  • Failure to maintain a registered office or agent


Complying with government requirements concerning your business filings and other requirements needs timely and accurate information. Suppose you don’t have time to follow up with the bulk information or find government filing systems tedious. In that case, it’s important to hire private professionals who will help you with your filings and improve your compliance. With a professional filing company, you will always have your Certificate of Good Standing ready.

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