When Would Your Business Need a Certificate of Good Standing or a Certificate of Tax Compliance?

A certificate of good standing is a document issued by a state to show that a business such as a corporation or limited liability company (LLC) is in existence, is authorized to transact business in the state and has complied with all the state's requirements. The certificate of good standing may also be called a certificate of existence, certificate of status, or certificate of authority. It can normally be requested from the respective Secretary of State. The certificate is valid for a certain period, for example for three months.

A certificate of good standing may be needed to request loans, to obtain or renew business licenses, for tax purposes, or to enter into certain contracts or relationships. You may also need a certificate of good standing in order to sell your business, or to have a license or contract reinstated after it has been suspended or revoked.

If your company is registered to do business in one state and you want to transact business in another state, you would normally have to register as a foreign corporation or LLC in the other state. You would generally register with the other state's office of the Secretary of State and may need a certificate of good standing from the state in which your company is constituted.

The information presented on a certificate of good standing includes your company's name, that the company is registered and authorized to do business in the state, that you have filed the most recent annual report required, and that you have paid all required fees, taxes, and any applicable penalties that are owed.

You may be able to request a certificate of good standing online, on your state's department of revenue or secretary of state website. To request the certificate you will need certain authenticating data such as your taxpayer ID number, the types of taxes you file, and the dates when you were first required to collect and submit taxes.

When you apply for a certificate of good standing, a search is made of the database to find any tax returns that need to be filed, or any bills that need to be paid. If you are fully compliant, you will be able to obtain the certificate. If any items are pending, you generally have the opportunity to comply and then reapply for a certificate.

Certificates of good standing are generally issued to incorporated entities. If you need certification of tax compliance as an individual, sole proprietorship, partnership, trust, nonprofit organization, or some other unincorporated entity, you may be able to request a letter of compliance. Your state may offer other types of certificates for specific purposes. To obtain a certificate you should check with your state department of revenue, secretary of state, division of corporations, or a similar office.

Sources:

Certificate of Good Standing, Bizfilings

Certificate of Good Standing, Massachusetts Department of Revenue

Certificates of Good Standing, Ohio Secretary of State