What Is a Certificate of Good Standing for a US LLC?
Certificate of Good Standing
A Certificate of Good Standing is an official document issued by the state in which the LLC is incorporated. This normally indicates that the LLC is a legitimate business entity and fulfills the requisite qualifications for staying active as such.
The certificate may be known by other names in different states, like Certificate of Existence, Certificate of Status, or Certificate of Authorization.
The following facts are normally stated in the certificate:
- The LLC is registered with the state.
- The company is currently active or in good standing.
- Required state filings have been completed.
- Applicable state fees are up to date.
- The LLC has not been administratively dissolved or revoked.
The exact information and terminology can vary by state.
Why Does an LLC Need a Good Standing Certificate?
An LLC Good Standing Certificate is not necessary for all business dealings. Nonetheless, there may be cases where the document is required to prove the good standing status of the company.
This could happen when:
- Opening or maintaining certain business bank accounts
- Applying for business financing
- Bringing in investors or business partners
- Registering your LLC in another state
- Entering into certain major contracts
- Completing a merger, acquisition, or restructuring
- Working with certain government agencies
- Providing company verification to a third party
When a bank, financial institution, investor, or business partner asks for proof of the LLC’s standing, the certificate may be especially helpful for the foreign LLC owners.
How to Get a Certificate of Good Standing
Steps to getting the certificate depend on the state where your limited liability company is incorporated. The states usually have a business entity search option or Secretary of State website from where businesses may apply for the certificate.
Step 1: Identify Your LLC’s Formation State
Start by finding out in which state your LLC was initially created.
In other words, if your LLC was created in Wyoming, then you have to go to the relevant state authorities in Wyoming to get the certificate. If your LLC was formed in Delaware, then you have to use the relevant procedure in Delaware.
The reason is that each state has its own procedure, fee, time, and nomenclature.
Step 2: Check Your LLC’s Current Status
Before ordering the certificate, verify that your LLC is active and in good standing.
Check whether:
- Required annual or periodic reports have been filed.
- State fees or taxes are current where applicable.
- The registered agent information is properly maintained.
- The LLC has any outstanding compliance issues.
If the company is not in good standing, you may need to resolve the outstanding issue before a current certificate can be issued.
Step 3: Find the State’s Official Business Portal
Visit the official website of the state authority responsible for business entities.
Search for your LLC using information such as:
- Company name
- Entity or file number
- Registered business details
It is advisable not to use unauthorized websites where the state has a channel for such transactions.
Step 4: Request the Certificate
After finding the LLC, you will need to use the state’s guidelines to obtain the LLC’s Certificate of Good Standing.
The options you have will depend on the state, and could include:
- Online processing
- Mail-in requests
- In-person requests
- Expedited processing
Some states also allow you to request certified or authenticated copies when required for a specific transaction.
Step 5: Pay the Applicable Fee
The state certificate will also be subject to certain fees. The exact amount will vary greatly based on the state and the particular service that you need.
An expedited processing, a copy or even an authentication may cost extra.
Make sure you check out the current fee schedule from the particular state authority’s website.
Step 6: Receive and Review the Certificate
After processing of your request, you will be issued with the certificate through the states means of delivery. Before usage, ensure you have examined the document for:
- Correct LLC name
- Correct entity number
- Current status
- Issue date
- State authority information
- Any certification or authentication details requested by the recipient
In case an investor, bank, or government official requests the document, it should be verified that they need a new certificate.
Certificate of Good Standing Requirements
Certificate of Good Standing Requirements might vary between states. Overall, you will need to have your LLC be in good standing in the state before getting the certificate.
Possible requirements are:
Active LLC Status
The LLC normally requires activity in the state records. The LLC will have to be reinstated if it is administratively dissolved or revoked before being able to get a current certificate.
Required Reports Filed
Certain states mandate that LLCs file annual or periodic reports. Failure to file could impact the LLC’s standing.
Fees and State Obligations
In case there are any outstanding fees for the state or any other pending obligation, then these may need to be cleared first.
Registered Agent Compliance
Registration of a Registered Agent is essential in the state where the LLC was formed. Updating information about the registered agent is one of the ways to keep proper records.
Since laws differ depending on the jurisdiction, LLC members should check the requirements of their states.
How Long Does It Take to Get a Certificate?
The processing time is influenced by the state and the mode of processing chosen.
Processing an application made online may at times be faster as compared to processing one done through mailing. Expedited processing service may be available in some states for an extra cost.
If you have any deadline for using the apostille certificate in relation to banking account, foreign registration, investment dealings, etc., then do not wait until the very last minute before applying.
How Much Does an LLC Good Standing Certificate Cost?
There is no single nationwide price for an US LLC Certificate of Good Standing. Each state establishes its own fees.
The total cost may depend on:
- Standard or expedited processing
- Online or paper submission
- Certified copies
- Authentication or additional documentation
- Delivery method
The most accurate costs can be found from the fee details provided by your state’s governing body regarding your LLC.
Does a Foreign Founder Need a Certificate of Good Standing?
It should be noted that an immigrant founder does not necessarily require a Certificate of Good Standing since he or she is not a resident of the United States.
Nevertheless, some cases might arise when international entrepreneurs will have to obtain such a certificate while doing business, opening a bank account, investing, or registering their company.
Foreign-owned US LLCs, for instance, can be required to present proof of their current good standing status during any business dealings or certain administration procedures.
The main idea here is that the necessity is always associated with some particular actions or transactions, rather than the nationality of the founder.
What If Your LLC Is Not in Good Standing?
If your LLC cannot obtain a current certificate, do not immediately create a new company. First determine why the company is not in good standing.
Potential issues can include:
- Missing annual or periodic reports
- Unpaid state fees
- Problems with registered agent information
- Administrative dissolution
- Other state compliance requirements
With the root cause determined, next proceed to restore the compliance of the LLC following the process outlined by the state. Based on the situation, the steps may include filing late reports, settling late payments, or reinstating the LLC.
With the compliance restored, the company will be eligible for getting a new certificate.
How Long Is a Certificate of Good Standing Valid?
A Certificate of Good Standing usually means that the firm is in good standing on the date on which it was issued. The certificate is not always a certificate of good standing in perpetuity.
For this reason, it is possible for the organization to stipulate the period in which it should be issued. For example, the issuing organization may be a bank, an investor or a government agency that would demand that the certificate is provided in a particular span of time.
Common Mistakes to Avoid
Getting the certificate is not really hard, but there are certain mistakes that might cause delays.
Ordering From the Wrong State
Make sure you request the certificate from the state where the LLC was formed or where the relevant business record is maintained.
Ignoring Compliance Issues
If there are any complications regarding overdue filings and liabilities, then the certificate of good standing will not help your LLC.
Waiting Until the Last Minute
In case you need the certification for a certain transaction that is subject to a deadline, ensure there is enough time for processing.
Ordering the Wrong Document
Some organizations may require a certified, authenticated, or recently issued certificate. Confirm the exact document requirements before submitting your request.
Conclusion
Certificate of Good Standing for US LLC is one of the essential documents that you will need to prove that your LLC is still operational and complies with the requirements of the state where it is located. Even though each state has different terms, fees, and processes related to this issue, there is always a common pattern, which includes checking if the LLC is in good standing, clearing up any issues with the compliance of the LLC, submitting the certificate, and ensuring that the document meets all requirements of the party receiving it.
For international founders and businessmen, knowing these requirements will make it easier to deal with different business transactions.
Frequently Asked Questions
How do I get a Certificate of Good Standing for an LLC?
Usually, you ask for this from the state agency that handles your LLC. Check the validity of the business and send the request along with the fee, and then get the certificate.
What is a Certificate of Good Standing used for?
It is usually employed to prove that the LLC is legally operating and continues to have valid registration within the state. Such a document may be requested by banks, investors, lenders, and other entities.
Can a foreign owner get a Certificate of Good Standing for a US LLC?
Yes. An owner from outside the USA may be able to get a Certificate of Good Standing for their LLC in the USA as long as they satisfy the criteria set by the relevant state. The location or nationality of the owner does not affect the standing of the LLC.
What happens if my LLC is not in good standing?
Before embarking on any further steps, it is imperative for you to resolve all your compliance problems first. This can be achieved by submitting overdue reports, payment of relevant fees, updating records, or reinstatement, amongst many other ways.
