Imagine you plan to expand your business by partnering with someone, and he asks you if your business is in good standing. What would you do? A certificate of good standing could help you get started with that opportunity. It could be a step toward achieving the goals you’ve been working on. In this article, I’m going to share in-depth information about this document, why you need a certificate of good standing, and how you may upgrade your business using this, so make sure to read this guide till the end.
How Does a Certificate of Good Standing Work?
A certificate of good standing is needed to inform others that your business is officially registered. It shows that your business is performing operation activities under the rules and regulations of the government. Having this certificate indicates that your business is in compliance with government requirements. Moreover, other people or companies interested in working with you ask for this document to know if you are following the guidelines set by the officials, which allow others to determine whether working with them is worthwhile or not.
Why is a Certificate of Good Standing Important?
What is the significant value of a certificate of good standing among companies? First and foremost, newbies need a bank account for their business; the basic requirement is this document. Having this certificate may be required to open a bank account; without it, your application could be declined. In addition, banks may often require a good standing certificate before approving loans for business expansion. For business expansion, sometimes there is a need for financial support, and banks are ready to provide it. This may be done if you have a certificate of good standing, which indicates that your business is legally registered.
Are You Required to Have a Certificate of Good Standing?
In many scenarios, a company may need a certificate of good standing to prove that the organization is real, not fake. As mentioned earlier, banks may ask for this document to open a business account, or an investor might request it to verify that your business is authorized to sell the product you’re offering.
A certificate of good standing may be required when applying for loans, as it helps banks evaluate the reliability of the applicant.
The Right Way to Get a Certificate of Good Standing
You can obtain a certificate of good standing by contacting the secretary of state’s office where your business is located. To contact them, you can send your request via mail or visit their website to submit your application. They charge a very minimal fee to process the request. Once they forward the papers, a message will be received for confirmation on your contact number. You may have to wait a few days, and then they will deliver it to your address.
Common Misconceptions About the Certificate of Good Standing
Due to the lack of knowledge, people may sometimes assume things that do not even exist. Some people think they are only eligible for this paper when their business is in good condition and authorities would not provide a certificate of good standing. However, the reality is different; this certificate only represents whether you are following the rules or not; it is not concerned with your financial status. Some people think this document is only needed to open a business bank account, but it actually shows that your company complies with legal requirements.
Consequences of Not Having a Certificate of Good Standing
If you are conducting business activities without a certificate of good standing, I suggest you mentally prepare yourself for the challenges that are coming ahead. Having this certificate shows that your business is in compliance with legal requirements, which may reduce the risk of legal challenges. Without it, investors and other businesses may be less likely to partner with your company.
Tips for Maintaining Good Standing
Staying on top of certain responsibilities is important to maintaining good standing for your business. Take the responsibility to maintain your business’s information with the state, never delay paying your taxes, and research regularly about the requirements of any permits or licenses that are vital to continuing operational activities. Doing these things may save your brand from falling out of good standing.
Disclaimer: This article is for informational purposes only and does not constitute legal or financial advice. The importance and requirements of a certificate of good standing may vary depending on your specific circumstances. Please consult with a professional for guidance on your business needs.
Published by Charlie N.
