It is critical to your Limited Liability Company or corporation to have a good standing with all states you do business in. Many times, vendors, investors and lenders may request a copy of your Certificate of Good Standing before they do business with you. If you are doing business in another state, you may have to present them with the Certificate of Good Standing in order to get a business license.
The Secretary of State, where you formed your LLC or corporation, supplies the Certificate of Good Standing. It is considered official proof that your company was formed correctly formed and currently exists and is in good standing with their records. It also shows proof that your company is authorized to do business in the state and is considered in good standing.
Keep in mind, each state may have other names for the Certificate of Good Standing. Some states refer to it as Certificate of Status or Certificate of Existence.
How Can My Business Lose Good Standing Status?
If there is a lapse in your annual report filing or you have not paid your franchise taxes are two big reasons you could lose your good standing status. Unfortunately, this may not surface until you are closing the big financial deal or expansion of your company.
You may lose your good standing status due to poor internal processes. This could include departments like your finance, tax or legal. Even if you have a compliance teams, they may not be up to date without the proper tools and processes that have been updated with your state.
There can be status changes that are voluntary. You may expand into new locations. If you decide to dissolve or withdraw your company from a state, you should file the correct forms, so you won’t be liable for taxes, filings and penalties.
Business Transactions and or Financing May Require a Certificate of Good Standing.
In order to approve financing, the financial institution may need a Certificate of Good Standing for approval. Many times, companies request one when requesting a proposal or other transactions
You Can Save Money
If your company falls out of good standing, you may face fines, penalties and additional fees to get your good standing status back.
Using a registered agent can help you stay in compliance.
Expanding into Other States is Easier When You Stay in Good Standing.
Many states will ask for a Certificate of Good Standing when expanding your business into their state. You will be seen as a Foreign business but that is not because you will are outside of the country.
Serious Consequences Can Happen if You Lose Your Good Standing status.
You could lose access to the court system. If you fall out of good standing the state may not allow you to file a lawsuit within the state.
Directors, employees, of officers could be fined.
There are business identity thieves who look for companies to go out of good standing. They will could take out loans or make purchases in your companies’ name.
Tax liens are usually a result of failure to pay taxes and that could keep you from getting financing.
The state could dissolve or revoke your company if you fall out of good standing. If you fall out of good standing, you will have a limited amount of time to get it reinstated.
Wyoming Discount Registered Agent, Inc. is a licensed registered agent in the state of Wyoming. We help business like yours to form an LLC or corporation. There are many advantages to incorporating in Wyoming.