In the Pursuit of a Perfect Business Entity: Certificate of Good Standing

They say, “If opportunity doesn’t knock, build a door!” and if you haven’t had the opportunity to start a business so far, now’s the time to do it! We at Prestige Auditors, together with our skilled team, will help you fulfill your greatest e-commerce business dreams and desires. If you have already formed an LLC, or you are currently planning to form one, you should sooner or later get familiar with a certificate of good standing. Because you need to prove the legal status of your business, more specifically, your LLC. Now let’s take a look at this certificate, who can get one and what is needed for helping your e-commerce-based business grow and mature.

A Certificate of Good Standing

This is a document that is given to LLCs by the state they are operating in. A certificate of good standing proves that your business exists and is compliant with all filings and payments. Moreover, this certificate may play a crucial role in your business because it officially states that your Limited Liability Company is registered with the state, keeps pace with state registration fees, and is legally permitted to be involved in business activities in that state.

Now which business type should get a certificate of good standing? As you may know, not every business type is required to register with the state, which means that they shouldn’t get a certificate of good standing. For example, if you choose Sole Proprietorship as your main business entity, you won’t have to get a certificate. On the other hand, LLCs (Limited Liability Companies) should be undeniably registered with the state.  What about other business entities? On this occasion, much depends on the state you are operating in. Just keep pace with your state laws, and you will always operate above-board!

When the Time Is Ripe

Normally, you don’t need to get a certificate until they ask you for it. To better understand when and why you should get one, let’s observe the following two situations:

1. This can happen when cooperating with an organization or an individual. When working with them, you may be asked for a certificate when applying for credit in the name of the business, when opening a business bank account and so on, it can be anything. This will prove that you are in good standing and you are reliable and trustworthy enough.
2. Imagine you are willing to register your business in another state. When you are applying to register out of your state, you will be considered a foreign entity. So, the state where you want to be registered will require a certificate of good standing from the state where your Limited Liability Company was initially formed.

P.S.: If your business is formed in a state where registration is not required, you can obtain a certificate of good standing from the state agency in the state where you’re operating your business as a foreign entity or the state agency in which your business is registered.

Long story short, all you have to do is check your state laws and always keep pace with them. If you are required to have a certificate, don’t be afraid, it’s easier done than said! Your profitable e-commerce business is not far from becoming true, because you are so much close to your main goal with Prestige Auditors at your side! We will also help you with business sales tax exemption and a lot of other eCommerce business solutions. Contact us now for more info!