Certificate of Good Standing vs Certificate of Existence
< View All PostsOne of the steps some organizations may need to complete to conduct business in a state is to complete a Certificate of Good Standing or a Certificate of Existence. Either of these documents helps to show that a company is incorporated and that they are legally authorized to do business within that state or in a specific jurisdiction. The two are a bit different in terms of what they communicate. A Certificate of Existence simply says the computer is allowed to operate in the state. The other is a bit more complex.
What Is a Certificate of Good Standing?
A Certificate of Good Standing is a bit different in that it states that the company does not owe franchise taxes, fees, penalties, or other costs to the Secretary of State. This does not mean that the company does not owe costs to other organizations. It only applies to meeting compliance requirements set by the Secretary of State. In most cases, this does not indicate any type of status with the Department of Revenue for that state. It does not apply to any tax obligations by the company in most cases.
In some situations, the Certificate of Good Standing can also indicate that the company has not filed for dissolution. It may also indicate that the company has an adequate and recognized registered agent service. In some states, it also indicates that the company has submitted all its annual reports as required to the Secretary of State.
For those who wish to verify the information about any given company, it is important to look for the Certificate of Good Standing as a first step. Then, it takes a further step to research any additional concerns associated with the Department of Revenue.
How Long Is a Certificate of Good Standing Valid?
One of the core concerns for any of these certificates is understanding how long they are good for. Circumstances can change at any time for a company, and that could mean that statuses change over time.
How long is a certificate of good standing valid? This depends on the state’s laws and rules. In most cases, these will be good for 60 to 90 days.
Other Types of Certificates
There are other types of certificates that could be issued as well. Some states do not issue a Certificate of Good Standing to any business. Rather, they may issue a certificate that verifies some specific information. They may issue a certificate the series just that the company exists on the state’s records. In some states, these are called a Certificate of Existence. In others, they may be referred to as a Subsistence Certificate, Status Certificate, or a Certificate of Fact.
These do not provide any significant information in terms of financial records or tax reporting. That must be obtained from additional research on the company.
What Is a Short Form and Long Form Good Standing Certificate?
Another factor to consider when seeking out these documents is the differences between a short form and a long form of a Good Standing Certificate. Though their names are self-explanatory, here is a closer look at what these mean:
Short Form: Typically, this is a short, condensed view of the information available about a company. It provides a quick view of the information about a specific company operating in the state. It may include information such as the company’s name and its status with the state. Most often, it contains a seal of the Secretary of State to prove it is authentic. In some states, additional information is provided. That may include the date the company was incorporated or the qualification, including if it is domestic or home state.
Long Form: The second type is a long form version, which contains more detailed information. This will include more information typically that is available to the state. It may contain all information found on the short form. It will also include any reference to documents that the state has based on the filing of that company within that area.
In most cases, the long form version is available for a fee. Most states offer a view of the certificate through the short form, but to obtain more information, it is necessary to request and pay for the long form Certificate of Good Standing. Keep in mind that every state offers a long form version of the Certificate of Good Standing.
Some states offer a Certificate of Listing. This document will provide a reference to all documents that are on file with the state for that company. However, this document may not contain the actual company status on it. One state that does this is California.
Why Is It Necessary to Have a Certificate of Good Standing?
All businesses need to do their part to operate under state laws. One component of that is to make sure that you submit all necessary steps to obtain a Certificate in Good Standing. This becomes important for many reasons beyond just meeting these rules. For example, as your company grows, you may need to prove that it is authorized to operate in the state and that it meets all of the state’s compliance requirements. When this is requested by any organization, you need to be able to contact the state and receive a copy of this certificate.
This is often done for many reasons. For example, it may be necessary to have this certificate if you have to acquire funding for your business or renew your business license. There may be a time when you need to seek out a permit. This is an important document in those situations.
Get Help with Your Certificate of Good Standing
Whether you need to open a business or register the one you have, our team at Eco-fyle is here to help you. All you have to do is reach out to our team to learn more about what requirements exist for your business. You can even get started right away.
