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UCC & Corporate Due Diligence

Resource Guide for Legal and Financial Professionals

Bad Corporate Standing: What is it? How do I fix it?


There are countless occasions in which a person could be asked to supply a certificate of good standing for their business, or where a lender or attorney acts to obtain one. Two of the most common scenarios are to register or qualify a company to transact business in another state, and to open a business banking account.

A good standing certificate verifies that an entity is authorized to transact business in a given jurisdiction and certifies that they have satisfied the requirements imposed by that state. Sometimes though, the certificate is returned from the state indicating an unfavorable status. In these cases, the document might say the entity is “not in good standing,” “forfeited” or “suspended.”

What Went Wrong?
As mentioned above, in order to maintain good standing, a business entity must satisfy a set of statutory requirements. These requirements will vary state to state, but typically involve the filing of requisite statements and payment of an annual fee or tax. An entity that is in bad standing has failed to comply with one or more of these requirements.

Does Bad Standing Really Matter?
People form Corporations, Limited Partnerships, Limited Liability Companies, etc. in order to gain certain legal and tax benefits. Companies that enter bad standing and do not promptly rectify the situation are in danger of being administratively dissolved or revoked by the state. If that should happen, the business and associated parties will lose the protections of being a registered entity.

How do I Fix It?
First, you will need to find out the reason for loss of good standing. You can either call the state filing office directly or work with a private service company to help you determine the cause. Once you know what deficiencies exist, you can begin the process of reinstatement (return to good standing). In order to reinstate, an entity must file all required statements and disclosures, and taxes and fees must be paid along with any penalty charges incurred for late payment. Once all outstanding requirements have been satisfied, the entity will regain favorable status and a good standing certificate can be obtained.

First Corporate Solutions can help you restore your entity to good standing quickly and affordably. Our staff of corporate experts has the tools and the know-how to expedite reinstatement of your business entity.

Additional Resources

  • An Overview of Good Standing Certificates
  • 3 Tips for Choosing a Public Records Service Company


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