Expert Tips on Understanding and Obtaining Good Standing Certificates
UCC, CorporateFirst Corporate Solutions recently asked a panel of experts to review a selection of our past blog posts. The panel was comprised of some of our most trusted and tenured clients from the lending and legal fields as well as expert members of our staff. We asked the panel to read the posts and share any insider tips or additional information they could think of that may be helpful to regular readers of the blog.
Over the next few weeks, we will be posting revamped versions of some of our most popular blogs, now complemented by an expert tips section! This week, we offer expert tips on understanding and obtaining good standing certificates.
A good standing certificate is a state-issued document that verifies that a registered entity is authorized to do business in a given jurisdiction. Further, the document certifies that the named entity has complied with certain statutory requirements imposed by that state.
Two of the most common reasons a person may require a good standing certificate are to register or qualify their company to transact business in another state and/or to open a business banking account. In both instances, a business must demonstrate that they have satisfied the requirements for their state.
In most states, the Secretary of State (or equivalent office) files and maintains records for registered businesses such as corporations, limited liability companies etc. and as such, they will be the issuing agency for the good standing certificate. Those in need of a good standing can work directly with the state either by mail or online or they can work with a private service company to secure priority processing of their document request.
Expert Tips
In some states, a good standing will denote an entity’s good tax standing in addition to favorable corporate status while in other states, a separate status certificate must be obtained from a taxation agency to determine an entity’s tax status.
– First Corporate Solutions Corporate Specialist
Beware of certificates that only indicate the business is active or in existence, as they only prove an entity is registered in that state – not that they are necessarily in good corporate standing.
– K. Lewis, Sr. Paralegal Houston, TX:
If the certificate says that the entity is not in good standing, it may require additional research to determine the reason for bad standing.
– H. Nguyen, Loan Documentation Manager Los Angeles, CA
2 thoughts on “Expert Tips on Understanding and Obtaining Good Standing Certificates”
Leave a Reply
You must be logged in to post a comment.
In Texas, the Comptroller of Public Accounts issues a “Certificate of Account Status” which were formally known as “Certificates of Good Standing.”
The Texas Secretary of State on the other hand issues a “Certificate of Status” (not to be confused with the Comptroller’s “Certificate of Account Status”).
The Comptroller’s certificate (of account status) provides information about the company’s franchise tax account status. The Secretary of State’s certificate (of status) is official evidence of an entity’s existence (or authority) to transact business in Texas as-well-as the entity’s formation (or registration) date and legal name.
Caveat – a valid Certificate of Account Status and Certificate of Status does not in-and-of-itself mean an entity is authorized to close the transaction. One must also look at the entity’s organizational documents and obtain the opinion of counsel as to whether the entity is in good standing and authorized to close the transaction.
This blog is one of my favorite and one of the very few I make sure to visit nearly every day – keep up the great work!
Hi Bradley – Thanks for your comments! Are you interested in being a guest blogger for us? Thanks, FCS-Samuel