What is Good Standing Certificate?
The Short Answer
Good Standing Certificate explained simply
A Good Standing Certificate, sometimes called a Certificate of Existence, is an official document from a state government. It confirms that your business is legally registered and has followed all the state’s rules. This means you’ve filed all necessary reports and paid all required fees. It’s like a clean bill of health for your business from the state.
Real-World Example
Why a Good Standing Certificate Matters When Selling
Imagine you own "Bake My Day," a popular bakery. You find a buyer who wants to purchase your business. As part of their due diligence, the buyer’s lawyer asks for a Good Standing Certificate. This document proves to the buyer that "Bake My Day" is a legitimate, compliant business in the state. Without it, the buyer might worry about hidden legal issues or fines, which could delay or even stop the sale.
Why this matters
This certificate is important for several reasons. Lenders often require it when you apply for a loan. Other states might ask for it if you want to expand your business there. Most importantly, when you sell your business, buyers will want to see it. It shows them your business is legitimate and free from state-level legal problems, making the sale smoother.
Always keep your business filings up to date to ensure you can get a Good Standing Certificate quickly when needed. Delays can hold up important deals.
Always keep your business filings up to date to ensure you can get a Good Standing Certificate quickly when needed. Delays can hold up important deals.
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