What is a Certificate of Good Standing?

Certificate of Good Standing Explained

A Certificate of Good Standing (CGS) can be considered a kind of “mark of trust” that shows clients, partners, and investors that the business operates transparently and legally. Having such a document helps a company support its reputation as a reliable and responsible market participant.

What is a Certificate of Good Standing for an LLC or corporation?

This question is often asked by company owners. The answer is simple: the CGS is essentially the same for both an LLC and a corporation. These documents are similar in content: they confirm that the company (whether an LLC or a corporation) is registered, has filed all reports, and has paid taxes. So, regardless of whether a business is structured as an LLC or a corporation, obtaining a Certificate of Good Standing involves the same process and serves the same purpose of verifying compliance with state requirements.

Why businesses need this document

Many founders wonder why they might need a Certificate of Good Standing. Below are the most common cases when this document comes in handy:

1. Financing and loans: loans, grants, or even opening a new account abroad often require a CGS. This way, the bank makes sure that the business is legal and that everything is in order with taxes.

2. Contracts and partnerships: for large deals or new projects, partners may ask for a company Certificate of Good Standing. It is similar to a “letter of trust”: it proves that you are a credible entity in the industry.

3. Expansion of activities: if a company plans to operate in another state or country, a Good Standing Certificate issued by the state/country of registration may be required for the company's records and due diligence. This confirms that the business is officially “listed” in its home registry.

4. Renewal of licenses and permits: some professional certifications require confirmation that the company has no outstanding debts, and a CGS provides this assurance.

5. Sale or change of ownership: when selling or transferring a business, the information about the company's status is key to assessing the transaction. A corporate Certificate of Good Standing will show that it has no outstanding state obligations or penalties.

   
   

In summary, while this document may not always be legally required, it greatly simplifies many matters. In fact, a Certificate of Good Standing is a kind of “business card from the state” saying that “you may trust this company.”

Purpose and Legal Importance

The main purpose of a Certificate is to confirm that a business complies with legal requirements and has the right to continue operating without restrictions. This document often serves as a “pass” to financial transactions, agreements, or international contracts, as it demonstrates the legal stability of the business.

Proof of compliance and active status

First of all, a Certificate of Good Standing is proof that a company is fulfilling its obligations. It confirms that the legal entity is active and “in the game”: it is not in the process of liquidation or suspension, and has no property seizures or debts. By submitting a CGS, you show third parties—from banks to customers—that your business is operating in accordance with the law. For them, it's a green light: if there is a Certificate, it means there are no issues with state authorities.

When banks, investors, or partners request it

Banks, investors, partners—all these counterparties want to be sure that cooperation is reliable. Therefore, it is not surprising that while negotiating, they often ask for a Certificate of Good Standing.

Without it, it is difficult to obtain a loan or investment, as financial institutions require guarantees of your solvency. At the same time, when concluding new agreements or starting cooperation, clients may ask for a CGS: this way, they minimize the risks of a risk-prone business partner. It is easier to show the document and continue business instead of repeatedly giving verbal assurances about the company's compliance.

How to Obtain a Certificate of Good Standing

Where do I get a Certificate of Good Standing?

Where can you obtain this Certificate? It’s straightforward: at the same place where the company is registered. In the US, this is usually the office of the Secretary of State of registration. In the UK, it is Companies House. In other countries, it is the body that maintains the register of companies (e.g., the commercial register). If you do not know where to obtain a CGS, search for the website of the state register in the company’s jurisdiction. There is usually a section or form for ordering documents about the status of a company.

How to apply — online and in person

The process itself is straightforward:

1. Gather information. Usually, the exact name of the company, registration number, and address are required.

2. Choose your method. Most offices allow you to do this online. Go to the registry website and find the section for ordering a Certificate.

3. Additional methods. If online submission is not available or you prefer a hard copy, you can apply in person or send a paper request.

4. Pay your fees. There is a fee for issuing a Certificate, which is usually quite reasonable.

5. Receive your Certificate. After your application is processed, you will be sent a document. Online, the document can be ready in minutes. Written or in-person submission may take several days.

   
   

Note for company owners: Before applying, ensure that all annual reports have been submitted and any taxes or fees are paid. Outstanding debts or incomplete documentation will prevent the issuance of the Certificate of Good Standing or may result in receiving a document indicating non-compliance.

If you’re encountering issues in obtaining a Certificate of Good Standing, you may contact the appropriate office to address your requests. If your issues are legal, consult your legal counsel to help you determine how to get a Good Standing Certificate.

Certificate of Good Standing for Different Business Types

International equivalents and terminology

Certificates of Good Standing exist in many countries under different names. For example, in the US, the document may be called a Certificate of Existence or Status. In the UK, Companies House issues a Company Certificate, which is, in essence, a Certificate of Good Standing. In Australia or Canada, similar certificates are obtained from the relevant registrars (sometimes called a Certificate of Compliance or Certificate of Status). In Europe, an official extract from the commercial register is often sufficient (for example, in France:  an extrait Kbis, in Germany: an extract from the Handelsregister). In any case, all these documents serve the same purpose—to confirm that the company is legally operating and has no outstanding debts. If an international version is required, such a certificate can be apostilled for recognition abroad.

FAQ on Certificates of Good Standing

What is a Certificate of Good Standing used for?

It is required whenever you need to prove the legality of your business. It is used when obtaining loans, opening bank accounts, concluding contracts, or attracting investors. It confirms that the company actually exists, has fulfilled all requirements before the state, and has no debts.

How can I get one for my company?

To obtain a Certificate, you’ll need to apply to the state registry where the business is registered. This is usually done online through an official state web portal. You’ll have to provide information about the company and pay a fee. If all is correct, the registrar will issue a certificate of good standing.

Does every business need a Good Standing Certificate?

No, not every business. Small domestic businesses without external audits typically don't require it. However, many processes, like obtaining loans or expanding, might require or benefit from having it.