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What Good Standing Really Means

Betsy Gonzalez
Posted on December 7, 2017 by Betsy Gonzalez in Business Compliance, Nonprofit Compliance.

Demonstrating your organization’s good standing is a normal part of doing business. Whenever you open a bank account, expand into new states, or apply for a license, a certificate of good standing is usually part of the required paperwork. The certificate acts as a sort of state report card, indicating whether you’re up to date on state filings and sometimes payments.

Yet looking at good standing that way, like obsessing over a report card, has two major drawbacks. One, it can produce unnecessary anxiety. Two, it takes focus away from the real value of good standing, which, like an education, goes beyond letter grades and test scores.

So what does good standing really mean? And when you need that bottom-line scorecard to get a loan or enter a new state, how do you get it? The following overview answers those fundamental questions and points to a better way to manage your organization’s good standing.

How Good Standing Is Determined

In the strictest sense, good standing means a business or nonprofit organization has satisfied all of its legal obligations with the secretary of state. Most secretary of state offices have a corporations division that will verify your status and issue a certificate of good standing (in some cases called a certificate of status, existence, or fact) for a small fee. The certificate affirms that your organization is up to date in these areas:

Secretary of state registration: In your home state, your organization is registered as part of the process of forming a business, nonprofit, or other corporate entity. In other states where you operate, you must register to do business as an out-of-state or “foreign” entity. These records must be updated whenever your corporate information changes.

Annual reports: Businesses and nonprofits are required to file annual reports with the secretary of state wherever they are registered.

Registered agents: Businesses and nonprofits must also maintain a registered agent to receive official documents in each state where they have operations.

Other Aspects of Good Standing

In some states, agencies such as the department of revenue share data with the corporations divisions, effectively broadening the criteria for good standing. In those states, your good standing may also reflect employment filings, tax registrations or exemptions, and whether you have paid all state taxes and fees.

Because this isn’t the case in every state, it’s possible for a business or nonprofit to receive a certificate of good standing despite being in arrears on taxes or missing other critical state requirements. If you’re not sure which requirements apply to your business, just get in touch, and one of our compliance specialists will be happy to help you sort it all out.

When You Need to Know the Score . . .

If you need to verify your organization’s standing, you can visit secretary of state websites and search for your entity, or you can make a quick call to us. Our entity management software interfaces with every state, so we can easily see not only if your organization is in good standing, but whether all of your information is up to date and if you have any upcoming deadlines.

If you partner with us for your entity management needs, we track your corporate status for you and can provide a printed report anytime. We also provide full access to our compliance software, so you can easily check your status in any state whenever you like.

If you need a certificate of good standing, we can obtain one for you in any state. Simply contact one of our compliance specialists for help.

Beyond the Scorecard

At Harbor Compliance, we take a broader view of good standing to consider all of your legal obligations at the federal, state, and local levels, including business licensing and charitable solicitation registration. Through this lens, good standing describes a state of true corporate well-being. This type of good standing is a valuable asset, demonstrating to partners and to the public that your organization is viable, responsible, and ethical.

Our mission is to keep businesses and nonprofits in that state of continuous good standing without the worry, stress, or risks of managing state registrations, reports and licenses in-house. You focus on your mission and goals; we steer you clear of regulatory obstacles and hardships.

Reap the benefits of true good standing. Contact one of our specialists today, or call us at 1-888-995-5895.


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