Certificate of Good Standing

Also known as a certificate of existence or a certificate of authorization, a Certificate of Good Standing is a vital document for any business. Without one, you’re going to have a tough time.

There’s a framework of regulations aimed at ensuring companies meet certain minimum standards before transacting business. For the most part, business owners and real estate investors agree on the need for a system that helps distinguish legitimate enterprises from unknown entities.

Essentially, the Certificate of Good Standing means you’re legally cleared to do business in your state.

What is meant by Good Standing?
A Certificate of Good Standing—also known as a Certificate of Existence or a Certificate of Authorization— shows that your business has paid its taxes, has fully complied with various regulations in the state where your entity was formed, and has filed an annual report.

This vital document is essential to just about any business because it means you’re legally cleared to do business in your state. Keep in mind, laws vary from state to state regarding the types of businesses that must register. If you’re unsure about your specific situation, check with your state’s business filing agency.

When would I need a Certificate of Good Standing?
There are many specific occasions where you will need to produce a Certificate of Good Standing. These can include if you choose to expand your business into another state (or even country), or if you are bringing a new investor or partner on board.

Obtaining it in advance will help you avoid last-minute scrambles, since you may also be asked to provide a copy when setting up contracts with suppliers, bidding on government contracts, and registering to do business in another state.

Who would require a Certificate of Good Standing?
Having a Certificate of Good Standing is necessary when opening a business checking account, applying for a loan, raising capital, or raising funds from investors. Many more lenders will require them if you need to apply for any type of financing.

Obtaining it in advance will help you avoid last-minute scrambles, since you may also be asked to provide a copy when setting up contracts with suppliers, bidding on government contracts, and registering to do business in another state.

AN OUNCE OF PREVENTION IS WORTH A POUND OF CURE

Regardless of your situation, it’s just sound business practice to have a copy of your Certificate of Good Standing for your own records. You’ll probably need it to operate anyway, and you’ll want to be able to produce it easily. Royal Legal Solutions can help you meet the requirements for and obtain your Certificate today.

WHY USE ROYAL LEGAL SOLUTIONS FOR A REAL ESTATE INVESTMENT ASSET PROTECTION?

We have experience in setting up the proper asset protection and making it easy for an investor to use. Our system simplifies management structure as much as possible, and we also use common sense to ensure your needs are met. For example, just one tip we give our clients is that you don’t need multiple bank accounts as long as you have accurate accounting records. For taxation, they should stay exactly how they are now while being reported on a Schedule E of your personal return (if you’re an individual/married partners) or a partnership return (if unmarried partners).


Last Updated: 
April 15, 2021

Scott Royal Smith is an asset protection attorney and long-time real estate investor. He's on a mission to help fellow investors free their time, protect their assets, and create lasting wealth.

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