What If My Business Is Denied a Certificate of Good Standing?

When running a business, it’s crucial to maintain good standing with the state in which your company is registered. One essential document that demonstrates your compliance and credibility is the Certificate of Good Standing. This article will explore what a Certificate of Good Standing is, reasons why your business might be denied this certificate, and steps you can take to rectify the situation. 

What is a Certificate of Good Standing?

A Certificate of Good Standing is a document issued by the state to confirm that your business is compliant with its regulations and requirements. It proves that your company is legally registered, has paid all necessary fees, and is up to date with tax filings. In some states, this certificate is called a Certificate of Existence or a Certificate of Status. It’s commonly required when you want to expand your business, apply for loans, enter into contracts, or establish credibility with partners or clients.

Why would my business be denied a Certificate of Good Standing?

Let’s say you determine you need a Certificate of Good Standing for the next step in your business. But when you go to apply for one, the state denies your application. This might seem alarming at first, but there are a few common reasons why your business might be denied a Certificate of Good Standing. Here are some of the most common compliance causes: 

• Failure to file annual reports or pay required fees: Each state has specific deadlines for annual report filings and fees. Failure to meet these obligations can result in your business not being in good standing. (Note that annual reports vary by state; for example, some states have biennial reports instead or call the reports something else.)
• Tax delinquency: If your business has outstanding tax liabilities or has failed to file tax returns, you might be denied a Certificate of Good Standing.
• Administrative errors: Mistakes in important paperwork, such as missing information or incomplete filings, can also lead to a denial. It’s important to double-check all documents before you submit them.

Keep in mind that the specific reasons for denial can vary by state. Therefore, it’s essential to familiarize yourself with your state’s requirements and regulations. And if you operate in more than one state, be sure to learn the compliance requirements for each one. 

What can I do if I’m denied a Certificate of Good Standing?

If your business is denied a Certificate of Good Standing, there are three basic steps you can take to rectify the situation. 

• Determine the reason for denial: First, confirm why your certificate was denied. Review the communication from the state agency or contact them directly for clarification.
• Remedy the situation: Once you understand the reason for denial, take appropriate action to resolve the issue. This may involve paying outstanding fees or fines, submitting missing documents, or rectifying any other non-compliance.
• File necessary forms: In some cases, you may need to file specific forms to address the issue. These forms can vary depending on the nature of the non-compliance and the requirements of your state.

Every state varies on its exact procedures for getting back in good standing, but those are the general steps you can expect. If in doubt, reach out to your Secretary of State for specific information.