Why Do You Need A Certificate Of Good Standing?

“What do you need to start a business? Three simple things: know your product better than anyone, know your customer, and have a burning desire to succeed.”


This statement by Dave Thomas, the founder of the famous fast food chain Wendy’s, explains to us the three major things we need to make a business successful.


There are a lot of things to be considered when you start a business. There are finances, pitches, legal formalities, marketing, and so much more attached to the idea of starting your own business. The most paperwork involved is in the legal formalities. One such document in the legal is a certificate of good standing.

What is a certificate of good standing?

A certificate of good standing is an official document that a business can get issued by a state government agency. The certificate is obtained if your business has paid all the necessary fees and filed all the reports required at the Secretary’s office.


It serves as proof that the company has met all the legal obligations in the state. For example, a Delaware certificate of good standing proves that the company has an existence in the state of Delaware and can transact here. It also permits them to seek business in other states.

Who issues the certificate?

The certificate is issued by the Secretary of State, Division of Corporations. It is a state government agency that handles all the legalities surrounding businesses. It keeps track of all your dues, taxes, and annual reports.

How to get the certificate?

It is easy to get the certificate if you and your business are compliant with state regulations. There are three major things to check if your business is up to speed with state compliance requirements:

1. License and permits

To run a business of any kind, your company must have all the proper licensing and permits. These involve health and building permits.

2. Taxes

Make sure you pay your taxes well within time to steer clear of any issues from the state agency. Deepening on your business type and state, different taxes need to be paid in time.

3. Annual reports

An annual report is a must to know the finances of your businesses to be analyzed by the state government agency.

Once you are done with the above-mentioned formalities, you can simply order the certificate of good standing online at the state website.

Why does a business need a certificate of good standing?

Here we address the main question, why do businesses need this certificate? A list of reasons will explain to you why the certificate is a big deal.

  • To do business with others

Whenever you make a deal or contract with another business, the other party might want to look at your certificate of good standing. This gives the company faith that they are dealing with an authentic and trustworthy brand.

  • To open a new business in the state

If your one business is debted and does not have a certificate, no state agency will allow you to dive into another business. To open a new business, one is required to submit a certificate of good standing.

  • To start a business in a new state

Any company that is thinking of spreading its wings in another state needs to show its certificate of good standing to prove that it has enough assets and no financial liabilities.

  • To seek funding or a loan

Any investor or bank would check all your details before investing or loaning you a significant amount. A certificate of good standing will help you prove that your business is financially stable.


A certificate of good standing is not a simple piece of paper, but it is your way to get things done right and easily. This is proof that your company has great assets and is financially stable.