One of the most common documents that companies need periodically after they form their entity is a certificate of good standing.
All states offer some form of a certificate of good standing, sometimes called a certificate of status, status certificate, certificate of existence, or certificate of authorization. They are typically issued by the Secretary of State in the state where an entity was formed. In the state of Delaware they are called certificates of good standing.
For many companies, the first time they find out that there is an issue is when they order a certificate of good standing and one cannot be issued.
Let's dive in and take a look at what to do in if you find out that your company is not in good standing.
What Does a Certificate of Good Standing Tell You?
The certificate of good standing confirms that the company has paid all taxes and fees to the state and is authorized to do business.
Why You Might Need a Certificate of Good Standing
Certificates of good standing are often needed during typical business transactions such as:
- Loans or financing
- Potential investors
- Other state governments
- Entering into business contracts
More recently, many companies needed to produce a certificate of good standing during their Paycheck Protection Loan application.
How to Get a Certificate of Good Standing
You can order a certificate of good standing for the state of Delaware from us here. Turnaround time for a certificate of good standing is same day, generally within two hours, during normal business hours.
When You're Not in Good Standing
If you order a certificate of good standing and we attempt to retrieve one for you and find you are not in good standing, we will reach out to you immediately.
If you are not in good standing with the state, no document retrieval service will be able to provide you with a certificate of good standing until the issue is resolved. In fact, when your company is not in good standing no filings may be made at all (i.e. no amendments etc.).
Your document retrieval company will be able to see the reason you are not in good standing. If you ordered from us, we will contact you with those details and instructions for resolution.
There are two common reasons why a company may no longer be in good standing:
When Your Company Has Gone Void
If it has been two years since your corporation last paid taxes to the state or three years for an LLC, your entity may have gone void. This means that according to the state of Delaware, it no longer exists.
If this has happened, you will have to do the following to bring your entity back to good standing status:
- Pay the taxes due in full including all penalties and fines (more below).
- File a certificate of revival.
We can assist you with this process by telling you how much you owe in taxes as well as filing the certificate of revival for you.
Penalties and Fines
Taxes for businesses in the state of Delaware are due for corporations on March 1st and for LLC's on June 1st.
If your annual franchise taxes are not paid and reports (annual reports are required for corporations only) are not filed by the due date, an immediate $200 penalty is assessed. An interest rate of 1.5% is then assessed on the taxes and penalties for each month of non-payment.
How Long Does Resolution Take?
The good news is that as soon as you pay your taxes in full and (if needed) file a revival, you can immediately get a certificate of good standing. The state system updates the status almost instantly. It is possible to have the issue resolved in the same business day.
If you have questions about obtaining a certificate of good standing, the status of your entity, or how to pay taxes or revive your entity, feel free to contact us or give us a call at 800-223-3928.