Reasons For Obtaining Certificate Of Good Standing In Pennsylvania
A certificate of good standing, also known as a business certificate or corporate status, is a document that shows that your Pennsylvania business is in good standing with the Secretary of State. This means that it has met all tax and legal obligations and is allowed to operate within the state. A certificate of good standing in Pennsylvania can be used for many purposes:
To be able to enter a contract
The certificate of good standing is a legal document that shows that your company is in good standing and has no issues with the state. The company or its representative must present the certificate to any other business entity interested in entering into a contract with them.
The certificate proves that your business has no outstanding judgments against it, which means that you can sign contracts without fear of being sued for debts owed by your previous ventures.
To be able to conduct business in another state
You need to obtain a certificate of good standing from the state where you conduct business if you want to be able to conduct business in another state. The certificate is required for two reasons:
- To show that your company has enough assets, or at least enough income, to cover its debts and liabilities
- To prove that your company is not in financial trouble or has been dissolved or liquidated
In some states, you must file the certificate of good standing with the Secretary of State or a similar office. If you doubt whether your state requires this document, check with your local government or an attorney specializing in business law.
To open a new business in Pennsylvania
To open a new business in Pennsylvania, you will need to submit a certificate of good standing. This is the only way that you can apply for a business license, open a bank account, apply for an employer identification number (EIN), and/or tax exemption.
The certificate of good standing is issued by the state where you are currently incorporated. It must be signed by an officer of your company and include the following:
-The name of the company -The date that the certificate was issued -The name of each officer signing the certificate
To expand your business
If you’re looking to expand your business, a certificate of good standing is the first step. Before opening a new branch or office, you’ll need to prove that there are no legal problems with the company’s name or structure. This can be done by obtaining professional help from an attorney who specializes in corporate law and business transactions.
In addition to opening new branches, certificates of good standing are also issued for companies that want to change their locations within Pennsylvania. For example, if a company has been operating out of Philadelphia but wants to move somewhere else in PA (or even outside it), it will need this document before being able to do so legally.
To seek funding from a bank or investor
If you’re seeking funding from a bank or investor, having a good standing certificate can help you get that loan. Without one, the process may be more difficult and time-consuming.
A certificate of good standing shows that your business is financially stable, which is vital for any lender looking to lend their money. Getting one is also helpful if you want to apply for a mortgage or take out business lines of credit.
Additionally, having a certificate of good standing will allow you to get a business credit card—a convenient way to leverage the funds in your checking account and make purchases using that money without dipping into cash reserves or selling off assets in order to do so (otherwise known as “liquidity”).
Conclusion
If you want to form a new business, expand your existing business in Pennsylvania or merge with another company, it’s important that you get a certificate of good standing. This document will show lenders and investors that your company is financially solvent and will protect them from fraud or legal action against them later on down the road.
