A company’s official status showing it is compliant with all state requirements—such as filings, fees, and taxes—allowing it to legally operate and maintain its rights in that state.
What is Good Standing?
Good standing is a legal designation issued by a state’s business filing authority (often the Secretary of State) confirming that a company has met all of its compliance obligations in that state. To be in good standing, a business must have filed required annual or biennial reports, paid applicable state fees or franchise taxes, maintained a registered agent, and complied with other ongoing requirements. When a company is in good standing, it is legally authorized to conduct business in that state and retains the benefits of its entity status, such as limited liability protection and the ability to enter into contracts, sue, or be sued.
For non-U.S. residents who own U.S. businesses, good standing is particularly important when applying for bank accounts, entering into partnerships, raising investment, or expanding into other states. Many banks, investors, and government agencies will require proof of good standing, typically provided through a Certificate of Good Standing issued by the state.
Losing good standing—often referred to as “falling into delinquent status”—can occur if a company fails to file required reports, misses franchise tax payments, or neglects other compliance obligations. This can lead to late fees, penalties, suspension of business rights, and even administrative dissolution (where the state formally closes the company). Restoring good standing usually involves filing past-due documents, paying outstanding fees, and sometimes additional reinstatement costs.
Maintaining good standing ensures that your company can operate smoothly, avoid interruptions in business operations, and uphold its legal protections. Even if your U.S. company is not actively generating income, you must keep it in compliance with the state to preserve its good standing.
