Once an entity is formed or registered to do business in a given state, there are a few things it needs to do to maintain “good standing” status. Corporate registries in each state have varying rules about entity obligations and the repercussions for not meeting those obligations, but all indicate when a company has not met the requirements, i.e: “fallen out of good standing.”
Loss of good standing, while it can usually be remedied, can have serious consequences for a company. Companies are usually required to show proof of their good standing status when opening bank accounts or getting financing. Many states require the payment of fines and penalties to restore the entity to good standing. If the company is out of good standing for a long enough period, it may become voided or revoked. In that case, the company’s name is no longer protected, another entity can form using the same name as the revoked company. There are a number of ways for a company to lose its good standing status, below we review some common scenarios.
This infographic is provided for informational purposes only and should not be considered, or relied upon, as legal advice.
