Becoming a small business owner in Maryland can be exciting, considering that you don’t have to answer to anyone but yourself. Plus, you can pursue passions while earning a living, so there’s nothing better than that.
It’s not all fun and games though. You’ll have to deal with paperwork you never had to as a traditional employee, and it can be confusing and laborious when you have to do so.
So even if you don’t have to get something immediately, it’s good to find out beforehand. In this article, we’ll discuss what a Maryland certificate of good standing is, when you’d need one, and how you can request this document.
What’s a Certificate of Good Standing?
A certificate of good standing is a paper you can get in every state, plus Washington DC. In the case of Maryland, it’s something issued by the Maryland Department of Assessments and Taxation (SDAT) and it’s called a certificate of status; however, in most other states, you’d get it from the Secretary of State.
This document confirms that your business has filed all necessary annual reports and personal property returns. In addition, it verifies that you have no outstanding fees, taxes, or penalties. Most importantly, it shows that your company is authorized to conduct business within the state.
You won’t have to get one at the start since it reflects your company’s history. However, it’s very likely that you’ll need one further down the line, especially if you plan on expanding your business. Below are some common scenarios where you’d be asked to produce a certificate of status from Maryland.
Renewing or Applying for Business Licenses
We’ve just said that you aren’t required to have a certificate of good standing to start a company. However, some industries or jurisdictions might ask for one if you need to obtain or renew operating licenses or permits.
Entering Contracts
Many companies or government agencies will require this certificate when you enter into contracts with them. This lets them verify your company’s legal standing beforehand.
Applying for Business Loans or Financing
Loans usually consist of big sums of money, and lenders will be discerning in who they give money to. Seeing a certificate of good standing will assure them that your business is compliant with state regulations and financially responsible.
Attracting Investors
This is basically the same case as applying for business loans or financing. You’re asking a third party to have faith that your company will succeed, so they need proof that you’re compliant with all state filing and tax obligations.
Expanding to Other States
Expanding to other states is called foreign qualification. If you plan on doing this, then you’ll most likely need this document when registering as a foreign entity in another state. They’ll want to confirm that you’re in good standing with Maryland before allowing you to officially do business in their state.
Selling the Business or Transferring Ownership
No one wants to take over or buy a business that isn’t legally compliant, as that’ll come with a whole mess of problems. You can alleviate any worries by providing a certificate of good standing to show you’ve been responsible.
Corporate Mergers and Acquisitions
These are situations similar to selling your business. As part of the due diligence process, the other party might ask for this paper to validate your legal standing before mergers and acquisitions.
How to Get a Certificate of Good Standing in Maryland
To get this document, your business must actually be in good standing. Otherwise, you’ll waste time and money requesting this certificate, as it won’t be possible.
Check with your legal and tax professionals to see if you’re up-to-date on your annual filings, as well as taxes and fees. If they say you are, then you’re good to go.
Those who haven’t even created a company yet might find this the perfect time to get started. If this is you, then take advantage of our free business registration service. You’ll only have to pay the state fees!
When you have an operating business and need a certificate of good standing in Maryland, then you should do the following.
Get a Maryland Certificate of Good Standing Online
To request a certificate online, you’ll have to use the Maryland Business Express website.
On this page, click on “Order (Business documents & certificates of status). Next, you can either search by business name or department ID. After you’ve filled out the box, click on “Search.”
On the results page, find your company and click on the name. Scroll to the bottom and click on “Order documents.”
You should then look at the section for “Order certificate of status,” and check the box for “Order” and then “Continue.” You can log in if you already have an account, or you can make one; otherwise, you can click on “Continue as guest.”
The next page will allow you to fill in your details and finish your order. You can receive a copy immediately in your email after paying the $20 standard processing fee. You can also pay $20 for a certified copy to be mailed, which can take several days to a couple of weeks to process, depending on how busy the SDAT is.
Get a Maryland Certificate of Good Standing by Mail
If you’d like to get your certificate in an offline way, then you can use snail mail. Send a letter of request to:
SDAT – Corporate Charter Division
700 East Pratt Street, 2nd Floor, Suite 2700,
Baltimore, Maryland 21202
The fee is $20 and you can enclose a check or money order made out to the State Department of Assessments. You can expedite your request by paying an additional $20.
How Long Is an MA Certificate of Good Standing Valid For?
A State of Maryland certificate of good standing is valid from the moment you request it until your company is no longer in good standing. So technically, there’s no expiration date.
In practice though, requestors will want proof of good standing from as recent as possible. This means that most won’t accept documents that are older than 60-90 days. If you have any doubts, you should ask to ensure you have an acceptable certificate.
Get Your Maryland Certificate of Good Standing
A Maryland certificate of good standing probably won’t be necessary when you first start out. But count on needing one if you plan on applying for permits and licenses, applying for loans, getting financing, or expanding out of the state.
By reading this article, you now know how and where to request this certificate. This will save you a huge headache and lessen stress if you need to file for it under a time crunch!
For anything else business-related, sign up with Business Anywhere. We can help you to set up your company for free. We also offer competitively-priced registered agent and virtual mailbox services.
