It is vital that a Massachusetts corporation or partnership remain in good standing with the Commonwealth of Massachusetts. Good standing exists when a Massachusetts entity registers itself with the state; files all necessary documents; and pays all applicable fees and taxes to both the Secretary of State and Department of Revenue.
When in good standing with Massachusetts, an entity may request a certificate indicating its good standing and compliance. Such certificate can be necessary when an entity enters into an asset purchase agreement; contract to purchase a commercial building or land; lease of equipment or business fixtures; or where an individual or entity seeks bank financing or capital. The certificate of good standing is one of many common conditions to close the aforementioned transactions.
To remain in good standing with the Secretary of State, annual reports must be filed with the applicable fee/tax paid (depending on entity type.) A corporation will pay the filing fee with the Secretary’s office and then pay taxes to the Department of Revenue. A partnership will pay $500 to the Secretary’s office when filing the annual report. An entity will not be issued a certificate of good standing if it’s fallen behind on filing annual reports with the Secretary of State. An entity may file annual reports for previous years so as to place the entity in good standing and avoid dissolution of the entity by the Secretary of State. The entity is responsible for the past due filing fees, and a reinstatement fee if the entity has been dissolved.
A Certificate of Good Standing (issued by the Secretary of State) provides the following information:
Name of the entity;
Date the entity was formed;
Confirmation that the entity has filed all annual reports and paid all related fees;
Confirmation that there are no proceedings pending for dissolution of the entity;
That no articles of dissolution have been filed by the corporation; and,
That according to the records of the state secretary the entity appears to be in good standing.
The Certificate of Good Standing does not provide an opinion nor make any warranties regarding:
The financial health of the entity’s business;
Whether there are pending lawsuits or judgments against the entity;
Whether the entity is subject to a bankruptcy proceeding; and,
Any number of the countless conditions that often affect a business (such as market conditions.)
To remain in good standing with the Department of Revenue, an entity must timely meet all tax obligations, including corporation taxes (excise, use and sales); room occupancy taxes (if applicable); meal taxes (if applicable), and withholding taxes . The Certificate provides no representation concerning unemployment insurance obligations and other taxes provided by statute. Nor does the certificate make any opinion or representation on the financial health of the business, or any other condition not related to taxes owed. The Department of Revenue may issue a Certificate of Good Standing and/or Tax Compliance upon request by a corporation, LLC, LLP or other entity.
If you have questions about your business entity, or how to revive a dissolved entity, or a related issue, feel free to contact one of our Massachusetts business and corporate lawyers at 781-463-6063.