5 Reasons To Get A Good Standing Certificate For Business
Your business needs to have a good reputation if it is to keep thriving. One of the most critical components every business needs to have is to get a good standing certificate. It comes with numerous advantages, especially when you need to expand and partner with other entities. Below are some of the main reasons why getting this certification can help improve your business standing.
Table of Contents
1. Crucial for Financing and Business Transactions
Lenders may ask that you provide the certification if you want to improve your new financing options. It is useful when approving the next financing request you make. The certificate is one of the ways to prove that you are not a potential risk to them.
When someone loses their good standing, they become less attractive to the lenders who may not approve their request. In some cases, some business proposals only happen when you get a certificate of good standing. To win a contract or get your proposal requests approved, the certification is crucial.
If you are unsure how to acquire this vital document, find out how you can get certificate of good standing in UK online. Besides supporting transactions that businesses may want to venture into, there is also the option of selling the company’s assets for one reason or another. Whenever such a transaction comes up, having the right papers is crucial since it eliminates doubt. Failure to produce the certificate of good standing can make people interpret it as a major red flag that reduces the chances of securing a big deal when they want to sell.
2. Saves Money
Having a low standing can easily lead to the government’s legal actions in charge of the business categories. Unfortunately, the consequences may be stern to the extent that your business may be labeled publicly or declared insolvent, depending on the situation and conditions surrounding the compliance issue. For you to restore the company or business to a status that makes it a trustworthy entity once the government interferes with it, you may incur personal expenses. There are several penalties, interests, and other charges that you will incur in your bid to restore the business to its former glory. If the business suffered a revocation, you would have to pay a costly reinstatement fee to get back to normal operations.
What’s more, if you continue being non-compliant, the chances of losing your business are high. You may have to change details about your business, including the name, since other companies may pick it up. If this happens, you will incur additional expenses to change most essential elements, such as the marketing tools and the products you deal with. So, if you can demonstrate your creditworthiness through bank statements, payslips, and other similar proof of your financial status, then you may be able to obtain loans. You can also opt for a credit repair agency to increase your creditworthiness. All this does not come cheap, meaning that you should prepare for the extra expense attached to it. Keeping your business in good standing will spare you all the additional costs that are likely to come up due to this.
3. Boosts Your Expansion Efforts
Whenever a business desires to grow and expand its territories, several factors must come into play. Remember that when starting the business, your license and legal backing serve a specific area. In case you intend to go outside this jurisdiction, you must prove that your business is worth transacting in these new spaces.
Your registration process to the new territory will require you to get a certificate of good standing in the UK to gauge whether you are worth it or not. As you plan for your expansion beyond your current territory, make sure that you are on the right side of things just if your new registration requires this proof. When you know how much your business expansion is likely to bring you, then you will work hard to ensure that you do the right thing from the start.
4. Saves You from Serious Consequences
Losing your business’s good standing has a lot of profound implications starting with blocked financial access. Besides that, there may be a barrier for you to pursue business in different areas, not to mention the increased costs attached to restoring your status. Apart from the obvious or common consequences, there are other effects of not having a good standing. These include:
- Failing to access the court system. It becomes challenging for you to get the justice one deserves if they lose their good standing. Most governments will bar such businesses from maintaining a legal suit in case they file for one, regardless of whether they need it or not.
- It is possible to incur personal liability. It is possible for the local government to find individuals that transact business on behalf of the company. This means that employees, directors, and even officers who transact on behalf of the company may be liable for the company’s issues.
- It may also expose the business to vulnerability to business identity theft. These thieves assume that companies that are listed are not paying attention to activities related to them. As such, the thieves can take loans and make other purchases in the business name when the owners are unaware of such moves. Sadly, when this happens, the company gets to bear the burden attached to such loans.
- May lead to alien tax status. Whenever a business has a poor standing, the government may decide to list it as a tax alien. This move easily affects the company’s possibility to access loans or other forms of financing when in dire need.
- It may lead to administrative dissolution or revocation, both of which have negative connotations. The business may also not be difficult to reinstate. You may have to keep up with the reinstatement duration allowed or risk the chance of losing the company once this timeframe elapses.
5. Gives You Peace of Mind
When you know that your business is not at risk of any of the mentioned issues, you will likely operate more peacefully. Such peace allows you to focus on the business’s essential aspects, allowing you to grow positively. When you spend most of your time developing new ways to thrive instead of following up on avoidable issues, your chances of increasing the business heighten.
Businesses should strive to ensure they have good standing at all times. Doing this ensures that the business’s opportunities to grow will remain open and uncontrolled. Work on ensuring that your business is always on the right side to maintain a good rapport with all sector stakeholders.