In Texas, the Certificate of Fact and the Certificate of Account Status are two different documents from two different agencies, and they answer two different questions about your business. The Certificate of Fact, issued by the Secretary of State, confirms that your entity was properly formed and legally exists. The Certificate of Account Status, issued by the Comptroller of Public Accounts, confirms that your entity is current on its franchise tax obligations. Most requests for proof of “good standing” actually call for both, because an entity can be current with one agency and delinquent with the other.
What Each Certificate Proves
The Certificate of Fact – Status is the Secretary of State’s official evidence that a business entity was properly organized under the Texas Business Organizations Code and remains authorized to operate. The Secretary of State treats it as the Texas equivalent of a Certificate of Good Standing, and it is the document other states typically recognize when a Texas entity registers to do business across state lines.
The certificate shows three core facts: the entity’s current legal name, its date of formation, and its organizational status in state records — active, terminated, merged, or voluntarily dissolved. It also reflects filings made during the life of the entity, such as amendments to the certificate of formation or registered agent changes. Because it draws only from the Secretary of State’s filing records, it says nothing about whether the business owes taxes or has filed its franchise tax reports. It is proof of legal identity, not financial compliance.
The Certificate of Account Status comes from the Comptroller and verifies that an entity has satisfied its franchise tax obligations and retains the right to transact business in Texas. The Comptroller also refers to the document as the Franchise Tax Account Status, a name that replaced the older “Good Standing” label.1Texas Comptroller of Public Accounts. Franchise Tax Account Status
An entity’s account is “not current” if it fails to file a franchise tax report, fails to pay the franchise tax due, or fails to submit a Public Information Report or Ownership Information Report.2Texas Comptroller of Public Accounts. Making Your Franchise Tax Account Current Corporations, LLCs, and limited partnerships file the Public Information Report each year; other legally formed entities file the Ownership Information Report. The Certificate of Account Status answers one question: has this entity met its tax obligations? It says nothing about formation history, registered agents, or amendments.
When You Need Each One
The Certificate of Fact is the document banks and lenders ask for when a company opens a commercial bank account, applies for a loan, or enters a credit facility. Banks and lenders generally expect the certificate to be dated within the last 30 to 90 days, so an older copy will usually be rejected as stale. Real estate closings call for it when the entity buying or selling property needs to prove it is legally active and authorized to execute deeds.
Litigation is another common trigger. A court will not recognize a terminated or nonexistent entity as a party capable of suing or being sued, and the Certificate of Fact settles that question by showing the entity’s status in Secretary of State records. Foreign qualification in another state is the third common use: when a Texas entity registers to do business elsewhere, the receiving state almost always requires a certificate of existence or good standing from the home jurisdiction, and the Certificate of Fact – Status is that document.3Office of the Texas Secretary of State. Instructions for Ordering Copies and Certificates Using SOSDirect
The Certificate of Account Status shows up in a different set of situations. State government contracts almost always require a current one; agencies will not award funds to an entity with delinquent franchise taxes. Professional license renewals administered through state boards often carry the same requirement. Investors conducting due diligence request it before an acquisition or capital raise, because a forfeited franchise tax status means the entity has lost its right to transact business and anyone acquiring it could inherit the back taxes and penalties.
The Certificate of Account Status is also required to formally dissolve an entity. The Texas Business Organizations Code requires a registered entity to present a Certificate of Account Status showing all state taxes have been paid before the Secretary of State will accept termination filings.4Texas Comptroller of Public Accounts. Requesting Tax Certificates and Tax Clearance Letters And because the Comptroller’s guidance notes that account status may be required to close real estate and financial transactions, both certificates often end up in the same closing binder for different reasons.1Texas Comptroller of Public Accounts. Franchise Tax Account Status
How to Get Each Certificate
Certificate of Fact
Order the Certificate of Fact through the Secretary of State’s SOSDirect portal. You will need your entity’s filing number, which was assigned when the entity was originally formed and appears on the certificate of formation. Once you locate the entity on SOSDirect, select the certificate of fact option from the filing history page. The fee is $15 per certificate. The Secretary of State sends an acknowledgment email approximately two hours after submission confirming the order is ready to view, followed by a transaction receipt.3Office of the Texas Secretary of State. Instructions for Ordering Copies and Certificates Using SOSDirect
Certificate of Account Status
The Franchise Tax Account Status is available at no cost through the Comptroller’s online search tool. You will need your entity’s 11-digit Texas Taxpayer Number, which the Comptroller assigns to every entity registered with the tax office.5Texas Comptroller of Public Accounts. Identify Taxpayer The number appears on previous franchise tax filings and sales tax permits, or you can find it by searching the Comptroller’s website. The search results display the current franchise tax account status, and you can print them directly from your browser. The results serve as the Certificate of Account Status for most purposes and reflect the Comptroller’s records in real time.1Texas Comptroller of Public Accounts. Franchise Tax Account Status
What Happens If Your Status Lapses
The consequences of letting either status lapse go beyond inconvenience. The Comptroller will forfeit an entity’s right to transact business in Texas if the entity fails to file a required report, fails to pay franchise tax or penalties, or refuses to allow the Comptroller to examine its records within 45 days after receiving a notice of forfeiture.6State of Texas. Texas Tax Code 171-252 – Effects of Forfeiture
Once forfeited, two things happen immediately. The entity loses the right to sue or defend itself in any Texas court, so any pending litigation stalls until the entity is reinstated. And each director or officer becomes personally liable for the entity’s debts. That personal exposure catches most owners off guard, because keeping personal assets separate from business obligations is the whole point of forming an LLC or corporation.6State of Texas. Texas Tax Code 171-252 – Effects of Forfeiture
On the organizational side, the Secretary of State will eventually terminate the entity for franchise tax noncompliance. Involuntary termination is a more severe outcome than a Comptroller forfeiture alone. A forfeited entity still exists but cannot operate; a terminated entity does not exist at all until it is reinstated.7Office of the Texas Secretary of State. Terminations and Reinstatements FAQs
Reinstating a Forfeited or Terminated Entity
Reinstatement means clearing the problem with both agencies, starting with the Comptroller. The steps run in sequence, and skipping one will stall the process.8Texas Comptroller of Public Accounts. Reinstating or Terminating a Business
- File all delinquent franchise tax reports along with the Public Information Report or Ownership Information Report for each missing year.
- Pay all outstanding franchise tax, penalties, and interest.
- Submit Form 05-391 to the Comptroller by mail or through Webfile to request a tax clearance letter. Once the account is clear, the Comptroller issues Form 05-377, the tax clearance letter.
- Submit the tax clearance letter to the Secretary of State along with Form 801 (Application for Reinstatement) and pay the Secretary of State’s filing fees.
If you reinstate within three years of the involuntary termination date, the entity is treated as though it continued in existence without interruption from the date of termination, which preserves continuity for contracts and legal proceedings. Reinstatement does not, however, retroactively shield directors and officers from personal liability for debts incurred during the gap between termination and reinstatement.9Texas Public Law. Texas Business Organizations Code Section 11.253 – Reinstatement by Secretary of State After Involuntary Termination