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Thinking about starting a business? If so, you might have heard the term “registered agent” and wondered what it means. A registered agent is crucial for any Limited Liability Company (LLC) and helps ensure your business stays legally compliant.
In this blog post, we’ll explore what a registered agent does, why your LLC needs one, and what to look for when choosing one. Whether you’re just starting out or have been running your LLC for years, understanding the role of a registered agent is key to your company’s success. Let’s dive in and learn more!
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What Is a Registered Agent
A registered agent is a person or company designated to receive official mail and service of process on behalf of your business. Also known as statutory agents, resident agents, or agents for service of process, they play a vital role in your business operations.
Every state mandates that registered business entities like LLCs, corporations, or nonprofits appoint a registered agent in their formation documents. These documents, often called “articles of organization” or “articles of incorporation,” are filed with the state. Once filed, the details within these documents become public records.
What Does a Registered Agent Do
The primary role of a registered agent is to be available to receive service of process. This can be delivered in person by a process server or sheriff or, in some states, by certified mail with a return receipt requested. Some states may allow additional methods of delivery.
A court can only issue a ruling that requires a defendant in a lawsuit to take some action if it has personal jurisdiction over the defendant. For the court to have this jurisdiction, valid service of process is necessary, as required by the Due Process Clause of the U.S. Constitution.
Identifying the right person to deliver documents to when using an entity like a corporation or LLC can be challenging. Only some people associated with the entity may receive legal documents.
Even if the plaintiff knows who is authorized, such as corporate officers or LLC managers, these individuals might need help to locate. However, since every LLC or corporation must appoint a registered agent and this agent’s name and location are public records, it simplifies serving legal documents.
Who Needs a Registered Agent
Every LLC and corporation formed under state laws or the District of Columbia must appoint and maintain a registered agent in their formation state and any state where they are qualified to do business as a foreign LLC or corporation. This requirement extends to other statutory entities that offer Limited Liability, such as Limited Partnerships and Limited Liability Partnerships.
This is a statutory requirement mandated by state corporation and LLC statutes and not optional. Non-compliance with the registered agent requirement can lead to statutory penalties.
Besides state corporation and LLC laws, other state or federal statutes require a registered agent for certain businesses or activities. For example, interstate motor carriers must register with the Federal Motor Carrier Safety Administration and designate an agent for service of the process.
Often, out-of-state businesses need a registered agent so that the administering agency or state citizens can easily contact the business or serve documents if needed. Such a requirement, imposed by a statute other than the business entity statute, is sometimes called a “special agency.”
Do I Need a Registered Agent
The answer is yes. You must legally list a registered agent as part of your LLC or corporation.
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When to Use a Professional Registered Agent
Choosing a registered agent, like selecting your entity type, formation state, and entity name, is one of the earliest and most crucial decisions for business owners.
Here are some questions to help you decide if a professional registered agent is right for your LLC or corporation. If you answer “Yes” to any of these, consider appointing a professional registered agent:
- Does your company operate in multiple states? If your business is active in multiple states, having the same registered agent across states simplifies tracking and reduces administrative work.
- Did you incorporate or form in a state other than where you do business? Having a consistent registered agent is advantageous for companies operating in several states. It eases the administrative burden.
- Will your company have subsidiaries? Each subsidiary needs its own registered agent in its formation state and any state where it qualifies. A professional registered agent can streamline compliance across all entities.
- Do your owners, employees, or potential registered agents have varied business hours or work from multiple locations? A registered agent must be available at the statutory location during business hours.
- Will your address change? Using a business or individual’s address as the registered office means updating the registered office if the address changes. A professional registered agent avoids this hassle.
- Do you want to keep your address private? The registered agent’s address is public. The address of a professional registered agent will be made public instead of yours.
- Do you see clients or customers at your home or business address? If so, you might want them to avoid seeing a sheriff or process server, which could raise concerns.
- Are you concerned about maintaining compliance with business entity laws? A professional registered agent can help with compliance needs. Besides receiving and forwarding documents, they often offer additional services for LLCs and corporations.
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Who Can Be a Registered Agent
The requirements to be eligible as a registered agent are straightforward. A registered agent must be a resident of the state where your company is registered. They must have a physical address for document delivery, which means a P.O. box isn’t acceptable.
Although these requirements are simple, it’s crucial to carefully consider who you designate as your registered agent. The right choice can significantly impact your business’s compliance and efficiency.
Should I Be My Own Registered Agent
You can list yourself as the registered agent for your business, but this may cause issues if you don’t work from a single physical location or isn’t present at that location during regular business hours. Consistent availability is crucial for receiving important documents and legal notices.
What Can Happen If You Don’t Have a Registered Agent
Generally, when registering your LLC, you’ll need to designate a registered agent. If your registered agent changes, you must file a form to show this change.
Beyond statutory penalties, not having a registered agent can expose your company to additional risks. Without one, you might miss crucial legal documents, leading to legal trouble or default judgments against your business.
Default Judgments
If a company lacks a registered agent, it may not receive a summons promptly. For instance, if a company gets sued and no registered agent receives the summons, the plaintiff can serve the company through alternative methods.
This could cause the company not to respond in time. In many states, the process may be served on the Secretary of State if attempts to serve the registered agent fail.
Suppose no registered agent and no other contact person can be found. In that case, the plaintiff might obtain court permission to deliver notice through “substituted service,” such as publishing in a newspaper or other methods that might not ensure actual notice.
The plaintiff can secure a default judgment if an LLC or corporation is validly served and does not respond. This can happen even if the lawsuit was frivolous, and the defendant could have easily won the case.
When judgment is enforced against a company’s assets, it might be too late to undo the damage. While courts disfavor defaults and may overturn them, if the default resulted from the LLC’s or corporation’s failure to comply with the state’s registered agent requirement, the court may be less inclined to do so.
Loss of Good Standing
If a company fails to maintain a registered agent, it risks losing its good standing with the state. This alone can be a reason for losing good standing.
The state may send the annual or biennial report required from the corporation or LLC to the registered agent. If the registered agent information on file is outdated, the LLC or corporation might not receive the report and fail to file it on time, further risking its good standing.
Not being in good standing can have serious consequences. It can prevent the company from filing lawsuits in the state, expanding into other states, or obtaining necessary financing to grow the business. Maintaining an up-to-date registered agent is essential to avoid these potential issues.
Fines and Penalties
An LLC or corporation may face monetary penalties for failing to comply with statutory requirements. Non-compliance can lead to fines and other financial consequences, emphasizing the importance of adhering to these regulations to avoid unnecessary costs.
Administrative Dissolution
As mentioned earlier, the state can administratively dissolve an entity. If this happens, the owners might become personally liable for the business’s debts to creditors. Usually, administrative dissolution can be resolved, but not always, especially if too much time has passed.
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5 Reasons You Might Need to Use a Registered Agent Service
If you’re deciding whether to act as your own registered agent or use a third-party service, consider the following points:
1. Official Mail Duties
Sorting through junk mail and urgent documentation can be burdensome. Many people prefer outsourcing this task to a reliable service that manages official correspondence. By hiring a registered agent service, you ensure that all essential documents are handled and relayed to you promptly.
2. You Want to Keep Your Personal Address Private
Listing yourself as the registered agent for your business can expose your personal information to public records, especially if you work from a home office. Hiring a registered agent helps maintain your privacy by keeping your personal details off public records.
3. You Want to Keep Legal Matters Confidential
In some states, legal notices are delivered in person by a law enforcement officer or process server. If your business faces legal action and you are the registered agent, you might receive legal documents in front of customers and employees. This can be embarrassing and lead to unwanted gossip and speculation. Using a registered agent service ensures you’ll never be put in this uncomfortable position.
4. You Aren’t in the Office During Normal Business Hours
A registered agent must be present at the listed address during regular business hours. If you work nontraditional hours, don’t have a fixed location, are frequently out of the office, have an unpredictable schedule, or can’t guarantee your presence during the workweek, a registered agent service can be a great solution.
These services charge an annual fee, typically between $50 and $300, ensuring all important company documents are relayed to you promptly.
5. You Want to Expand Your Business to Other States
You, or any individual, can only serve as a registered agent for your business in the state where you live. If you plan to expand your company to another state, you’ll need a registered agent who lives in that state or may do business there. A registered agent service can be an excellent solution for this need.
Best Registered Agent Services
ZenBusiness is an online LLC formation service designed to assist entrepreneurs and small business owners in starting and growing their companies.
They offer affordable and comprehensive LLC formation packages that include registered agent services, annual report filing, and additional features. ZenBusiness also provides ongoing support and resources to help businesses remain compliant and succeed.
Swyft Filings is an LLC formation service specializing in quick and easy LLC formation. They offer various LLC services, including incorporation, compliance, and registered agent services. Swyft Filings provides personalized support to help businesses navigate the LLC formation process and ensure compliance with state and federal regulations.
Tailor Brands is an online branding and design service dedicated to helping businesses create a professional and cohesive brand identity. They offer various branding packages that include logo design, business card design, and social media branding. Tailor Brands also provides a suite of design tools and resources, allowing businesses to create and customize their own branded assets.
Northwest Registered Agent provides personalized support and a variety of business services, including registered agent services, compliance management, and document filing. Specializing in LLC formation, they offer ongoing support and resources to help businesses stay compliant and grow. Northwest Registered Agent is a trusted partner for LLC formation services.
Bizee (Previously Incfile)
Bizee offers fast and affordable LLC formation services, providing various packages, including registered agent services, compliance management, and document filing. Their user-friendly and streamlined platform makes the LLC formation process easy and hassle-free.
Bizee also provides ongoing support and resources to help businesses stay compliant and succeed. With a focus on affordability and convenience, Bizee is an excellent option for LLC formation services.
Disclosure: We earn commissions if you shop through the links below. The order in which services appear may or may not depend on the payment level.
What Is a Registered Agent – Frequently Asked Questions
Bottom Line on What Is a Registered Agent
Choosing a registered agent for a corporation or LLC is crucial. This role is vital, and if not handled properly, it can lead to disastrous consequences for the company. That’s why professional registered agent companies exist.
Anyone responsible for deciding who should be the registered agent, whether in the home state or a foreign state, should appoint a professional registered agent.
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