Building a successful business is no trivial matter. It requires passion, vision, courage, and a solid understanding of the rules that apply within your state. One of those that might catch you by surprise is the requirement to list your registered agent when you register your business with the state government.
What is a registered agent, though? What does a registered agent do? Do you need one to run your business? Those are just some of the questions we’ll answer in this post.
What Is a Registered Agent and What Do They Do?
If you want to register your business in any US state, you will be required to have a registered agent. In some states, this might be called an agent of process or a statutory agent. However, they all boil down to the same thing: an individual designated to receive legal documents and service of process from the state and federal governments.
For instance, suppose a subpoena is issued for someone in your business. It would be delivered to the registered agent. The same is true of a summons.
Why is a registered agent necessary? Why can’t these documents simply be mailed to a defendant? When a subpoena, summons, or other legal documents must be delivered, there must be a mechanism to ensure that it’s received. The registered agent is that mechanism because it is their legal responsibility to ensure that those documents reach the individual in question.
Because the registered agent is required to accept legal documents on behalf of your business, there must be a physical address associated with the agent. The agent must also be accessible during normal business hours.
So, how does the process work today? It’s pretty straightforward.
- The registered agent receives the legal notice.
- The agent then signs for it, satisfying the requirements of the government.
- The agent will then email a copy of the notice to your business.
What Are the Benefits of Having a Registered Agent?
Why should you have a registered agent for your business? Other than meeting your state’s legal requirements to operate a business, having a registered agent can bring some other important benefits.
For instance, if your business only has a PO box, a registered agent’s address can be used as your physical address to receive important communications, such as communications from the state and federal governments, which cannot be sent to a PO box.
Another benefit is that you can be spared the indignity of being served legal documents in front of your employees or your customers. The agent will simply email you a copy, allowing you to avoid embarrassment and potential damage to your brand.
Having a registered agent ensures that you don’t miss important legal documents, but also means that you don’t have to file a registered agent change with the state government if you change physical business locations within the state. You’ll just notify your agent.
Of course, having a registered agent also means that your business will be in good standing with your state’s government, and you’ll be able to avoid fines and penalties that come with missed deadlines.
Who Can Be a Registered Agent for an LLC or Corporation?
While you’re required to have a registered agent for your business, the requirements for who can be designated as such are less clear. Most states in the US have some version of the following rules, although you’ll need to check with your Secretary of State’s office for the specifics that apply in your situation.
- Your registered agent must be at least 18 years of age.
- Your registered agent must have a physical address within the state.
- Your registered agent must be physically present at this address all day during standard business hours (9 am to 5 pm, usually).
- Your registered agent does not have to be an individual. You can name a company that provides registered agent services.
- You can even name yourself, your spouse, a family member, or a friend as the registered agent, so long as the person so named is available all day at the address specified.
It’s pretty simple so far, right? Now let’s look at some of the things that you’ll need to avoid in this situation.
- You are not allowed to name your business as its own agent.
- Someone who only works part-time is not a good choice for a registered agent.
- Someone who travels (for work or pleasure) is not a good choice for a registered agent.
- Someone who telecommutes is probably not a good choice as a registered agent.
- Someone who has frequent off-site meetings is not a good choice as a registered agent.
While you can choose a registered agent who doesn’t offer these services professionally, there’s a lot of benefit to working with a professional rather than just naming someone arbitrarily. A registered agent service can offer enhanced privacy, ensure consistency, and provide expert services to ensure that the job is done right. Also, a registered agent service can represent you in multiple states, instead of having to choose a separate agent yourself in each state where your business operates.
Do I Need a Registered Agent for My Business?
Most states only require certain business formations to have a registered agent. Are you required to have one? Only if you operate an LLC, C-corp, or other formal business entity. If you run a sole proprietorship or your business is a general partnership, you are not required to have a registered agent.
For those who run formal business entities, you’ll need to choose a registered agent before filing your formation paperwork. That means you’ll need to do the necessary legwork to vet candidates and choose the right agent.
Your responsibilities don’t end there, though. If your registered agent ever moves, you’ll need to update your information with the state by filing a specific form. The same rule applies if your agent changes their name. Failure to do so can result in losing your good standing with the state.
Finally, you will also need to choose a different registered agent if you expand to other states. You’re required to have one agent per state in which your business operates.
How Do I Get a Registered Agent?
You have several options when it comes to getting a registered agent for your business. You can choose to name yourself or someone you know (a family member, friend, or employee of the business, for instance). You can find someone outside your business and circle of family and friends to act as your agent. Finally, you can choose a registered agent service. Which is the right choice, though?
Acting as Your Own Agent
Acting as your own agent might seem like the most straightforward option. However, you'll find quite a few drawbacks. For instance, it means that you can be served with legal notices and summonses in front of your employees and customers. That can damage your brand and lead to a lack of confidence.
Second, acting as your own agent means that your address will be part of the public record. That can be problematic in some cases, particularly if you run a home-based business or want to ensure your privacy. You’ll also deal with a lot of other correspondence, including junk mail, business documents, notices, and more, all of which will be addressed to your business. That puts additional burdens on your mail carrier, but also means you’ll need to spend time sorting and sifting through it all.
Naming Someone Else
Choosing an employee or your spouse can be equally problematic. For example, if the employee leaves or you and your spouse separate or gets a divorce, you'll need to choose another registered agent and then go through the filing process with the state again.
Choosing Your Registered Agent
Choosing your registered agent is not a process you should rush into or leave to chance. This individual (or company in the case that you go with a registered agent service) should be reliable, reputable, and have a track record of providing professional services. You must be able to trust them to not only accept important business documents but to ensure that you receive them promptly. If they fail in this responsibility, you could lose a lawsuit by default, simply because you weren’t aware that there even was one. You may even find yourself sanctioned for ignoring a subpoena.
When choosing your registered agent, consider the following:
- Can you trust the individual or service to deliver important documents promptly?
- Are you shortchanging yourself just to save money?
- Will you need a service that can represent you in multiple states?
Ultimately, your registered agent is an important partner, and if you've set up a formal business entity, such as an LLC or a corporation, it's a requirement before you can even begin operating. Your registered agent will play a vital role in ensuring that you’re aware of important legal documents, but they will also deal with other business correspondence.
You must choose a trustworthy professional who meets your state’s requirements and is committed to providing professional, timely service. And, while you’re certainly allowed to name a family member, friend, or employee, there are many benefits to working with a professional registered agent service, including having access to representation in multiple states.
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