If you are conducting business in California, designate an agent for service of process with the California Secretary of State.
The agent for service of process
An "agent for service of process" (also known as a Registered Agent) is an individual or a corporation designated by a business entity to receive official legal documents, such as lawsuit papers, subpoenas, and other official legal documents.
Why an agent is needed
An agent for service of process is required by California law for every corporation LLC, partnership, limited partnership, and LLP that is:
- Organized in California (a domestic entity); or
- Organized in another state, territory, or country; and conducts business in California (a foreign entity).
Suppose a business fails or refuses to designate an agent for service of process. In that case, you leave yourself open to potential liability for violating state law or the possibility of facing civil defaults without knowing that an action was filed against them
What an agent for service of process does
The agent's duties are to:
- Maintain a street address in California (not a PO box, a private mailbox, or mail service);
- Have someone available at that address to receive service of process for the business
- Notify the business owner of any papers received, and forward them to the appropriate person.
Agents sometimes offer additional services, such as preparing and filing registration documents, sending reminders when reports or license renewals are due, and keeping documents.
Who can be an agent for service of process
An agent can be a person or a company that provides agent services. A person serving as an agent must be a California resident.
The two ways to designate an agent:
- Designating an "in-house" agent. This is typically an owner or employee of the company, using the street address of the entity's main office in California.
- Hiring an outside agent. This can be an individual but is usually a company that is in the business of serving as an agent for service of process and represents multiple entities.
Choosing an agent for service of process
Whether you select an agent from within your company, or hire an outside agent, it is important to select one that can be relied upon to notify you promptly when important legal papers are received.
Using an agent within your company
The agent for service of process for your business can be you, one of your co-owners, an employee, or any other adult. The advantages of having an agent within your organization are simple It saves the cost of an outside agent, and having someone in your organization as an agent means that you will know immediately of any lawsuits or other important matters. There are some disadvantages to having an agent in your organization. Disadvantages include:
- Someone must be at the designated agent's street address during regular business hours. Keep in mind that your agent's address is public information. If you are running your business from home, consider using a registered agent service to maintain your privacy.
- Without an agent, legal papers may be served in front of your clients and employees, which can be embarrassing.
Using an outside agent
Hiring an outside agent will be necessary if:
- Your business is organized in another state, and you will be doing business in California but do not have a regular office there.
The main advantages to hiring a professional outside agent are that the agent will comply with California laws, and your clients and employees will not be present when any legal papers are served.
Designating an agent for service of process
Business entities required to have an agent for service of process must designate the agent in the initial documents filed with the Secretary of State. This will be in the Articles of Incorporation for a California corporation, the Articles of Organization for a California LLC.
Changing your agent
If you need to update your agent's information or if you decide to change agents, you will need to report that change to the Secretary of State. To change your agent, you must file a Statement of Information if you're a corporation. If you are an LLC, the best time to change your registered agent is during the Required Periodic Statement of Information, which happens every two years. If you need to change your agent outside of that time frame, there may be a fee for making the change.
For all of these filings, the agent's name and physical address must be designated if the agent is a person. Only the corporation's name is to be given if the agent is a corporation.
What happens if you have more than one business or have a business in more than one state needing registered agent?
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