If your corporation's officers have decided to do business in another state, your corporation needs to register with that state. Additionally, if the corporation expands its business into other states, the corporation needs to have a registered agent in each state in which it is doing business.
Definition of Registered Agent
A registered agent is someone the corporation appoints to represent the corporation. The registered agent, during regular business hours, is responsible for accepting service of legal papers, receiving mail and other communication, and contacting the corporation to let the directors know if anything important occurs, such as a lawsuit's being filed against the company. Some states refer to a registered agent as an agent for service of process or as a statutory agent, and their function is the same as a registered agent.
The registered agent has to live in the state where the corporation is doing business and the agent has to have an actual physical address, not a post office box address.
A business entity such as a corporation, law firm, or other type of firm also can act as a registered agent. Even one of your corporate directors can act as the corporation's registered agent, so long as the director is a responsible person and is available during regular business hours. The registered agent represents the corporation, so it's important to choose someone who can do a good job as your agent.
Registered Agent for Service of Process
While every state has different business laws, each state requires that a corporation doing business in its state have a registered agent for the service of lawsuits and subpoenas.
It's often difficult to find an agent to appoint in each state if the corporation is doing business in multiple states. If that's the case, it's a good idea to have a company that's available in all states be your registered agent.
There are different registered agent solutions available, but having an online company or firm that has the authority to act anywhere in the United States can be very helpful. This allows your company to have a registered agent in place in every state where the company does business.
Expanding Your Business into Another State
Only some types of transactions in other states mean that your company is doing business in those states. Nevertheless, your corporation's officers must keep track of what business the company is doing in other states.
A corporation registered and doing business in the same state is known as a domestic corporation, while a corporation doing business outside the state where it's registered is known as a foreign corporation (in this usage, foreign does not refer to another country).
There are many types of corporate actions that constitute doing business in another state. Some of these actions include, but are not limited to:
- Having a physical office in another state
- Conducting sales in another state
- Administering services in another state, even without a physical office in that state
- Being incorporated in Delaware but having a physical office in Illinois, making the company qualify as doing business and qualifying as a foreign corporation in Illinois
- Having a strong connection to another state, other than doing advertising or telephone sales
- Having a substantial portion of the corporation's income come from another state
- Often meeting clients in another state
These situations usually mean that the corporation is doing business in another state, although of course it depends on the foreign state's definition of doing business. If your corporation is in fact doing business in another state, you need to file forms with the secretary of state or other government official to permit your company to do business in that state. When you're ready to file the required paperwork and pay the fee, make sure you establish a registered agent for that state.
Failure to Appoint a Registered Agent in Another State
If you fail to appoint a registered agent in the additional state where your corporation is doing business, the corporation usually incurs fines, fees, and ongoing penalties, and the corporation cannot litigate in court. If you can't find a person who lives in the state to act as your registered agent, consider hiring a reputable company to act as your registered agent as soon as possible.