Suppose you’re forming a corporation, LLC, or other business entity. In that case, you’ll need to select a registered agent for your business and provide the agent’s name and address on the formation documents you file with the state.
Here’s what you need to know before you choose an agent.
What is a registered agent?
Simply put, a registered agent is a person or service designated to receive mail for a business entity. A registered agent ensures that your business doesn't miss important paperwork like lawsuits, tax notices, and other business documents.
To make it easier to determine who should receive important paperwork for a corporation or LLC, all states require business entities to keep the name and address of a registered agent with the Secretary of State.
In addition to lawsuits, registered agents may receive subpoenas, tax notices and other official correspondence. They are responsible for passing these documents along to the appropriate person at the corporation or LLC.
Corporations and LLCs must have a registered agent in each state where they are registered to do business.
Who can act as registered agent?
Registered agent requirements vary slightly from state to state, but there are a few general rules:
- The agent must have a physical street address within the state – a P.O. box won’t do.
- The agent must be available at that address during normal business hours.
- In most states, the agent can be an individual who is at least 18 years old, or it can be a company that provides registered agent services.
- A corporation or LLC cannot act as its own agent, but in most states, one of its employees or owners can be the agent.
Should you be your company’s registered agent?
Naming an employee or owner to act as a registered agent for your business can save money on registered agent fees and give you the comfort of knowing that legal documents will go directly to you.
However, acting as your own agent has numerous downsides, including:
- You can be personally served with a lawsuit in front of employees and customers at your place of business.
- Your name and address will be part of your business’s public records on file with the state. If you have a home-based business or want to keep your information private, this can be a concern.
- Registered agents commonly receive other documents, notices, solicitations, and junk mail addressed to the business. If you don’t want to sift through this mail on an ongoing basis, you might prefer an outside agent.
- If your business changes locations or your agent leaves the company, you need to update your registered agent information with the state. Small business owners seldom remember to do this after a move or reorganization.
- If you travel frequently or spend a significant amount of time outside the office during the workday, you’re won't be available during normal business hours.
- You can only act as an agent in the state where you’re physically located. Many businesses with a multi-state presence find it easier to hire a company that can provide registered agent services nationwide.
Tips for selecting an outside registered agent
Your registered agent’s responsibilities don’t end with accepting lawsuits and other documents on your behalf.
The agent is also responsible for getting the documents into your hands promptly. If your agent neglects to do this, you can lose a lawsuit through default or be subject to court sanctions for ignoring a subpoena.
For this reason, choosing a reputable agent with a track record of providing registered agent services is important.
If you are registering to do business in multiple states, consider hiring an agent who can act as your agent in all those states.
Your registered agent plays an important role: ensuring that lawsuits, court documents and notices are brought to your attention promptly, so you can act on them and avoid default judgments, fines, and penalties.
What happens if you have more than one business or have a business in more than one state needing registered agent?
Did you know Legalinc is a fully owned Legalzoom subsidiary that provides registered agent representation for law firms, tax firms, and in-house legal teams at multi-state / multi-company organizations?
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