Operating a corporation, LLC, LP, LLP, or LLLP in Texas requires the designation of a "registered agent" (or RA) with the Texas Secretary of State.
Registered Agent Requirements in Texas
A registered agent is designated by a business for the purpose of receiving official legal documents, such as lawsuit papers, subpoenas, and other important notices. The RA must have a Texas street address, which is called the registered office.
Texas law requires a registered agent and registered office for every corporation, limited liability company (LLC), limited partnership (LP), limited liability partnership (LLP), and limited liability limited partnership (LLLP) that is:
- Organized in Texas (a domestic entity); or
- Organized in another state, territory, or country; and conducts business in Texas (a foreign entity).
An entity that fails to appoint or maintain a registered agent is subject to termination of its authority to conduct business in Texas. Also, the Texas Secretary of State becomes the agent for service of process, which can delay or prevent the business from receiving vital legal notices.
What a Registered Agent Does
The duties of an RA are to:
- Maintain a street address in Texas (not a PO box, or a private mailbox or mail service);
- Have someone available at the street address during normal business hours to receive service of process for the business;
- Receive "process, notice, or demand" that is served on the business, as well as mail sent by the Texas Secretary of State; and
- Inform the business owner of any papers received, and forward them to the owner.
RAs sometimes offer additional services, such as preparing and filing registration documents, sending reminders when annual reports or license renewals are due, and keeping documents.
Registered Agent Qualification and Selection
A registered agent can be an individual person who is a Texas resident, or a business entity that provides RA services and is authorized to do business in Texas (but a business entity may not serve as its own RA). Your two choices are:
- Designate an "in-house" RA, who must be an individual person who is an owner or employee of your business entity; or
- Hire an outside RA, who may be an individual person, but is most often an entity (corporation, LLC, etc.) that is in the business of serving as a registered agent for many companies.
Whether you choose an "in-house" RA, or hire an outside RA, it is important to designate one that can be relied upon to notify you promptly when important legal papers are received.
Designating an "In-House" Registered Agent
If you designate an owner or employee of your company as the RA, you will save the $50 to $500 annual cost of an outside RA and you will immediately know of any lawsuits or other important matters. However, there may be disadvantages, such as:
- Someone must be at the designated RA's street address during normal business hours. If you are operating out of your home, a responsible adult must be there during normal business hours.
- If your company moves, you are required to notify the Secretary of State of the RA's address change, and pay a fee.
- You risk the embarrassment of being served with legal papers in front of clients and employees.
- Your business address will be a matter of public record with the Secretary of State. Especially with a home-based business, you may want to keep this information private.
- Companies will frequently obtain RA addresses from the Secretary of State and mail solicitations, so you will receive more junk mail.
Designating an Outside Registered Agent
If your business does not have a regular office with a street address in Texas that is staffed during normal business hours, you will have no choice but to hire an outside RA.
Even if you do have the required street address and staffing, the advantages of hiring an outside RA include:
- The RA's office will comply with Texas laws regarding having a street address and an office that is properly staffed.
- If your company moves, you will not need to notify the Secretary of State of a change in registered agent address.
- Your clients and employees will not be present when any legal papers are served.
- Your home or business address will not be on record with the Secretary of State as your RA's address.
Designating the Registered Agent
A registered agent will be designated in the document that is filed with the Secretary of State's office to form or register your business entity.
The RA must consent to serve as the RA by completing an Acceptance of Appointment and Consent to Serve as Registered Agent (Form 401-A), either in electronic or written form. This signed consent should be kept with your company's records.
If the RA changes, a Statement of Change of Registered Office/Agent (Form 401) must be filed with the Secretary of State. If the RA's address changes, either Form 401 is filed by the entity, or a Change by Registered Agent to Name or Address (Form 408) is filed by the RA.