Business Startup Incorporating

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How to Choose a Registered Agent for Your Business

If a formal entity is going to be established to own your business, that entity will need a full-time registered agent who is authorized to receive legal papers on its behalf.

How to Choose a Registered Agent for Your Business

Registered Agent Requirements for LLCs and Corporations

When forming a corporation or limited liability company (LLC), rather than owning your business yourself, you will need to select a registered agent. Virtually all states require corporations and LLCs that are formed or foreign qualified (registered to transact business in a state other than its own home state) to have a registered agent and a registered office in that state. The registered office is where the registered agent is located.

What Does a Registered Agent Do?

The registered agent is authorized by the corporation or LLC to receive important legal and tax documents on its behalf. Types of documents delivered to the registered agent include –

  • Documents like a summons and complaint that notify the company a lawsuit has been filed against it. These documents are called “process”. Service of process refers to the delivery of those documents to the company being sued.

  • Important mail sent by the state, such as annual reports or statements

  • Wage garnishment orders

  • Tax documents sent by the state's department of taxation

  • Liens

  • Court summons and subpoenas

The registered agent must have a physical address in the state of formation or qualification. Post office boxes or a private mailbox rented from a company, such as The UPS Store, may not be designated as the registered office. The registered office must also be open during normal business hours.

Additionally, the registered agent's address is a matter of public record, which means that anyone has access to it. In states that do not require a company's actual business address be included in the formation or qualification documents, the registered agent's address is the only address on file with the state for that company. 

Can I Be My Own Registered Agent?

Individuals are allowed to act as registered agents for a corporation or LLC, although this is very seldom a good idea. (Improper handling of legal papers and other important documents can put your business at risk.)

If you have a physical address in the state where you form your corporation or LLC, you could name that address as your company’s registered office and yourself, or someone else who works there as the registered agent.

You could not, however, name your new company as its own registered agent. This is prohibited by most states.

Should I Use a Registered Agent Service Provider?

There are companies that specialize in providing registered agent services to corporations, LLCs, and other business entities that are required to have a registered agent. These companies can offer a great deal of value to small businesses, such as providing online access to service of process and providing tools to assist with the ongoing compliance requirements corporations and LLCs face.

When considering a registered agent for your company, below are some things to keep in mind and some situations for which using a registered agent service provider may be the best choice:

  • You're forming your company in a state where you don't have a physical location. You are legally required to have a registered agent and registered office with a physical address (no P.O. box) in the state of formation. Using a professional registered agent provider with an office in the state will satisfy this requirement.

  • You use a P.O. box as your business address. The registered office must have a street address. If you have only a P.O. box or a private mailbox as your only address you cannot use that as your registered office.

  • Your company does business in several states. When you qualify your company to transact business in states other than your state of formation, you need a registered agent and registered office in each of those states. By using a registered agent service provider, one company is handling this important documentation for you in each state and allowing you to concentrate on your business.

  • Your address changes frequently. Corporations and LLCs are required to keep the registered agent’s address updated with the state. There are penalties for failing to do so, and it can result in important documents not being received by the company. Changing this information requires a formal state filing and may also require that a fee be paid to the state. It also requires you remember to update the information. By using a registered agent service provider as your registered office, instead of your company’s business address, you never have to worry about this.

  • Your business is home-based. As previously mentioned, the registered agent address is a matter of public record. That means anyone, including marketers, can access it. It is not uncommon for the registered agent to receive a lot of junk mail for the business. Using a registered agent provider can reduce the amount of unsolicited mail your business receives.

  • You prefer to keep business activities private. When a company is served with process, this document is often delivered by local law enforcement. Most business owners do not want the sheriff to show up in front of customers, employees or neighbors (as in the case of home-based businesses) and serve them notice that their company is being sued. Using a professional registered agent ensures you receive any service of process discreetly.

  • You don't maintain normal business hours. The registered agent for a business must be available during normal business hours to accept important documents as they are delivered. If you set your own hours, you may wish to consider using a professional provider, so that you never miss these important communications.

  • You do not have a permanent work site. If your business requires you to move around frequently, for example, an electrician who is making service calls all day, and you act as your company’s registered agent, you may not be around when important documents are delivered. Using a registered agent service provider ensures that important documents will still reach you and your business.

  • You want one less thing to worry about. Running your company is challenging enough without personally handling the necessary minutia. A professional registered agent can often help you by providing online access to your accounts and important documents and assisting with the annual filings states impose on corporations and LLCs.

Correct Handling of Service of Process Is Critical

Service of process has been mentioned frequently in this article and for good reason. It is very important that when these documents are served on a registered agent that they are handled properly and promptly. As previously mentioned, these documents notify the company that someone has filed a lawsuit against it

The summons that is served outlines the time frame in which a response from your company must be received. If a response is not received in time, a default judgment may be issued. When a default judgment is issued—unless it is overturned—the other party wins, and your company may need to pay the damages outlined.

What Should I Look for in a Registered Agent Service Provider?

You need to consider a wide range of factors when choosing a registered agent for your corporation or LLC. Not every registered agent provides the same level of service. As you speak with various potential providers, look for someone who’s reliable, consistent and accurate. Your agent should also -

  • Be available during business hours, always. This ensures that they’re able to receive important, hand-delivered documents.

  • Staff professionally trained experts who can also properly handle all SOP papers.

  • Know compliance and entity rules for your state. Because each state differs, this is critical. 

  • Be able to deliver crucial documents to you as needed and follow-up to ensure delivery was successful.

  • Be located, with a physical office address, in the states in which you currently operate and plan to expand into.

Not only does a registered agent alleviate much of the work associated with formal paperwork, compliance changes and regulation know-how, your agent may provide also a range of other helpful services. For example, your agent may be able to provide you with tools and alert systems that help ensure you’re up to date on compliance needs and guide you every step of the way.

Conclusion

As you form or foreign qualify your corporation or LLC, give serious thought to who will be the registered agent for your company. While the registered agent is a legal requirement, the right registered agent can also be an asset to your business.

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