One of the key decisions you have to make when forming a corporation or limited liability company (LLC), is picking a registered agent. This is a legal requirement for the process of registering a new business.
The Duties of a Registered Agent
A registered agent is the person to whom certain communications are addressed. For instance, if someone wants to sue your business, they need an address to deliver the necessary documentation to. The registered agent represents your firm in instances such as these. States require businesses to have a registered agent who will act as your representative and be available at all times during working hours. The name and address of your registered agent is filled with your registration documents so that if ever anyone needs to send documentation such as this to you, then they have a legally valid address to do so.
In some states, the registered agent is called the “statutory agent”, but the difference in names disk l shouldn’t confuse you. They’re the same thing. Your registered agent’s business address is known as a “registered office” and the process by which a range of legal documents are served to you through your registered agent, is known as “service of process”.
Service of process is not just confined to lawsuits. Service of process is an outgrowth of this country’s due process tradition. Due Process prevents courts from taking action against someone unless that person has received proper notice of legal proceedings. In other to meet this requirement, courts require that plaintiffs provide defendants with a court summons as well as a copy of the plaintiff’s complaint. We call these documents “process”.
You can’t just mail process to a defendant. You have to make sure that the defendant actually received the process. To ensure this, registered agents must be appointed by businesses to act as representatives of the business. Then, process may be served to your registered agent and due process considered served.
Registered agents may, therefore, receive tax notices, subpoenas and other official correspondence on your behalf. It’s their job to pass process to a corporation or LLC once they have received it.
Legally, corporations and LLCs must have a registered agent in every state in which they are registered.
Who Can Be a Registered Agent?
The statutory requirements vary from state to state, but there are a few common and important features:
- The registered agent should have a physical street address in the state. A post office address isn’t enough.
- The registered agent must be availed to receive service of process throughout the working day.
- In the majority of states, a person can be a registered agent if they’re over 18 years old.
- If the registered agent is a company and not an individual, that company should be a registered agent services company.
- A corporation or LLC cannot be its own registered agent, though in most states, an employee of the company can be its registered agent.
Should You Appoint Yourself Your Company’s Registered Agent?
This is an attractive option because it saves you the money you’d use to have a registered agent services firm or another individual act as your company’s registered agent. However, this plan does come with risks and costs:
- It opens you up to the embarrassment of being personally served with process, even in front of clients or employees.
- The registered agent’s name and address are part of your business’s public record. If you’re your own registered agent, then your name and address enter the public record. If you’re concerned about privacy, then this should concern you.
- Not everything registered agents receive is of the kind of importance we’ve discussed. Businesses and people often use registered agent’s address to send junk mail, solicitations, notices and other documents. If you don’t want to have to wade through all those documents, then don’t be your own registered agent.
- If you move offices or an employee who acts as your registered agent leaves the company, then you will have to update your records to reflect the new registered agent. Many small business owners neglect to update their record.
- If you’re often out of the “registered office”, then you will be in violation of the terms of being a registered agent. As a registered agent, you need to always be available within the registered office during normal business hours.
- If your business has locations in many states, then obviously you can only be in one state at a time and it’s easier to have a registered agent services company handle your registered agent needs.
Qualities of a Good Registered Agent
Being a registered agent isn’t just about accepting services of process. Your registered agent also has to quickly deliver those legal documents to you. This can get incredibly complex if you are running a business dealing in lucrative goods, such as a jewellery retailer selling Moissanite rings, for example. Remember, service of process tells the legal system that you have received the legal documents you were meant to receive and that due process has been met. At this point, action can be taken against you. For instance, if a summons has been delivered, your failure to attend court on the stipulated date can result in action being taken against you in your absence. Just because the plaintiff has fulfilled their due process obligations doesn’t mean that you have actually seen or received process. Your registered agent has to quickly provide you with these documents so you know what your legal position and obligations are.
That’s why it’s important to hire a registered agent who has a reputable brand and a reputation for fast delivery of process.
Many people fall into the trap of looking for cheap solutions because there don’t ever imagine that they will need to receive process and review it quickly. Don’t appoint your second cousin as registered agent must because he’ll work for free.
If you need to find a registered agent, then ask your state’s business following department. Typically, they maintain a list of registered agent service companies in the state.
If you’re business will operate in multiple states, then make sure the reach of your registered agent covers the states that you will be operating in.
Registered agents are an important part, not just of the registration process, but of due process as well. They ensure that service of process occurs and you receive the court documents, tax notices, lawsuits and other legal documents that you are meant to get. A good registered agent is a business that you can count on to quickly send you your process so that you never fall foul of the legal system and end up having to accept default judgements, penalties and fees.