If you are starting a formal business like an LLC or Corporation you have probably seen the term “Registered Agent”. For anyone starting an LLC or Corporation you will need to designate a registered agent to complete the legal process of forming your business. But, for the average person, you’re probably wondering “What exactly is a registered agent and who should I designate as my registered agent?”. In this article, we’ll go over what a registered agent is, what they do, why a registered agent is needed, who can serve as a registered agent and tips on how to choose who to designate.Table of Contents:
- What is a Registered Agent?
- Why do you Need a Registered Agent?
- Who can be a Registered Agent?
- Model Registered Agents Act (MoRAA)
- Registered Agent FAQs
A registered agent is an individual or commercial entity that has been designated by an LLC or Corporation to receive service of process (SOP) on their behalf. In addition to receiving service of process documents, registered agents are also responsible for receiving official messages from government agencies and compliance documents. These can include notifications of annual renewal fees or reports as well as statewide notices sent out by the Secretary of State’s office.
Depending on where your business is being formed your state may refer to a registered agent by a different name such as “statutory agent”, “resident agent” or “agent for service of process”. All of these terms are referring to an person or entity that serve as the point of contact for service of process for a formal business entity.
Service of process is the formal method that a person or company provides official notice that legal action has been initiated.
Registered agents serve a sole purpose: be available during normal business hours to ensure that important documents for a business are received and promptly delivered to an appropriate person at that business. On the surface this seems a bit over-the-top for something so simple, however in the event that a business is sued or subpoenaed, there are very strict timelines that must be adhered to.
If you are starting a business and plan to operate under a formal business structure like an LLC or a Corporation you’ll be required by law to designate a registered agent when completing your formation paperwork. Unlike informal businesses like sole proprietors and partnerships, LLC’s and Corporations are recognized as legally separate entities from their owners.
As a result the state government agencies that regulate LLCs and Corporations want to ensure that there is a specific person or other organization who can be responsible for receiving important information. This prevents a formal business from trying to hide behind layers of employees or intentionally trying to make it difficult to reach them to hold them accountable in the event they are sued. Registered agents also ensure that the state has a designated point of contact for each LLC or Corporation that is made aware of important business notices and when their business’ renewal fees are due. Essentially this prevents a business from claiming that they weren’t made aware that they needed to pay a renewal fee to keep their LLC or Corporation in good standing.
When you designate a registered agent you must make sure that you keep the information for this person or business up to date and accurate. This means that the contact information for the registered agent must be updated if they move. Alternatively, if you use a third-party commercial registered agent you will need to keep your status with them active.
If you have inaccurate information for your registered agent or use a third-party service that you cancel and you fail to update your registered agent your business could lose it’s good standing with the secretary of state’s office. Worse yet, if you fail to update this in a timely matter after losing good standing you could have your LLC or Corporation administratively dissolved or shut down completely. This would mean that if you were to be sued your LLC or Corporation would not be formally recognized anymore, removing your limited liability protection. This could leave you and your business partners personally liable for any outstanding debts or personally responsible in the event you were sued.
The requirements to be eligible to serve as a registered agent vary slightly from state to state, but generally can be anyone that:
- Is at least 18 years old
- Lives in the state where the business is registered
- Has a physical address where they are available during normal business hours (8 AM – 5 PM)
Alternatively, you can also use a third-party commercial registered agent service that is licensed through your state. In most states a business cannot serve as it’s own registered agent.
You are free to appoint anyone you see fit including yourself, a spouse, business partner or employee as your registered agent. As long as the person fits the 3 qualifications listed above they can serve as the registered agent for your business. With this in mind, remember that the person will have their name and address listed publicly and they must be available during business hours, every day. While you can serve as your own registered agent, it can be a very easy way to create a large headache for your business downline.
You may be asking yourself “If I can be my own registered agent, why would I want to hire a registered agent service?”. This is a very fair point and many small business owners do serve as their own registered agent. While you can serve as your own registered agent, you may want to consider the risks that can come with designating yourself or another member of your business as your registered agent. There are 4 main reasons why you should consider using a registered agent service:
- Remove Risk of Embarrassment:
In the unfortunate event that you are sued, if you list your business address as your registered agent address you will be served with the lawsuit at your place of business. This could be incredibly embarrassing in front of customers and could dramatically damage your business’ reputation.
- Maintain Your Privacy:
When you designate a registered agent, the contact information of the registered agent is listed publicly. If you were to list yourself, you would be listing your personal contact information for anyone and everyone to look up.
- Ensure Your Business is Compliant:
One of the core functions of a registered agent is to receive compliance correspondence from the secretary of state office. If you were to miss an official correspondence reminding you that your renewal fee or annual report is due this could lead to loss of good standing or even shut down of your business. If you list yourself, a business partner or a spouse you would have no recourse for not acting on this notice.
- Reduce Spam Mail:
Since registered agent information is required to be listed publicly, there are many people who scrape this information from the secretary of state’s website and use it to send commercial spam mail about various business offers. New businesses are often inundated with spam after they initially form their LLC or Corporation as a result. Even worse, there has been a dramatic rise in recent years of scammers trying to send official-looking notices to new businesses. These notices attempt to get businesses to pay for items they don’t need like a certificate of good standing and certificates of existence. This was so bad in North Carolina that their secretary of state office had to send out a state-wide alert notifying businesses to not fall for this scheme!
In recent years there has been an attempt to help standardize business entity laws around the US. One of these efforts lead by the American Bar Association (ABA) and the International Associations of Commercial Administrators (IACA) is the Model Registered Agents Act (MoRAA). The MoRAA attempts to resolve the varying laws and filing requirements across the US that cause confusion and difficulty in understanding for the public. By adopting a uniform process across the US, the MoRAA aims to make the business formation and maintenance process easier. To date, 11 states and Washington DC have adopted the Model Registered Agents Act:
|Jurisdiction||Year Adopted||Bill Number|
|District of Columbia||2011||18-500|
|North Dakota||2007||SB 2153|
|South Dakota||2008||HB 1137|
No, a registered agent is a person or business entity that is designated to receive service of process and government notices.
A registered agent is responsible for receiving compliance notices from the secretary of state office and service of process in the event of a lawsuit. In addition to this, many commercial registered agents will offer virtual mailbox and document storage services.
Any person who is at least 18 years old, has a physical address in the state and is available to accept service of process and other notices during business hours is eligible to serve as a registered agent.