A registered agent is an individual or entity appointed by a Limited Liability Company, S Corporation, C Corporation, or other legal business entity to accept legal documents, government correspondence, and compliance paperwork on its behalf. Other names for a include statutory agent, agent for service of process, and resident agent.
Registered agents are critical for keeping statutory (state-registered) business entities in compliance with a state’s laws. Perhaps they’re not as fragrant as a rose, nor would they make an appropriate Valentine’s Day gift. But regardless of whether you call them “statutory agent,” “registered agent,” or some other name, they are extremely important!
All states (other than New York) require business entities to designate a registered agent. This is done when completing their registration forms to conduct business in the state. They must maintain a registered agent at all times to stay compliant with the state’s rules. If they change who is serving as their registered agent (or if their agent moves to a different location), they must notify the state. If a business entity has physical operations in other states, it will typically need to appoint a registered agent in each of those states.
Examples of documents a registered agent may receive on behalf of a business:
- Tax notices
- Official federal and state correspondence
- Corporate filing notifications
- Notice of lawsuits
- Wage garnishment notices
- Subpoenas for information
- Court summonses
Qualifications and Requirements
Registered agents must meet the state’s qualification requirements to be recognized as legitimately registered agents.
A registered agent must have a physical address in the state where the business it serves is located. The registered agent’s location is often referred to as a “registered office,” which must hold office hours from 8 a.m. to 5 p.m. from Monday through Friday. Most states allow individuals who are at least 18 years old and a resident of the state to serve as registered agents. Also, some companies provide registered agent services to businesses. Note that while LLCs and corporations may not act as their own registered agents, many states allow an owner or employee of the company to serve in that capacity.
The exact requirements that a registered agent must meet may vary from state to state.
While designating someone within the business entity as its registered agent may seem the easiest thing to do, there can be downsides to that.
- Availability feasibility– Can that person maintain the required office hours every week of the year? What about going on vacation or sick days, etc.?
- Privacy concerns– The individual’s address becomes available to the public.
Because of those potential problems, it may be more practical for business owners to find an experienced third-party registered agent. That provides some assurance that all necessary protocols and processes are in place to meet the state’s qualifications and handle registered agent responsibilities effectively.
Benefits of Having a Registered Agent
- Privacy– Having a registered agent helps to assure the individuals in the business have some privacy. The professional registered agent’s (not the business owner’s or employee’s) name, physical address, phone number, etc. go on public record with the state.
- Peace of mind– Businesses that have a registered agent in the states where they conduct business gain peace of mind that their legal and government documents will be received and responded to promptly. Registered agents are always available during the required business hours to accept important documents on their clients’ behalf.
- Good standing status– Designating a registered agent is a must when forming an LLC or incorporating, if a business intends to stay in good standing with the state. It’s a compliance requirement!
- Ease of expansion– A nationally recognized registered agent streamlines extending operations into other states. There’s no need to find separate registered agent services providers in each individual state when one registered agent can handle the responsibilities no matter where the business moves or expands.
Risks of Not Having One
- Loss of personal liability protection for business owners– If important documents don’t get handled in time, it could put the business owner’s personal assets at risk if anyone were to sue the company or the business is unable to pay its debts.
- Failure to take care of essential notices– If a business designates its owner or an employee as its registered agent, legal documents and compliance notices might get mixed in (and lost in the shuffle) with other mail.
- Financial hit– If a business fails to designate a registered agent or doesn’t pay its registered agent’s fees, it could face state penalties and fines.
- Loss of business entity status –If a business is required to designate a registered agent but hasn’t, it could face suspension or termination of the entity. This could render the company not legally authorized to conduct business in the state.
Costs for Registered Agent Services
The prices vary when using a professional registered agent’s services. All-in-all, businesses don’t usually find the costs prohibitive. Generally, the rates range from as low as $50 to $200 per year.
Choosing a Registered Agent
What are some things to consider when selecting a registered agent?
- Are they authorized to serve as a registered agent in the state(s) you want to do business in today and in the future?
- Do they have proven experience complying with the rules and filing deadlines of different states?
- Will they assist you in obtaining and maintaining copies of your LLC’s or corporation’s compliance documents (such as Articles of Incorporation, Articles of Organization, Operating Agreement, Bylaws, annual reports, etc.).
- Do they have an online compliance portal via a secure server to give you 24/7 access to your account, compliance requirements, and documents?
- Are they accredited with the Better Business Bureau and have an A+ rating?
Be selective because a registered agent’s integrity, responsiveness, and thoroughness can directly impact your business legally and financially!
What if you decide to change your registered agent? Typically, states require business owners to complete and file a form with their Secretary of State’s office. Some states require businesses to amend their Articles of Organization (LLC) or Articles of Incorporation (corporation) when changing their registered agent. Filing fees vary depending on the state.
Make TaxMedics Your Registered Agent
TaxMedics provides registered agent services in all 50 states. Besides being there to receive any critical legal notices that arrive for your company, we will also keep you on top of all your upcoming compliance filings. Different states have different requirements and filing deadlines, and we are knowledgeable about all of them. Our team is here to help ensure you meet due dates and stay in good standing in every state your business operates. Feel free to contact us at 509-543-7600 or send a request HERE.
April 2021
This blog does not provide legal, financial, accounting, or tax advice. This blog provides practical information on the subject matter. The content on this blog is “as is” and carries no warranties. TaxMedics does not warrant or guarantee the accuracy, reliability, and completeness of the content on this blog. Please contact us directly to discuss how this information may be used based on your actual facts and circumstances.