You might have heard or seen the term “registered agent,” and wondered, “What is that exactly?” A registered agent (sometimes called a “resident agent” or “statutory agent”) is an individual or a company with the authority to accept service of process on behalf of a business.
This definition often leads to a second question, “What is service of process?”
Examples of documentation that a registered agent receives on behalf of a business include:
- Official federal and state correspondence
- Notice of lawsuits
- Subpoenas for information
- Tax notices from the IRS and local tax authorities
- Court summonses
- Corporate filing notifications
- Wage garnishment notices (if a business is ordered to withhold a portion of an employee’s wages and send them to a person or company to which the employee owes money)
Does your business need a registered agent?
In most states within the United States, a business must designate a registered agent when establishing a company as an LLC or a corporation in that jurisdiction. Maintaining a registered agent becomes an ongoing corporate compliance responsibility for those companies.
A business that is required to have a registered agent, but fails to appoint and maintain one, can face some serious ramifications. For a new business, its formation or qualification documents to incorporate will probably be rejected by the state. Also, a company that doesn’t maintain a registered agent runs the risks of fines, penalties, and possible default judgments in favor of the other party (in the case of a lawsuit). A business might even be suspended or terminated (administratively dissolved), and not be allowed to conduct business in other states.
How can you find a registered agent?
An individual or entity must meet a state’s qualification requirements to act as a registered agent for businesses that are forming an LLC or incorporating in that state. Typically, a registered agent must have a physical address in the state, maintain office hours from 8 a.m. to 5 p.m. on Mondays through Fridays, and meet whatever other conditions the state requires.
While many states will allow a company to designate its owner or an employee as its registered agent, this arrangement has its downsides. First and foremost, a registered agent’s name and address become publicly available. So if the owner or a staff member acts as a registered agent, that person’s privacy becomes jeopardized. Also, maintaining the required office hours to accept service of process every workday can present a challenge. For these reasons and others, it’s usually more beneficial to find an experienced third-party registered agent.
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If you have or are starting an LLC or a corporation, you may want to check your state’s website for a list of authorized registered agents, or ask your attorney for recommendations. Businesses that aspire to expand their companies into more than one state can benefit from finding a registered agent that is authorized in all 50 states.
Published at Sun, 09 Dec 2018 02:37:41 +0000