What is a Registered Agent?

As you go through the process of incorporating your business, you’ll find many references to registered agents, and will be required to provide information about your registered agent. The registered agent is the person to whom the state goes when it wants to communicate with a corporation or LLC. The registered agent is there to fulfill legal obligations between the state and the business entity. For example, a corporation has legal rights such as due process, since it is considered its own entity. The right to be given notice is a major part of due process, so the state needs a registered agent in order for the state to be able to give notice to a corporation or LLC in compliance with due process.

Why We Have Registered Agents

Without a registered agent, the state has no way to give notice to a corporation or LLC. After all, there is no such thing as a corporation that can walk down the street; it is a legal entity, but it needs some person to act as the intermediary. And the registered agent is even more important if you incorporate in a different state from where you actually do business, such as Delaware or Nevada. The registered agent is there so that the state has a way to communicate with the business entity, sending any paperwork, declarations from the state, annual reports, and tax forms to the registered agent. The registered agent is also the point of contact for legal actions such as a lawsuit or other service of process.

More on this subject: [eBook] All About Incorporation: Choosing the Right Business Structure

It is the registered agent’s duty to forward documents and notices from the state to the corporation, and to report on the entity’s standing with the state, whether it is in “Good Standing” or not. The registered agent stands in the middle of the state and the corporation or LLC, giving both sides a single place to go for handling administrative, legislative, and regulatory requirements.

Not maintaining a registered agent has major consequences. A corporation or LLC could lose its legal status in the state, and receive penalties, as well. And then there are the problems that could arise because no one is handling the responsibilities of the registered agent: what happens if the corporation is sued and has no registered agent in the state?

Finding a Registered Agent

The most elementary requirement for a registered agent in almost any state is that the agent must be a resident of the state, with a physical address (not a PO Box) where someone will be available during regular business hours. The registered agent can actually be another business entity in some cases, but that entity must itself have authorization to do business in the state. Many businesses choose a corporate officer or director to be the registered agent. Lawyers and CPAs also frequently serve as registered agents. There are even some states where the registered agent can be the business entity itself, so check for the specific requirements in each state.

Many businesses opt to designate a third party as a registered agent, which has many advantages. The business would be able to move without having to go through the additional paperwork of an address change with the state for the registered agent. The third party agent can also spend time keeping up with new requirements and legal changes in the state for the business, and also helps the corporate image by ensuring that a lawsuit or legal action will never be served at the office, to the embarrassment of customers and employees.

[latest_posts header=”more on startups” limit=”” category=”9″]