Starting and running a corporation or LLC is an exciting time for a business owner, but setting the company up can be an overwhelming process.
One thing you’ll need to do is find and appoint a registered agent for your business entity, but how do you go about choosing a registered agent?
Here’s a summary of the key points regarding how to choose a registered agent for your business:
- Registered agents are people or services tasked with receiving important mail for a business, like tax notices and legal documents.
- They need to be reachable during standard business hours to receive and forward official correspondence to the company they’re representing.
- To qualify as a registered agent, a person must be at least 18 years old, live in the same state as the business, have a physical address (not just a P.O. Box), and be available during regular business hours.
- In some cases, it’s necessary to use a registered agent service. This includes situations such as not having a physical address for your company, operating in multiple states, running a home-based business, or if your address changes often.
- If a business doesn’t have a registered agent, it can face serious problems. These can include losing the right to run the business, increased risk in lawsuits, and potential penalties and fines. So, it’s very important to choose a registered agent and keep their details current.
What are registered agents?
A registered agent is an individual or service who is designated to receive mail or official correspondence for a corporation, limited liability company (LLC), limited partnership, or limited liability partnership.
This official mail includes correspondence such as tax notices, legal documents, lawsuits, and subpoenas, along with other important business-related documents.
The agent is literally ‘registered’ with the state because states require that you submit a form that ‘registers’ the individual as someone who can receive official correspondence for the business when the formation documents are filled out and filed with the state.
A registered agent ensures that there is always someone available to receive information regarding the business entity and that the company doesn’t miss out on any important official correspondence.
To simplify and clarify this process, all states require certain business entities to keep the registered agent’s address and name on file with the Secretary of State.
When is a registered agent required?
Any state where a corporation, limited liability company (LLC), limited partnership, or limited liability partnership (LLP) has been registered will need a registered agent appointed to represent the business.
A registered agent will need to be appointed in any state where the business was formed or where the company conducts business.
What are the requirements for a registered agent?
Even though requirements vary from state to state, all states have the same general rules.
These general rules include the following:
- The agent must be at least 18 years of age
- The registered agent must be located in the same state where the business is registered
- The agent must have a physical address in that state, not a P.O. Box
- The agent must be able to maintain normal business hours at the physical address
What does a registered agent do?
The corporation or LLC appoints and gives authorization to the registered agent to receive tax and legal documents as a representative for the company.
A registered agent resides in the state where the business was formed or where business is conducted and is the registered agent for the associated state.
Below is a brief list of responsibilities:
1. Registered agents are available during normal business hours
The registered agent makes himself or herself available at the designated address on file with the Secretary of State during normal business hours.
2. Registered agents receive official correspondence
While at the designated address, he or she is the appointed person to receive official correspondence delivered by an in-service process, courier, or mail.
Some of this official correspondence might include summons, complaints, annual reports, statements, wage garnishment orders, tax documents, subpoenas, and liens.
3. Registered agents pass correspondence on to the company
The registered agent then forwards the communication to the corporation or LLC for which he or she represents.
How do I register an agent?
A registered agent is established when you initially set up the business or when the business entity is formed.
During the formation process, the registered agent is designated in the Articles of Incorporation.
What are the Articles of Incorporation?
The Articles of Incorporation are documents filed with the government that legally document the establishment of a business.
Articles of Incorporation include the following information:
- Name of the business
- Name and address of the registered agent
- Statement of purpose
- Details regarding the management of the business
- Address for the principal place of business
- Business duration
- Authorized signatures
These forms can be found on the State Corporation Commission’s website.
If you already have a business that is registered with a state, you can update your registered agent’s information by downloading a form from the Secretary of State.
This will notify the state of any updated information on the registered agent.
Should an owner or employee be the registered agent of your company?
Using an employee or business owner as your company’s registered agent can save you money on registration fees.
However, there are some significant drawbacks to choosing this route, listed below:
- If you were to be personally served with a lawsuit, it would be at your place of business in front of customers and employees.
- If your business is home-based, your personal address will be on display as part of the business information that is accessible to the public.
- If the owner is considering being the registered agent, he or she would be very confined to the office.
There’s a lot to take into consideration when deciding who to choose to be a registered agent.
When should I use a registered agent service?
There are companies that provide professional registered agent services and times when it’s beneficial to take advantage of these services.
Below are some examples of when you should use registered agent services:
1. When forming a company where you don’t have a physical address
It’s beneficial to use a registered agent service when you are forming a company and don’t have a physical location.
A registered agent service provider with an office located in the state where the company is being formed will meet the requirement of the registered agent address.
2. When a P.O. Box is your business address
Since you need a street address for your registered office, a registered agent service is a great option when you only use a P.O. Box as your business address.
3. When business is conducted in multiple states
When you conduct business in multiple states, you need a registered agent for each state.
One provider of registered agent services can serve as the registered agent in all of the states.
If you do business across states, it’s easier to use a company that provides professional registered agent services nationwide.
While we’re on the topic of professional registered agent services, be on the lookout for Shoeboxed‘s upcoming registered agent service!
4. When your business is home-based
A registered agent service is a good option if your business is home-based.
This prevents your private address from becoming public information.
5. When your address changes frequently
If your address changes frequently, a registered agent service provider can save you a lot of time and money.
It’s a requirement that your address stays updated with the state, and there’s a penalty if it doesn’t.
If you have a registered agent service provider, then you don’t have to keep up with the changes and the filings every time there is a change.
What happens if you don’t have a registered agent?
You don’t want to be caught without a registered agent if you are required to have one.
Below are the issues that can occur from not having a registered agent:
1. You lose the right to operate your business
If you are required to have a registered agent and don’t, you could lose the right to operate your business in that state.
2. You risk losing a lawsuit
If you don’t have a registered agent available to receive the service of process, you risk losing a lawsuit.
3. You may have to pay penalties and fines
Not responding or acting on official correspondence can result in significant penalties and fines.
Questions to ask yourself
Below are some questions to ask yourself so nothing gets overlooked when choosing a registered agent:
- Am I forming a business entity that requires a registered agent?
- In what state am I forming my business entity?
- What states am I going to conduct business in?
- If the registered agent is an individual, is he or she at least 18 years of age?
- If appointing a registered agent for the business when it is formed, does the registered agent live in the state of formation?
- If appointing a registered agent for a state where the company is conducting business, does the registered agent live in that state?
- Does the agent have a physical street address and not a P.O. Box?
- Will the agent be at this physical street address consistently during regular business hours?
- Should I, as the owner, be the registered agent, and why or why not?
- Should I appoint an employee as the registered agent, and why or why not?
- Should I use a registered agent service?
- What happens if I don’t have a registered agent?
Asking the right questions can prevent you from getting into trouble with your small business in the future.
Frequently asked questions
Registered agents were established because of the due process of the law. Lawsuits couldn’t move forward without businesses first being properly notified.
Yes, you can act as your own registered agent in Indiana.
Yes, you can be your own registered agent in Illinois.
Yes, you can be your own registered agent in New York.
Having a registered agent is an important part of running a business within the confines of the law.
Choosing a registered agent is vital if it’s required for your business.
Be sure that your appointed registered agent is at least 18 years of age, has a physical address in the state of your business, and will be available for correspondence during working hours.
Caryl Ramsey has years of experience assisting in different aspects of bookkeeping, taxes, and customer service. She uses a variety of accounting software for setting up client information, reconciling accounts, coding expenses, running financial reports, and preparing tax returns. She is also experienced in setting up corporations with the State Corporation Commission and the IRS.
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