Every business needs a registered agent, but for what purpose exactly?
If you want to open a business in any state, you will have to provide plenty of information to register it as a legal entity. Besides information such as the business name, location, management structure and ownership, you will also be required to provide the name and address of the registered agent that handles your business.
A registered agent, sometimes known as a statutory agent or resident agent, is an entity or individual that receives and handles legal documents on behalf of your company. This includes subpoenas, summonses, or other legal documents that may result from lawsuits.
By now, you probably know you are obligated to have a registered agent appointed for your business, but why is that exactly? How can a registered agent help your business, and can you be one if you don’t want to hire someone else?
These are all questions we are going to explain below, so that you can make an informed decision when it comes to who is going to be your company’s point of contact for all legal communication from now on.
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What is a registered agent?
All businesses, with the exception of self-employed individuals, need to register as legal entities first. Some of the most common forms are LLCs, corporations, or partnerships. When you register your business, you are going to have to name a registered agent.
The registered agent of your choice must be located in the same state as your business, meaning if you operate in more than one state, you will need a different registered agent for each. A Wyoming registered agent, for example, can only handle legal correspondence in Wyoming, but there are agencies that can provide this service in other states as well.
A registered agent handles all your business’ legal correspondence and lets you know when summons or subpoenas are sent your way. This means if, for example, a former employee decides to sue your company for whatever reason, it is not enough to just mail the summons to you. They will have to send it to your registered agent, and they will forward it to you.
What will a registered agent do for my business?
Put simply, the job of a registered agent is to serve as the designated recipient of your legal documents. This happens to avoid situations where a business claims to not have received summons or subpoenas, despite them being sent to the company’s address. When they receive your documents, the agent acknowledges the receipt and forwards a copy of the documentation to you.
A service of process must usually be sent in person, regardless if the documents are delivered to a business or an individual. This means anyone serving notice against your business must do so by going to the office of your registered agent or meeting them in any place the registered agent established they will be during working hours. Usually, registered agents are required to operate during typical working hours (9 A.M. to 5 P.M., Monday to Friday).
When the registered agent receives legal documents, they are obligated to at least notify the business about the received documents immediately. It is the agent’s duty to follow up with emails and phone calls if your business does not respond to the initial notification in a timely manner.
Some registered agents also provide additional services, including filing documents and notifying the company about important legal events such as franchise tax filing dates and so on.
The following are some of the benefits of having a designated registered agent:
- If you don’t have a real address and use a PO Box as the mailing address, you will not be able to receive legal documents and federal state notices. A registered agent will be able to receive these documents on your behalf.
- Registered agents do their job in a discreet way, saving you the awkwardness of being served in front of your employees or, worse, clients.
- Because registered agents are required to work during traditional business hours, you can rest assured knowing you won’t miss any important documents while you are on vacation or if you work flexible hours.
- If you miss an important legal or tax deadline, you risk receiving fees or penalties. A registered agent will ensure this never happens.
What to keep in mind when choosing a registered agent?
Just as you do when you choose all of your other business collaborators, you will need to be very careful when choosing a registered agent. Pick a person or agency that you trust, as integrity and reliability are very important in this matter.
When you are vetting potential options, keep in mind the following:
- Are they located at a legitimate business location?
- Do they have good reviews from other clients?
- Do they charge any extra fees besides what’s written in the agreement?
- Do they have knowledge about the rules and regulations of multiple states?
- Will they be able to keep copies of your important documents?
- Is the agent or agency authorized to serve as a registered agent in states you plan to expand your business in the future?
Can I be my own registered agent?
The law allows you to serve as your own registered agent. Even though it may sound like a good idea in theory, it may not be as easy as you believe.
For starters, being your own registered agent requires you to be available at a single location during business hours, meaning you will be effectively pinned to your desk for the most part of the day. If your role in the business requires you to meet with clients in different locations or travel a lot, it may be impossible for you to serve this role.
If you want to serve as your own registered agent, keep in mind that your name and address will appear in public records, so if you want to avoid that, you will have to appoint someone else to serve as your registered agent.