When forming a new business, one thing is consistent across all 50 states—business owners choosing to incorporate with the state must choose a registered agent (RA) to accept service of process for their companies. However, which business structures need an RA and who can act as a registered agent varies by state.
So, whether starting a new business or expanding your current company into another state, it’s crucial to learn what’s involved in choosing a registered agent.
What is Service of Process?
The reality of business ownership is that you will likely receive official documents requiring in-person delivery and a signature acknowledging receipt at some point in your company’s lifetime. That’s where a registered agent comes in. Also called a “resident agent” or “statutory agent,” in some states, the person or entity is responsible for accepting service of process on behalf of the company it represents.
Service of process documents includes official federal and state correspondence, subpoenas, official tax notices, lawsuit notifications, court summonses, and corporate filing notifications.
Because many companies are headquartered in one state but might have other locations across the country, each state requires businesses formed with the state to assign a registered agent and registered office to accept the timely (and possibly sensitive) service of process documentation. The key being the person and office must have a physical location in the state where service of process documents are to be received.
What Companies Need a Registered Agent?
Generally, the companies that are required to register their businesses with the state in which they are formed and/or conduct business must assign a registered agent. However, because statutory laws guide company formation, the kinds of business structures requiring a registered agent vary by state. Sole proprietorships are never required to register with any state, while corporations and limited liability companies (LLCs) must always formally follow a state’s registration process.
For other business structures such as general partnerships, limited liability partnerships (LLPs), cooperatives, and trusts, the registration rules vary by state; therefore, which entities require registered agents also vary. To determine if your company needs an RA, begin your research with the Secretary of State’s office in that state. Most state websites have information and instructions on what is involved in forming a company.
Who Can Act As a Registered Agent?
While researching registered agent qualifications, you may run across the terms “noncommercial registered agent” and “commercial registered agent.” A commercial registered agent is an RA that has submitted an application and been approved to be listed on the Secretary of State’s website as a registered agent. While not on the Secretary of State’s list, a noncommercial registered agent is still viable as long as it meets the state’s qualifications for RAs.
At a minimum, all states require the registered agent to be a state resident and maintain a physical location within the state where the business is registered to operate. The location must be a physical address and not a PO Box or UPS box because there must be a person present to accept the service of process and sign for the documentation during normal business hours. Also, a registered agent must agree to forward the service of process to the company as soon as possible, either by scanning and uploading the notifications via an email, shared website, mail, or in-person delivery.
Depending on the state, resident agents can be:
- At least 18 years old and a resident of the state
- One of the business owners, such as a shareholder or LLC member who resides in the state
- An employee who is a resident of the state
- A resident friend or family member meeting other state requirements
- An online business filings company offering registered agent services
- A registered agent services provider with permission to serve the state
- An attorney or law firm offering registered agent services
- An accountant or accounting firm offering registered agent services
- A tax preparer or tax preparation firm offering registered agent services
- Some Secretary of State offices will act as the RA if one is not named
When you fill out your formation documents with the state, you’ll be asked to provide the registered agent’s name and physical address in the state. You may also be required to submit an additional form showing that the resident agent has agreed to represent your company. Once the registered agent has officially been listed as your company’s representative, any changes, such as the RA’s location or the RA itself, must be submitted to the state.
Can You Be Your Own Company’s Registered Agent?
In most states, the company cannot act as its own registered agent. Realistically, this makes sense since business owners don’t want to receive service of process in front of customers or employees. Or for home-based business owners in front of your neighbors or family. Also, you may not keep regular business hours, which is a problem if a delivery person is trying to serve documentation.
Finally, if your company conducts business in one state only, you may not have an issue finding a local RA. However, hiring a registered agent company is a solid option if you plan to conduct business out of state or sell products in other states. An RA company likely has representation in all 50 states (and the District of Columbia) and can set up your company’s RAs for you for a fee. Look for companies offering a discount for multiple registered agent needs.
Get the latest headlines from Small Business Trends. Follow us on Google News.
Image: Envato Elements
