What Is a Registered Agent and Does My Business Need One?

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. 

Maintaining a registered agent is not cost prohibitive. Generally, you might expect to pay between $100 to $200 for registered agent services in a state. 

What should you consider when selecting a registered agent?

As when you choose any vendor, you’ll want to have confidence in your registered agent’s integrity and reliability. Some things to consider when vetting prospective registered agents include: 

• Are they authorized to serve as a registered agent in the state(s) you want to do business in today and in the future?
• Are they experienced in navigating the different rules and filing deadlines of different states?
• Can they help you maintain copies of your important corporate compliance documents (such as Articles of Incorporation, Articles of Organization, Operating Agreement, Bylaws, annual reports, etc.) and give you online access to them via a secure server?

It pays to be selective because a registered agent is responsible for making sure your company gets notified of time-sensitive materials without delay. It’s critical to have a registered agent that is trustworthy, organized, and responsive because you will rely on that resource to help you keep your business informed and in good legal standing in the state(s) where you operate. 

RELATED: 10 Key Issues in Setting Up an LLC