Business compliance is a crucial issue for all entrepreneurs running some type of commercial entity or venture, especially when it comes to more complex forms like LLCs and corporations. A duly appointed and maintained registered agent is an essential part of this compliance status. A prerequisite for business incorporation, this function plays a vital role in keeping a company in good standing with the state. Hence, if you need to change a registered agent at some point, it’s important to make the change correctly not to put your business compliance at stake.
What Is a Registered Agent?
This role is your company representative for receiving and handling legal documents on behalf of your organization. Notices of lawsuits, services of process, government notifications, letters, statements, orders, and requests from banks, financial institutions, and other state agencies that set up some deadlines, requires some actions to be taken, or calls for a timely response are all in the competence of a registered agent.
Given the importance of this function, there is a number of requirements a registered agent should match to become lawful and eligible. First of all, this role is state-specific. In other words, you’ll have to assign a separate registered agent in any state where you have an affiliate office or apply for a foreign qualification. With that, an assignee should reside in the state of designation. Only real street addresses are accepted, with no P.O. boxes allowed since another requirement is that an agent should be consistently available under the specified address. That way, they can physically receive correspondence during business hours on workdays and sign for the mail if necessary.
To continue, a registered agent can be either an individual or a legal entity. Speaking of an individual, there are no severe restrictions here. Any adult over 18 years old could serve as a company representative, with no limitations over the educational or professional background. It could be your relative, neighbor, friend, or anyone you trust enough to assign this role. In practice, though, it’s advisable that you choose someone with associated experience. Attorneys, lawyers, accountants, business consultants, financial advisors, and tax experts are the best candidates for this function. For example, your hired bookkeeper or company attorney could also serve as your registered agent.
When it comes to legal entities, the rule of thumb is that LLCs and corporations can not be their own registered agent. You should appoint a third-party entity. An optimal choice here is one of the multiple professional services available around. Not only will they handle this role in a diligent and professional manner, but also the same service is usually available across the states. So, there will be no problem, should you decide to move the business to another state.
Finally, you can serve as your own registered agent and take care of all your official correspondence by yourself. However, as your firm grows, the workload grows accordingly and might become a bit difficult to cope with over time. On the other hand, registered agent’s data are to be made publicly available, and you’ll hardly want that publicity for your personal data. Hence, delegating that function to a third-party entity is a more convenient and efficient alternative.
Reasons for Changing a Registered Agent
Why you might want or need to change your company’s formal representative? There is a whole slew of reasons for that. The most common, though, cover the following situations:
- Launching a business as a smaller venture, many beginner entrepreneurs choose to appoint themselves or some of their partners for this role to save money on professional services and deal with their internal affairs on their own. In the course of time, the scope of activities grows and so does the paperwork load. As a result, you might want to delegate those responsibilities to a hired entity;
- If you’ve assigned this role to your company’s employee or an independent specialist and that person resigns for some reason, you’ll have to find a new registered agent anyway;
- Your current registered agent doesn’t deliver to its commitments and puts your business compliance at risk;
- An appointed person cannot fulfill this function anymore. Most often, individuals move to other locations or fail to be permanently available under a specified address;
- You have ambitious business expansion plans and seek an agent with a physical address available in all US states. It’s a good thing for consolidation purposes and will save you a lot of time on a new agent’s search in each state your open an affiliate in. This is where companies choose to cooperate with special registered agent services.
Things to Consider Before Changing a Registered Agent
Though changing an agent is not a daunting task, you don’t want to go through that procedure too often. So, before delving into the process, you need to be strong in your decision. Thus, whether the change is rather a necessity or your desire, don’t rush into selecting a random entity as a substitute. Be wise and choose a person you can trust and the one you can rely on in such crucial matters as official business correspondence. Despite a seeming formality of this function, a registered agent is a key element in the legal structure of an incorporated enterprise. Your compliance status greatly depends on this role, so a trustworthy and diligent partner is a must.
Besides, consider your long-term business goals and estimated workloads. If your target business grows, a special service might be a better alternative that will keep up with your business development. Though payable, it will pay off in the long run. And the peace of mind you’ll get is certainly worth some extra.
How to Change Your Registered Agent
Since a registered agent is a state-appropriate role, the rules for changing an assignee also vary by state. However, there are basic steps to take that will make the whole process clearer and simpler for you:
- Visit the website of Small Business Administration where you can find more info on the registered agent’s change and spot a list of links redirecting you to corresponding websites covering this procedure and current requirements valid in each separate state. Besides, you can contact the Secretary of State’s office in your home state or the targeted state for added data or to check some details.
- Get the forms you need to fill in to apply for the change of your representative agent. Today, most states have all the necessary forms in a digital format downloadable online. So, you can search for those on your state department’s website. If the form is not available there, you can get an already printed version from the business service’s office of the Secretary of State.
- Fill in and sign the required form. The common data you’ll have to mention include your company name and address along with the contact data and addresses of your current and new registered agents.
- Receive consent from the new person you are going to appoint to perform this function. The document should be executed in writing and duly signed.
- File the completed change form along with the new assignee’s consent to your state department. You can do it online or send the documents by mail. Notably, some states make this procedure free for applicants while others require a filing fee. If there is a fee to be paid, you’ll have to attach the payment confirmation as well.
Mind that operating without a registered agent will cause penalties for your company and can even lead to administrative dissolution. To avoid any negative consequences for your enterprise and risks for your company’s good standing status, make sure you complete all formalities in time when changing your current representative and your new assignee is lawful and eligible.