A common type of business organization is the corporation, which is formed under the laws of each of the 50 states. Despite some differences in corporate codes from state to state, the basic provisions of these laws are the same throughout the country, according to Robert W. Hamilton’s “The law of corporations in a nutshell”. One of the universal aspects of US corporate law is the requirement to appoint a registered agent. Want to know more about the registered agent for corporations? Read our article below.
Definition Of a Registered Agent
Timely receiving of correspondence plays a crucial role in keeping a firm functioning smoothly. For this reason, the state obliges all LLCs and corporations to assign a person to be responsible for getting official papers. Such an intermediary providing interaction between the state and the entity is commonly referred to as a registered agent. Some states may use alternative names, such as “resident agent,” “statutory agent,” or “agent for service of process”.
A registered agent actually acts as an official of a corporation, providing contacts for the handing over of documents. Having a reliable agent ensures that all state correspondence is received on time. It will allow an organization to avoid penalties for late delivery, as well as assure proper notification if a lawsuit is filed against it. At the same time, by requiring corporations to designate a registered agent, the state is protecting the public interest. Their contact information is publicly available. This makes it easy for potential partners, investors, or customers to learn more about a venture, and to contact it if necessary.
What Is the Purpose of a Registered Agent?
The owners have to enter the registered agent’s data when submitting the formation documents, otherwise, the state will reject the application. This is a prerequisite for starting a new firm as the state needs a point of contact to deliver official paperwork. Having a registered agent avoids situations where the owner of a company cannot accept formal papers due to an absence from the workplace. It also eliminates the uncertainty, which might arise because an enterprise has several owners, and it becomes unclear who should receive the materials.
For the effective development and growth of your corporation, selecting a qualified and trustworthy registered agent you can trust is of great importance. The reason for this lies in the fact that their duties include the processing of such significant papers as:
- Legal notices;
- Official correspondence from the Secretary of State or another government agency;
- Litigation documents;
- Notice of garnishment proceedings against an employee;
- Tax forms;
- Other compliance-related documents.
In addition to handling documents containing sensitive organizational information, professional registered agents often render additional services. For instance, they can remind you when the next annual reporting deadline is approaching and assist you with filing it with the state. That allows you to focus on operating your company without having to worry about penalties and other adverse consequences of missing a deadline.
Who Can Be a Registered Agent For a Corporation?
Although the importance of a registered agent in supporting the running of a corporation cannot be overestimated, the requirements for applicants are quite loyal. The legislation allows any person or entity to be a registered agent as long as the following criteria are met:
- Availability during normal operating hours to pick up company documents in person at its registered address;
- Be a resident of the state at least 18 years of age (for individuals) or have a state business license (for legal entities);
- Have not only a mailbox but also a real physical address in the state you are going to set up your enterprise.
As long as a candidate satisfies the above conditions, they are treated as eligible. The state does not require any professional education or previous similar work experience.
When deciding on a registered agent, keep in mind that a corporation cannot perform these duties on its own. However, it is usually permissible to delegate them to an owner, employee, accountant, or lawyer.
First-time entrepreneurs sometimes choose to appoint themselves as the company’s agent. This option allows you to save money but is also associated with significant difficulties. The main one includes the impossibility to go on a business trip, vacation, or even attend a meeting during office hours. Moreover, even if you are in the office but not at your workplace, you risk missing a delivery. This can be a considerable limitation and a strong argument in favor of hiring a professional service.
How Is a Registered Agent Appointed or Changed?
You will need to select and assign your first registered agent already at the preparation stage of your incorporation documents. Their name and contact information will be included in the Articles of Incorporation. In some states, you should also include written consent from your agent to perform these duties. An application without these details will be rejected. This will not only lead to a loss of your money paid as a mandatory fee but also delay the launch of your startup.
Maintaining a functioning agent is imperative throughout the life of your venture. Failure to do so not only puts your entity at risk of losing the opportunity to protect its interests in the event of a lawsuit but also threatens legal consequences. Thus, the state can subject your corporation to penalties, as well as other sanctions, including administrative dissolution.
Even if you work with a perfectly fitting agent, at some point, it may become essential to change them. There are various reasons for that. For example, the relocation of your current personal registered agent to another state, or the reluctance of one of the parties to continue cooperation. As for the professional service, refusal to use their services may also be caused by the increased price or insufficient quality of their work. Finally, you may simply want to switch from an individual registered agent to a corporate one. Either way, regardless of the factors motivating you to take action, you should follow the procedure established by law and not delay in appointing a new registered agent.
If the change of a registered agent coincides with the annual report filing period, you can update the information in the state database simply by entering the up-to-date data. In all other cases, you should apply for an amendment to the company’s Articles of Incorporation.
Should a Corporation Use a Registered Agent Service?
The efficiency of a corporation depends on the robustness of a registered agent, therefore many entrepreneurs prefer professional services. This is the ideal option for those who value experience and knowledge. By hiring an online agency, you can avoid many difficulties associated with using an individual registered agent. Of course, the services of specialists are not free of charge, but this investment provides access to a wide range of benefits, among which we can mention the following.
Being your own agent, you cannot leave the office during working hours. Even if you are away for a short period, it will put your corporation at risk, so your ability to move around is severely limited. You can easily solve this problem by outsourcing your registered agent obligations to professionals. This will not only eliminate extra responsibility but also allow you to have full control over your working day.
As an entrepreneur, you probably know how vital it is to receive official paperwork and submit reports on time. Companies providing a registered agent service often give their clients access to a virtual office. Thanks to this tool, you will be able to review documents as soon as they are delivered.
Many online firms include regular reminders about upcoming reporting periods in their registered agent service. That way you don’t have to constantly think about ongoing state compliance to ensure your corporation is in good standing. Convenient and practical compliance monitoring tools let you forget about penalties for missing reporting deadlines.
If you perform the duties of a registered agent yourself, your personal data will be in the public domain. This can lead to a flood of spam and advertising. Furthermore, embarrassing situations can occur when a subpoena or notice of noncompliance is handed to you in front of your customers, partners, or investors.