As you go through the process of incorporating an LLC, you’ll find many references to registered agents, and will be required to provide information about your registered agent. But what is a registered agent? Let’s explore how they are instrumental in forming your business.
What Does a Registered Agent Do?
They are the designated point for contact for when the state wants to communicate with a corporation or LLC.
The registered agent is there to fulfill legal obligations between the state and the business entity, and to ensure you’re following regulatory requirements.
For example, a business has legal rights such as due process, since it is considered its own entity. The right to be given notice is a major part of due process, so the state needs a registered agent for the state to be able to give notice to an LLC in compliance with due process.
Why We Have Registered Agents
Without a registered agent, the state has no way to give notice to a corporation or LLC. After all, there is no such thing as a corporation that can walk down the street; it is a legal entity, but it needs some person to act as the intermediary. And the registered agent is even more important if you incorporate in a different state from where you actually do business.
The registered agent is there so that the state can communicate with the business entity—sending any paperwork, declarations from the state, annual reports, and tax forms. The registered agent is also the point of contact for legal actions such as a lawsuit or other service of process.
Do I Need a Registered Agent for My LLC?
A registered agent for your LLC is a key step in creating your business, which is why many business formation services provide registered agents. It is the agent’s duty to forward documents and notices from the state to the corporation, and to report on the entity’s standing with the state, whether it is in “Good Standing” or not. The registered agent acts as a go-between for the state and the LLC, giving both sides a single place to go for handling administrative, legislative, and regulatory requirements.
Not maintaining a registered agent has major consequences. A corporation or LLC could lose its legal status in the state and receive penalties, as well. And there are problems that could arise when no one is handling the responsibilities of the registered agent: what happens if the corporation is sued and doesn’t have a registered agent in the state?
How Do I Find a Registered Agent?
The most elementary requirement for a registered agent in almost any state is that they must be a resident of the state, with a physical address (not a PO Box). The registered agent can even be another business entity in some cases, but that entity must itself have authorization to do business in the state.
Many businesses choose a corporate officer or director to be the registered agent. Lawyers and CPAs also frequently serve as registered agents. There are even some states where the registered agent can be the business entity itself, so check for the specific legal requirements for creating a business in each state.
Many businesses opt to designate a third party as a registered agent, which has many advantages. The business would be able to move without having to go through the additional paperwork of an address change with the state for the registered agent.
Third-party agents can also spend time keeping up with new requirements and legal changes in the state, and also help the corporate image by ensuring that a lawsuit or legal action will never be served at the office, to the embarrassment of customers and employees.
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