What is a Registered Agent for an LLC?

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In simple terms, a registered agent is an individual or entity (say a law firm or accountant) in a particular state that serves as that LLC’s physical address.

The primary reason you need a registered agent for your LLC is that it serves as a physical address at which to receive service of process in the event of a legal issue arising.

But in reality, a registered agent usually plays a number of other functions for the owners of an LLC, including:

  1. Receiving and passing on government correspondence on behalf of the LLC in a timely manner
  2. Passing on any other correspondence and (in some cases) phone calls in a timely manner
  3. Tracking compliance events for the LLC such as deadlines for filing annual reports

When you form an LLC (or another kind of corporate entity) in a particular state, you will be asked who will serve as your registered agent so it is a key part of the LLC formation process.

Registered Agent Requirements

These vary from state to state (check out our state-based guides to find a registered agent in your area), but can be boiled down to these essentials:

  1. Have a physical address within the state in question (no PO boxes)
  2. Be open during normal business hours
  3. Be 18 years of age or over (most states)

Being Your Own Registered Agent

You can designate yourself, or a member of your LLC, as your LLC’s registered agent at your office address.

It may seem that being your own registered agent is a simple way to avoid signing up for a registered agent service, but in reality, there are some pitfalls to understand.

  1. You need to have someone physically present at the office at all times during normal business hours. That’s rarely the case with small businesses that are start-ups, and if you get served with legal documents and no one is there it can result in severe legal consequences. According to Kennedy Law, one legal challenge could be a “default judgment” if you do not respond to service of process.  This means you lose your case and you didn’t even know about it!
  2. It can create awkwardness if you are served with legal documents at your office address – it will raise questions among staff and look bad if there are clients present on site even if you have done nothing wrong.

For these reasons, most businesses that are starting out will go with a reputable registered agent service to fulfill this requirement.

How Will My Registered Agent Service Work With Me?

They’ll provide you with access to a portal where you can upload any documents necessary and login to see when compliance events such as filing annual registrations or reports are due (the registered agent service will also email reminders). The portal usually contains a calendar, a tab to access any mail forwarded, and a list of entities the service is managing on your behalf.

Choosing a Registered Agent Service

As we spell out in this post on the leading registered agent services, there are advantages to using one of the major national registered agent services (we recommend ZenBusiness) as opposed to a local service that only offers coverage in that state alone.

ZenBusiness and the other leading players offer the service at a competitive price with a user-friendly interface to track correspondence and reporting requirements.

Using ZenBusiness, Northwest, or another national registered agent service also means that if your business expands its operations to another state you can keep the same registered agent operator and just add in another state. You can administer it on the same platform. Many multi-state companies mistakenly have inhouse teams to fulfil this function when they could easily and cheaply outsource this function to a registered agent service.

What happens if you don’t have a registered agent service?

You have to have a nominated registered agent service to form an LLC, so you’ll definitely have one at the outset.  If you would like to remove yourself as your company’s registered agent and sign on with a registered agent service, you need to file that with the state the company is organized.  If you need assistance with doing so, you can reach out to our legal partners at Kennedy Law and they can handle this for you. 

What happens if you let your registered agent service lapse?

This can result in serious consequences (as mentioned below) and must be avoided at all costs by keeping your registered agent service active.

  1. Your LLC risks being no longer considered as being in “good standing” meaning it can’t legally enter into contracts and do business effectively
  2. You may miss vital documents that are set to your LLC including government and legal correspondence
  3. By not having an active address that’s open during regular business hours to receive service of process you may not even be aware that you are being sued, which hampers your legal defence and risks getting you into even hotter water

Selecting a professional registered agent service for your LLC is not only a mandatory part of operating a company, it can also give you peace of mind and allow you to keep track of your requirements as a business entity.

How much does a registered agent service cost?

A professional registered agent service costs between $50 an $300 a year depending on what company you go with and what’s included in the service.

Sometimes the first year of registered agent fees is free when you use a particular service to form your LLC.

Is a registered agent liable?

In general, most states recognize that registered agents are not liable for the debts and obligations of the business they serve.

A registered agent is liable only for any losses incurred by failing to notify the business of service of process documents in a timely manner.

What is service of process?

The action of formally notifying an individual or business entity that there’s a pending lawsuit against him or her, or in this case, against one’s company.

Are there other names for a registered agent?

Yes, a registered agent is also sometimes called a statutory agent, a service of process agent, or a resident agent, depending on the state. Rest assured, it is the same thing.

What is a commercial registered agent?

A commercial registered agent is a person or entity that has registered with the state by filing a commercial registered agent listing statement with the Secretary of State in accordance with the Model Registered Agent Act (MoRAA) or similar state law. To someone forming an LLC it doesn’t make any practical difference if your registered agent is a commercial registered agent or not.

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AUTHOR

Rick Wallace is an investor who has established several LLCs in different states. He writes about starting businesses via LLCs including topics such as choosing a registered agent.