What is a registered agent and do I need one?

In your hunt for information about incorporating or forming an LLC, you may have stumbled across some industry jargon that needs some explanation. "Registered Agent" is one of those terms that could use some demystifying.

In the document that creates your corporation or LLC, you must tell the state in which you're forming where they will send state tax reports, annual reports and legal notifications regarding your company. The name of this official-type notice receiver is the "Registered Agent".

The only requirement is that this "agent" have a physical address within the borders of the state where the company is incorporated. If you choose to form or incorporate in a state where you are not located, you will have to designate someone to be the agent. This could be your cousin from Cucamonga if it's a California formation or Uncle Al from Albuquerque if you incorporate in New Mexico.

Receiving these notices is only half the job, however. Upon getting them on your behalf, the agent must send them to you in a timely and reliable manner as most state notices have a deadline for return and in the case of legal notices, you must respond within as little as 10 days or less.

If your cousin or Uncle Al aren't on their toes, it could cost you penalties for late filing or in the case of legal proceedings, a judgment against you for failure to respond. This is why you may consider naming a professional service as your agent. They will assume the responsibility of receiving and forwarding state and legal notices quickly; most likely, they will use courier delivery and not snail mail.

An agent service also meets the state requirements that the Registered Agent must be available during normal business hours at a physical location. A service also protects your privacy from customers, vendors, clients, and neighbors since legal documents will not be served at your place of business or your home (in the case of-home-based businesses).If you travel or are out of your office for extended periods of time during regular business hours, an agent service may be indicated.

If you form in your own state, you can name yourself as agent but keep in mind the reasons noted above for choosing an agent service. If you are on budget, remember that agent service is seldom free although many will offer free service initially if they are also the party who is handling the incorporation. If you use an incorporating service, be sure to ask about the terms and conditions of their registered agent operation.

Should you decide to file your own forms and simply need to name an agent, a web search will provide the names an addresses of suitable agents; just be sure to make agent arrangements with the one you choose before submitting your forms as some agents may be unpleasantly surprised when a process server shows up to deliver a subpoena on a company for which they have no record.

When shopping for an agent or an incorporator, ask for some history and try to get a feel for how you fit in their client base. Some agents are geared toward large legal firms or corporations with many subsidiaries so may not give you the attention you need while other agents may be a post office box with a website and farm out the formations and agent work to others.

What a registered agent is not:

(1) an advisor, intermediary or arbiter between you
and the party sending the notice. The agent's job is simply to receive and forward what they get.

(2) a mail forwarding service for your business.Do not expect the agent to forward that copy of Glass Cleaning Monthly (it'll be tossed) or gift baskets (they'll be eaten) from your favorite vendor.

As always, please consider our services in these areas. As it happens, we neatly fit all the criteria I've outlined and I welcome questions from anyone about this and other aspects of incorporating. You can post or email us but if you call between 8 AM and 6PM eastern U.S. time, we always answer the phone!

See you at the next post!