Working with a State-Required Registered Agent - dummies

Working with a State-Required Registered Agent

By Jennifer Reuting

States require a business to have what is called a registered agent — a term that is interchangeable with resident agent and statutory agent — in the state in which you domicile or “home” your limited liability company (LLC) and in every state in which you transact business.

A registered agent’s primary duties are to have an in-state address that is not a P.O. box and to be open during business hours in the event that the company is sued and paperwork needs to be served. Fun job, huh?

This company or person is also legally required to be able to accept government documents, such as correspondence from the secretary of state’s office, clerk’s office, and state tax bureaus, on behalf of the company and then forward them on to you, the owner. In many cases, the agent’s office can also serve as your corporate headquarters in the state where your LLC was formed if you don’t have an office there.

Why you need a registered agent

In some states, you can serve as your own registered agent (provided that you have an office address in the state). However, this is never a good idea:

  • You can’t ever leave. Someone must be at the registered agent’s office address at all times during business hours to sign for government papers. If the court service comes to drop off legal documents and you’re not around, there’s a chance that you could lose the lawsuit by default! Went to lunch? Too bad. Needless to say, that would be one really expensive lunch.

  • You look bad in front of employees and customers. If lawsuits are served at your business address, imagine what your customers (and employees) will think when they see a couple of cops come into your place of business carrying a lawsuit and asking for you. Even if you’ve done nothing wrong, the talk among your employees and customers can be incalculably damaging.

  • You lose some of your privacy. A lack of privacy makes you more vulnerable to lawsuits. For example, if you use your home address, someone considering suing you can instantly see online if your home is in an affluent area.

    This may be the deciding factor for an attorney considering whether to take a plaintiff’s case without a retainer. Using your registered agent’s address on your state filings gives you an additional level of privacy.

  • You lose safety. Imagine if a disgruntled customer wanted a refund in the form of your landscaping, or an unlucky day trader came directly to your home to “discuss” his losses. You’re better off avoiding these sorts of scenarios by concealing your personal address and using a registered agent instead.

What your agent should do for you

Due to the sad truth that a registered agent’s primary function is to sit and wait for a lawsuit to arrive, most registered agents now provide extra services. After all, you’re a well-behaved citizen and you probably aren’t getting sued very often, so what’s a registered agent to do all day?

A good registered agent warrants its nominal fee by taking on such important tasks as keeping your LLC in compliance with all the state-required filings, forwarding your government mail, and protecting your identity. Because of these extra tasks, registered agents have gone from being mere legal irritants to being important members of LLCs’ teams. They have the following responsibilities:

  • Have a separate business location at a commercial (not residential) address and stay open during normal business hours to accept lawsuits and filing documents, which they forward immediately to you.

  • Protect your address by allowing you to use their address as your corporate headquarters.

  • Forward your state and government mail and/or notices each business day.

  • Remind you of any state filings that are due and make sure that you stay in compliance. Some registered agents even have online “compliance calendars” that keep you up to date with any upcoming filings you may have to make.

  • File your documents (if necessary) with the requisite state and local bureaus.

  • Assist you in finding state-specific tax and legal professionals.

  • Keep copies of your corporate documents in case of theft, loss, or natural disaster (this is a legal requirement for certain documents). A lot of Louisiana businesses were happy that they had employed the services of legitimate registered agents after Hurricane Katrina!