What Is An LLC Registered Agent?
By: UpCounsel
An LLC registered agent definition is a third party representing a business in the same state that a business wants to be established in. They receive documents on behalf of a corporation or LLC from the secretary of state and other government entities (think lawsuits and tax forms).
The law usually allows you to act as your own registered agent, though it’s recommended a third party is hired due to the importance of the role.
With a third party responsible for receiving all of your tax and legal documents, you have peace of mind knowing someone is always there to receive time-sensitive documents. This is important for times you’re on vacation or working away from the office regularly.
The term “agent” usually refers to a person representing someone (or an entity). When they receive any documents, they are required to forward documents in amount of reasonable time.
Why Do I Need a Registered Agent?
If your business doesn’t have a physical location in the state where you registered, a registered agent is required to collect documents for you.
The state needs to know they can contact someone on your behalf within the state at all times, therefore P.O. Boxes are not acceptable registered agent addresses.
What Does a Registered Agent Do?
Beyond accepting tax and legal documents on your behalf, a registered agent is allowed to have a role in the business operations.
As they receive all service of process documents for legal actions, they’ll collect:
- Served court documents
- Secretary of State notifications
- Official State communications
- State tax notifications
- Annual report notices
All the other mail will not be received by your registered agent unless additional payments are involved.
When they receive legal documents, registered agents will scan, store, and send them via email with regular follow-ups. If a hardcopy needs a signature, they’ll forward information via mail. A registered agent provides a compliance calendar (online and offline) to provide reminders of important due dates for reports and tax returns.
What Are the Benefits of Having a Registered Agent?
As a business, you’ll often change your address. With a registered agent, the address will stay the same, meaning you don’t need to go through the paperwork every time and you won’t miss out on paying any fees late or have any legal trouble with misplaced documents.
A registered agent can also utilize their network to help you find state-specific accounts and legal professionals. Backing up documents is another important function of registered agents. You never know when a theft, loss, or natural disaster might occur.
What if I Don't Designate a Registered Agent?
You’ll usually be required to put forward the name of your registered agent when you register your business entity. And if you are switching registered agents, you’ll need to file paperwork updating this change.
There’s a temptation to stop using a registered agent once your LLC is established, but the consequences of not having one can be severe. That starts with the state you registered in seeing you as not in “good standing.” Potential penalties can include fines, lack of ability to enter legal contracts, license removal, and lack of access to court systems. And if you were to try and get reinstatement, the monetary costs can be extensive in addition to civil and criminal sanctions.
For example, it’s possible you might not be aware you’re being sued without seeing the service of process regarding a lawsuit. If you don’t know you’re being sued, you can’t respond let alone knowing when you’re supposed to be in court. A default judgment could then be issued against you against you.
A failure to respond to government correspondence can result in fines and/or other sanctions.
Registered Agent Requirements
The list of requirements are usually required of registered agents:
- They must be a resident of the state where you chose to register your LLC.
- A physical address to receive documents.
These are simple requirements, but there are more factors in choosing the right registered agent.
Generally, the registered agents can be an individual (at least 18 years old) or a company providing registered agent services. While an employee can act as the registered agent of a company in most states, it’s not possible for the entire corporation or LLC to do so as a whole.
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This post originally appeared on the American Express OPEN Forum, where Mashable regularly contributes articles about leveraging social media and technology in small business.
