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What is a Registered Agent, and Why Do You Need One?

lawtrades registered agent

Business corporation law doesn’t have to be daunting, even though it might sometimes seem that way. Depending on your business model, you might be operating in multiple states, each of which have their own requirements for business licensing, annual reports, tax liability, reporting standards, and disclosure. And to add to all of this, every state in which your business operates will require that you have a registered agent that is resident in that state.

If this seems a bit much and you are wondering whether it is really necessary, and whether you can be your own registered agent, we’ve got you covered. Here’s everything you need to know.

What is a registered agent?

A registered agent–sometimes referred to as a resident agent or a statutory agent – is a natural person that has been designated to receive service of process, correspondence from the secretary of state, and other official government notifications on behalf of a business entity. The exact scope of documents they will receive depends on your business and the state, of course, but can include franchise tax notices, annual report forms, and disclosure report requests.

In some states, the registered agent does not have to be a natural person, and can also be a business entity. This is the case in Delaware, for example. Your Delaware Registered Agent can be a company, in other words.

Most business entities (including LLCs and corporations) are required in terms of business corporation law to appoint and maintain a registered agent in the state in which it is incorporated. When forming an LLC or incorporating your business, you are required to designate a registered agent as a prerequisite for the approval of your Articles of Formation.

In addition to this, you are also required to designate a registered agent  in every state where your company is registered to do business. As a rule of thumb, you can ask yourself: do I need a business license in this state? If the answer is yes, you will need a registered agent.

The law requires that you provide a physical address of the registered agent (a street address, and not PO Box) to ensure that the agent is resident in the state.

What Does a Registered Agent Do?

Your registered agent fulfills a number of key functions for your company:

Maintaining a Legitimate Working Office

Your registered agent is required to maintain a legitimate working office on your behalf. This includes being available and present at the registered address during normal working hours.

This is to ensure that your business is available to receive government and tax notices, and service of process if you are being sued. If your company’s registered agent is not available to receive these, you incur liability that can range from fines to administrative dissolution or default judgment, depending on the situation.

Simply being available to receive documents during office hours might seem like a simple task. This is why many business owners start out by designating themselves as their registered agents. This could work, provided that your office is always open during business hours, of course. It could only work in the state where your business physically maintains an office, however. If you are doing business in another state, you will need an in-state address for your registered agent in that state.

In addition to this, appointing a registered agent specifically for the task, and at a different address than your business, offers additional benefits.

Information Protection

The address and contact details of your company’s registered agent is, by law, a matter of public record. This means it is available to everyone: marketers, spammers, mailing lists. This alone is a convincing reason to appoint a registered agent at a different address than your physical business operations. It also provides another form of privacy you will hopefully never need: privacy when litigation proceedings are ongoing. Nobody wants to receive summons in front of clients, after all.

Additionally, it is often possible to use the registered agent’s address as the listed address of officers/directors and members/managers of the entity. This provides privacy and an additional safeguard against unwanted prying eyes.

It does not mean that you can use your registered agent to avoid bad news and legitimate inquiries, of course. Another key function of the registered agent is to forward all legitimate communication to your company in a timely manner.

Compliance Management

Ensuring that your business complies with all corporate filings that are required of it in every state can be tricky. There are multiple bureaucratic bodies of government that requires corporate filings and reports. This is further complicated by the fact that these requirements differ between states.

A registered agent will be familiar with all the filings required in the particular state where they represent you. This offers a huge advantage: stress-free compliance while you work on the more important strategic aspects of your business.

Record Keeping

As your business grows and along with that its reporting duties, record keeping can become a cumbersome task. Especially across multiple states. Having a registered agent that can keep comprehensive records of your compliance, and have all necessary records available in the case of legal scrutiny or litigation, can avoid costs and make a lot of things easier: finding investors, expanding your business, and proving your compliance, to name only a few. The format of the registered agent services in this regard will depend: some registered agents mail all records directly to you, whilst others send electronic copies. Decide which you prefer so that you can be sure to appoint a registered agent that serves your needs.

Consequences of Not Having A Registered Agent

Not having a registered agent may lead to your company falling out of good standing with the state. Penalties can range from fines, license revocation, the inability to enter into legal contracts or to gain access to the court system in that state.

If you are do not receive service process, your company might face default judgment. In more extreme cases, a state can administratively dissolve your company, leaving you personally exposed to claims from creditors.

Suffice it to say: it pays to have a professional registered agent that can help you avoid all these unnecessary complications.

Appoint your Delaware Registered Agent

If your company is incorporated in, or conducts business in Delaware, LawTrades can serve as your registered agent! We’re a natural choice for businesses incorporated in DE because our startup attorneys can help take care of your legal needs on top of serving as your registered agent. Simply stop by our website and ask one of our project managers for more info.