Do You Need a Registered Agent?

This article is a reprint of Wise Bread's contribution to OPEN Forum from American Express -- where small business owners can get advice from experts and share tips with each other.

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Picture this… a sunny summer day and you’re hosting a barbeque for the neighbors in your backyard. You’ve closed your home office for the day and are concentrating on the festivities. Up walks a person who hands you a summons for a lawsuit against your business… in front of your family and neighbors. You’ve been served in a very public way. But you could have avoided the embarrassment by using a registered agent for your corporation or limited liability company.

What’s a Registered Agent?

As the name implies, a registered agent is someone (a person or entity) who represents your company for a very specific legal purpose: to accept service of process in legal actions. The registered agent can also alert the business to any state filings that may be required and could well be time-sensitive. In many cases, owners choose to act as the registered agent for their companies, something that is perfectly legal, but owners can name a third party for this purpose.

Key facts about registered agents:

• Every state requires certain types of companies doing business within its borders – corporations, limited liability companies, limited partnerships, not-for-profit corporations, and other entities required to register in state – to appoint and maintain a registered agent, as well as a legal address (“registered address”) to accept service of process on behalf of your company. If your company is a sole proprietorship or general partnership, you probably don’t need a registered agent.
• If you operate in more than one state, you’ll need a registered agent in each state.
• The registered agent information is in the public record for anyone to see.
• Appointing a registered agent can be done when the company is first set up, or at anytime thereafter.
• The cost for having a registered agent is usually about $100 to $150 each year.

Why Use a Registered Agent?

Besides the embarrassment of being served in front of family, friends, customers, vendors, or prospects, there are other compelling situations in which it’s good to have an agent working on your behalf.

• You formed your company in another state. Some start-ups are attracted by ads suggesting that they incorporate in Delaware or Nevada even though the company will operate in another state. A registered agent in the state of operation makes sure that you don’t miss important legal and state documents.
• The company uses a P.O. Box or doesn’t have a permanent worksite. A P.O. Box cannot be a registered address and your post office personnel can’t serve as your registered agent; you need to name someone else. If you relocate frequently, you could tell your state each time you move, but using a registered agent avoids this hassle.
• You want to cover yourself. If you want to make sure that you don’t overlook anything that could get your company into trouble, appoint a registered agent. For example, this can be helpful if you travel a lot and aren’t around when the process server shows up. Process may be completed by leaving the summons at your office, but the clock on responding in the legal action starts to run before you return to see the summons.

Bottom Line

Discuss the advisability of appointing a registered agent with your legal advisor. He or she may be able to suggest an appropriate agent for you. There are also numerous sites to help you find a registered agent, including BizFilings, InCorp Services, Inc. (ICI), LegalZoom.com, and National Registered Agent, Inc. (NRAI).