All states now require a business owner or operator to name a registered agent. He or she serves as a third-party representative within the state and receives correspondence from the Secretary of state, service of process documents, and official notifications from the government, such as notice of lawsuits or tax forms, for the LLC or corporation.
Furthermore, the registered agent takes on other tasks for the business owner.
Why Is a Registered Agent Needed?
The state needs to know whom to contact regarding the business during normal business hours. As a result, an agent serving in this capacity cannot have a P.O. box. This is particularly important when a business does not have a physical location within the state. The agent accepts documents on behalf of the business owner.
The Benefits of Having a Registered Agent
In addition to accepting official documents, the agent handles business matters that could potentially be embarrassing. For example, no business owner wants to be handed a tax or legal document in front of a client. Furthermore, when the business location changes, there is no need to file additional paperwork with the change of address information. The registered agent remains the same, thus the paperwork isn’t necessary.
Furthermore, a business that does not adhere to this requirement may not remain in good standing with the state in which it has registered. As a result, the organization could find they are no longer able to enter into legal contracts within the state, fines might be imposed, and the organization’s access to the state court system could be revoked. To be reinstated, the business may incur additional expenses and be required to file more paperwork.
The Background of Registered Agents
The American legal system revolves around due process. Before any legal action can be taken in a court of law in this country, notification must be made to all parties. The registered agent functions to ensure this notification can be made properly and in a timely manner.
Can a Business Owner Serve as the Organization’s Registered Agent?
A business owner has the option of serving as his or her organization’s registered agent. However, there are drawbacks to taking on this role. The agent must be available at the business location during normal business hours every day and doing so can be challenging. When starting a new venture, the business owner must handle numerous duties at one time. Leaving to handle these tasks isn’t possible when the owner is serving as the registered agent as well.
Furthermore, the registered agent is responsible for all tax forms and tracking the annual report date of the state. If the business owner forgets one or more of these things, it can be costly. Finally, business owners who rely on a third-party registered agent find they have more freedom, one reason many entrepreneurs choose to start a new venture.
Business owners appreciate knowing their privacy will be maintained when a registered agent is used. When documents are prepared on behalf of the business, the address of the registered agent is provided rather than that of the business owner. This adds an extra layer of protection for the business owner who may not wish to have the public know his or her personal details.
Operate a Business in Any State
Business owners may choose to operate their business in another state for a variety of reasons. Employing a registered agent allows the owner to do so with ease. For example, a company operating a business in Virginia that wishes to expand into Maryland will need to file a foreign qualification to begin operations within Maryland.
Any business that maintains a physical presence within a state needs a registered agent as explained above. However, there are numerous other situations when a registered agent may need to be employed by a business even without a physical location in the state where the agent operates. This is referred to as foreign qualification.
Business owners and employees who often conduct in-person meetings with clients in another state will need to retain a registered agent in the state where the meetings take place. The same is true when a business maintains a physical location in one state but obtains a significant portion of its revenue from another state. A registered agent is needed in the state where the revenue is generated.
When a business is located in one state and employees work in another, a registered agent will be needed, especially when state payroll taxes are being paid in the second and subsequent locations. Finally, anytime an organization applies for a business license within a state, a registered agent is required in that state.
Learning the requirements for obtaining a foreign qualification in a new state can be time-consuming. When working with a registered agent, a business owner does not need to learn this information. The third-party agent is already familiar with the process, which ensures it can be completed in less time. Thanks to the speed at which this process is completed, the business can begin operating in the new state sooner and generating more revenue for the overall organization. This alone is enough to have many business owners and operators choosing to rely on a third-party for this task.
Laws change and a business that operates in multiple states may find it hard to track them and remain in compliance. A registered agent takes on this task for the business and ensures no problems arise. This takes the burden off of the business owner who may be operating in several states simultaneously.
No business owner wants to find an important document has been misplaced. Certain registered agents now scan every document coming into their possession as soon as it arrives to guarantee the information is not lost. This ensures the business owner has the paperwork on hand at all times, which may be of great importance in certain situations.
Registering a business and hiring an agent to operate on behalf of the company can be confusing. A corporate guide becomes of great assistance at this time, answering all questions a client may have. There are no answering services, phone systems that make the user go through a variety of prompts, or things of that nature. The client speaks to a human being to ensure the right information is provided.
Have all information available at your fingertips immediately. This includes annual reports, foreign qualification paperwork, document scans, and more. Furthermore, clients receive access to filing tips, resources for each state, and forms to be filed with the different states. There’s no need to request this information and have it delivered because it is all available through the internet in the client’s account.
No business owner wants to learn they have missed an important deadline simply because they were busy with other tasks. Unfortunately, this does happen at times. When a company employs a third-party registered agent, the agent becomes responsible for ensuring all deadlines are met. He or she alerts the business owner to important deadlines coming up and sends reminders to ensure these tasks are handled.
Appointing a Registered Agent
Wouldn’t it be more cost-effective to hire a person to serve as the registered agent for a business? Can’t he or she simply sit in the business every day and accept any paperwork that comes in? This is an option, but it is not a wise one to choose as numerous business owners have learned.
The money paid to have this person in the office every day adds up with time. In contrast, using a third-party registered agent not employed by the business saves money. Furthermore, the registered agent does much more than accept documents as described above.
Imagine the party serving as the registered agent misplaces a paper as a client walked in and needed immediate assistance. This could be very costly for the business if a court date or tax filing deadline is missed. This is never a concern when a professional registered agent service is used.
The employee taking on this role likely won’t be aware of legislative changes in other states. Again, this could lead to the owner being fined or losing his or her right to operate in another state. Paying a third-party to take on this task simply makes sense, as he or she ensures the business remains in compliance with all laws, even those just enacted.
For these and numerous other reasons, it’s best to make use of a service to take on this task. Multiple employees are available to track legislative action and ensure new laws are adhered to at all times. In addition, documents are scanned when they are received to ensure none are misplaced, and the agent won’t be dealing with clients walking into the office needing immediate attention. Choose a reputable service to task on this task and minimize the risk of problems arising in the future.