Why do states require a registered agent?
Your registered agent is your official contact with the state. The state requires the designation of a registered agent so that it has an official contact on file for your business. (This requirement may sometimes be referred to as “statutory representation”.)
The state will send your company important compliance information and official correspondence through your registered agent. For most businesses, this correspondence is comprised of annual report and tax filing correspondence.
Your registered agent is also responsible for receiving service of process for your company. Service of process is legal paperwork that gives your company official notice that a lawsuit has been filed against it. Your registered agent may also receive other court documents such as wage garnishment orders or subpoenas.
Having a registered agent is an ongoing requirement
You’re required to designate an in-state registered agent when you form your company and in each additional state in which you do business. It is an ongoing requirement to maintain a registered agent in the state in which you formed and, in each state where your company is conducting business.
What happens if I don’t designate a registered agent?
Failing to have a registered agent contact in the state in which your business was formed and in states where your business has expanded can result in serious, adverse consequences. Your business can be administratively dissolved in the state of its formation and forfeit the authority to do business in other states.
Administrative dissolution occurs when the Secretary of State takes action that leads to the forfeiture of a business entity's rights, powers, and authority. Individuals representing an administratively dissolved business entity could be personally liable for any debts or obligations accrued during the dissolution period.
Continuing to do business as usual under this status means your business is not only subject to fines but, if it fails to file its annual report it can lose its good standing status. Reinstatement of what is known as “good standing” for businesses varies state-by-state and can be a tedious — and expensive — process.
Not having a registered agent can also mean that your company will be unable to defend itself in a lawsuit. This can happen if the person filing the lawsuit tries to serve process on your registered agent but is unable to do so. That person may then serve your company in another manner which may not allow a company to respond to the summons in time. This can result in a default judgment against your company.
Reasons for using a professional registered agent
If you have a physical address in the state in which you form your company, technically you could serve as your own registered agent.
However, just because you can serve as your own registered agent doesn’t mean that you should. Here are a couple of important reasons to consider.
- Time-sensitive materials require immediate attention. You’re busy running your business, and in almost every case that means you’re not always available during regular business hours to receive important communications or documents in an appropriate manner. These documents may require a response by a certain deadline or due date. A professional registered agent is available for the receipt of official documents and will forward them to you in a timely fashion so you don’t miss important annual report, tax, and litigation filing deadlines. A reliable professional agent helps you avoid the consequences of improper handling of critical paperwork.
- Protecting your business image. The address of a registered agent must be on file with the state. Acting as your own registered agent may mean keeping your personal address or the business address on file with the state. The address on file is where the state will send all correspondence routinely associated with the corporation or LLC. It is also where the process server will go to serve your business with court documents. This opens you up to interruptions to your busy day. If clients or customers are present, it can jeopardize the professional image you’ve worked so hard to project. For example, if you are served with notice of litigation, you can understand that a client or customer’s reaction will not be favorable.
Summary
The right registered agent is a partner in your success. A reliable professional registered agent such as CT Corporation gives you peace of mind that you won’t miss a critical filing and endanger your business’ good standing and its right to defend itself in court. Monitoring tools and services provide transparency as to exactly what’s going on with your business compliance so you’re always in control. With a professional registered agent, you can have the confidence of knowing that you’re aware of and on top of your compliance obligations. Learn more about CT professional registered agent services.
