What Does a Resident Agent Do?

A resident agent is required for almost every corporation, LLC and limited partnership in the United States. So why do people have so many questions about what they are, and what they do?

What is a Resident Agent

A resident agent (also called a statutory agent or a registered agent) acts as a gatekeeper for your company. It is a person or a company that acts as your business’s legal face in each state where the business is registered. Any legal documents are served on the resident agent, rather than on your company directly.

In most states, tax notices and Annual Report forms are sent to the resident agent’s office, instead of the business directly.

Why Are Resident Agents Required?

Good question! We feel that the most logical answer has to do with creating a standard, orderly method to serve legal documents. Say you want to sue a large company. They have offices across the country. You need to find the “official” address for service, to comply with state law. If you don’t, your lawsuit may be dismissed on a technicality – i.e., that you didn’t properly serve the company with notice of your claim. Having a resident agent office – which must be a physical location, not a PO Box, is a matter of public record – allows you to make sure you comply with that legal process and gets your lawsuit started.

What Types of Businesses Need a Resident Agent?

All formal business structures need a resident agent. That includes C Corporations, S Corporations, Limited Liability Companies and Limited Partnerships.

Unincorporated business, like Schedule C or General Partnerships, don’t need to have a resident agent.

Do all States have the Same Resident Agent Requirement?

No, but most of them do. New York and West Virginia both allow you to appoint the state’s Attorney General’s office as your business’s agent instead.

Can a Company Act as its Own Resident Agent?

No. State laws explicitly say that a company cannot designate itself as the resident agent.

Can You Act as Your Company’s Resident Agent?

Yes, you can name yourself personally as resident agent for your business. However, most businesses opt to use a third party service provider for this service instead. Remember, the resident agent address must be a physical address, and it must be accessible to the public. So, if you work out of your home, you would have to put that address on the public record. And, if you live in an apartment building or gated community, where access is restricted, you could have a problem. If someone thinks you are trying to avoid or evade service, that person can apply to the court for relief from personal service. Many states specifically disallow you from acting as resident agent if your address isn’t accessible.

How Much Does it Cost?

Service provider rates vary from a few hundred dollars each year to more than $100 per month, so it pays to shop around. Look for an established provider that has been in business for some time. Remember, part of your corporation’s existence is tied to this position. Our strategic partner provides resident agent service for Smart Business Incorporation clients outside of Nevada for just $100 per year.

Also, it’s important to understand that this is a yearly service. You can expect to renew your resident agent service once a year or more often, depending on the contract you enter into.

What Happens if You Don’t Have a Resident Agent?

Your business must have a current resident agent on the public record at all times. If you forget to pay your bill, your resident agent has the right to resign. If that happens, you may or may not get a notice. But regardless of whether or not you get notified of an impending resignation, if you don’t do something about it within 30 days of the resignation, you could find that your business has been dissolved by the state, for failure to follow state laws. When that happens you can expect some fees and fines to bring your company back into good standing.

There are many variables when you’re structuring a business. That’s why it’s hard to go through a quick-service website. Unless you talk to someone who’s got some knowledge and experience on both the tax and the legal side, it’s hard to know what you don’t know. And that can leave you vulnerable.

Got questions? Contact us! We’re here for you.

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