Every corporation or LLC must have an in-state registered agent in its formation state and in every state where it is registered to do business. Failing to appoint and maintain a registered agent can result in severe penalties for the LLC or corporation, and sometimes, its owners.
Resident agent, statutory agent, and agent for service of process
Most states use the term registered agent.
However, some states use the term resident agent, which serves to emphasize that the agent must be a resident of the state.
Statutory agent is another term that may be used, highlighting the fact that this agent is required by statute. Agent for service of process is another term that is used, highlighting that the main function is the receipt of service of process.
What is service of process?
Service of process is notice that there is a lawsuit filed against the LLC or corporation. Usually, this involves serving the defendant with a document called a summons. The summons is often accompanied by a complaint. In the case of an LLC or corporation, the summons may be served on the registered agent. By serving process on the registered agent, the court obtains jurisdiction over the corporation or LLC.
CT tip: Not having a registered agent available to accept service of process does not mean that the company cannot be sued. What it does mean is that the court can obtain jurisdiction in another manner.
However, that other manner may not be as reliable as serving the registered agent and may result in the company not getting timely notice of the lawsuit and not being able to mount a defense.
Other registered agent responsibilities
In addition to receiving service of process in connection with a lawsuit against the LLC or corporation directly, the registered agent receives other mission-critical documents, such as
- Notice of garnishment proceedings against an employee
- Litigation documents once the lawsuit is underway, including motions or requests to produce documents
- Legal notices
- Government correspondence, such as notices of annual report deadlines and tax notification
- Other compliance-related documents
Although these documents might be very different, they all have one common element. Each one contains vital, time-sensitive information.
What happens if you don’t have a registered agent?
When you form an LLC or incorporate, you must designate an initial registered agent. The state won't approve your Articles of Incorporation or Articles of Organization if you do not do so. The requirement applies when you register to do business in another state (foreign qualify) by obtaining a Certificate of Authority.
However, it is not enough to have a registered agent at the time of formation or registration. You must maintain a registered agent in your home state and every state where you are registered to do business. Many states require that the current registered agent be listed on the entity’s annual report. All states expect the entity to file a change of registered agent form whenever the agent changes.
If you don’t maintain a registered agent, your company is at risk in four ways.
- You may not receive critical information that you need. For example, if your company is sued and there is no registered agent to receive the summons, the plaintiff can serve your company in another way — one that may not result in your company responding to the summons in time. The plaintiff can then proceed with the lawsuit — without your company. A default judgment can be entered against your company even if the lawsuit was frivolous and you could easily have won the case. By the time the judgment is enforced against your company’s assets, it may be too late to undo the damage.
- Your company risks its good standing with the state. Losing good standing can have a serious impact on your business. It can prevent your company from bringing a lawsuit in the state, expanding into other states, or obtaining financing that you need to expand your business.
- Your business (and you personally) may be hit with fines and penalties for noncompliance. This can be a Catch-22 because, without a registered agent, you may be unaware of the situation which can cause the amounts and sanctions to continue to increase.
- The state can administratively dissolve your entity. If this happens, you forfeit the limited liability protection that your entity provided which leaves you exposed to business creditors. In most cases administrative dissolution can be remedied—but not in every case and not after too much time has elapsed.
Can I be my own registered agent?
The minimum qualification to serve as a registered agent is pretty simple: The registered agent must be an individual resident of the state or a domestic or qualified foreign business entity with an office in the state. For entities that are formed in the state of residence of one of the owners, managers, or officers, the temptation is to simply appoint one of these individuals as the registered agent. Another temptation is to have the entity’s attorney serve as the registered agent. Although expedient, these solutions usually are not the best option. Read more about why you need a registered agent and whether or not you can act as your own here.
What are the benefits of using a professional registered agent?
It is often a better strategy to choose a professional registered agent service. Why? Because it is essential that the registered agent always be ready, willing and able to perform two critical functions mentioned earlier:
- Receive important state and legal documents
- Relay these documents to the appropriate party quickly and effectively
With a professional registered agent, you can be confident that there will be someone at the registered address during all standard business hours and available to be served a legal notice. There is no worry that the registered agent will be on vacation or away from the office when service of process is attempted. Moreover, receiving legal notices in front of your customers (and if operating a home-based business, in front of your family, friends and neighbors) can be uncomfortable, to say the least.
Another key factor is that promptly relaying the information is essential, especially in the case of a lawsuit which usually requires a response within a matter of days to avoid a default judgment. Receiving legal documents is the professional Registered Agent’s entire job, not simply an interruption in an otherwise busy schedule.
Finally, dealing with paperwork and keeping up with industry requirements and regulations is time-consuming. A professional Registered Agent service is focused on this area of the law and, in the case of CT, has a team of attorneys and contacts with state legislatures that monitors and responds to changes in the law.