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Wednesday, June 24, 2015

Does My Business Need a Registered Agent?

Does My Business Need a Registered Agent?

A registered agent is someone that you as a business owner designate to accept legal papers if your company is sued or named in any type of administrative agency case. If your business is legally established within a state in which you don’t maintain a physical presence, you are often required to appoint a registered agent that is physically located within its borders

A registered agent can be an individual or a corporation. Many small businesses simply list one of the owners as the registered agent, if any of them reside in the state in which the business is formed. In situations where none of the owners are residents of the state in which the business is formed, there are a number of options. Some attorneys are willing to serve as the registered agent for their clients’ businesses and may do so for no additional fee, provided that the attorney herself is a resident. There are also companies that will serve as the registered agent for an annual fee. Generally, you must name your company’s registered agent when you file your articles of formation with the appropriate government agency (in most states, the Department of State).

There are generally two situations where you are required to maintain a registered agent:

  1. When your business is formed in a state in which you don’t maintain a physical presence, such as your company headquarters.
  2. When your business conducts intrastate commerce within a particular state. For example, if you register your business in Delaware, but you operate a few stores in Virginia. This is an intrastate transaction because your products are being sold directly to consumers within Virginia. Note that selling products through an online store and shipping the products to Virginia would not be considered intrastate commerce. Nor would sales through distributors of your products.

The registered agent must be an individual that lives in that state, or a business that has offices in that state. So, if you live in Delaware you could serve as agent for your company in Delaware. However, if your company also does intrastate business in Virginia, you will have to appoint someone else who lives in Virginia, or a company with offices in Virginia, to serve as your registered agent.

Even if you do reside in the state where you need to designate a registered agent, there are advantages in designating a third party, such as maintaining privacy or preventing a litigant from serving you with a lawsuit in front of your customers and employees. A business law attorney can help you sort through the key considerations and take steps to make sure you comply with all local statutes.


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