In order to start a business, you must register your company within each state where you plan to offer services. Before granting a license, the secretary of state requires that your business have a resident agent to accept mailings and legal notices on behalf of the company. Also called a registered agent, this position can be filled by an employee within the organization or by an independent entity. Every secretary of state has regulations regarding resident agents. Ignoring them can lead to serious consequences for your business.
What They Do
When mail is delivered to you at your home, there is a general assumption that you will receive it. That same assumption does not extend to businesses. Employee turnover and numerous locations can contribute to inconsistencies in mail receipt. Resident agent services prevent this problem, by representing a company for the purpose of receiving lawsuit notices and important government notifications. Once mail is received, the agent is responsible for notifying the owner or a designated employee. All business entities must have a resident agent and, as a matter of public record, you must include your agent's name and address with your state registration information.
Requirements to be listed as a resident agent vary. In some states, the agent must be professionally associated with your company. South Carolina requires you to choose an organizer of the business, a member of the business LLC, or an employee of the company. If the registered agent is a person outside of the organization, he must be an attorney or an accountant. One general requirement nationwide is that the agent maintain a physical address within the state where business is conducted. It's not enough to have a post office box. There must be a physical location where mail can be delivered and accepted by a representative.
Professional Agent Companies
You may choose to contract a professional resident agent to act on your organization's behalf. These companies accept a flat monthly or yearly fee to provide all agent duties for the business. Though agencies may have multiple locations nationwide, they must maintain a physical address within each state where they provide services. In addition to accepting mail and legal notices on your behalf, some resident agents offer notification services to remind you of state licensing and certification dates. Most resident agents advertise and are easily found through an internet search. Your company is placing a lot of responsibility into your agent's hands, so be careful when making a selection. Look for longevity in the industry. Also ask for references and visit the agent's physical location to make sure it is properly staffed.
The consequences of not having a resident agent can be serious. You are not able to register your company and start legally conducting business without one. Once you have started your company, failing to maintain an agent within the state may result in the revocation of your business license. In some jurisdictions, the secretary of state is required to send all official notifications to the resident agent, instead of your business address. This is done to ensure receipt. If delivery cannot be achieved, the secretary may revoke your business license. Courts operate in the same manner when serving legal papers on businesses. Once they send notification to your resident agent, your company is considered served. Failing to maintain an agent can result in legal actions proceeding against your business without your knowledge.
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