Before you form a corporation or limited liability company, you’ll need to choose an agent for service of process.
The term sounds like complicated legal jargon, but the concept is really quite simple. An agent for service of process is a person who receives lawsuits and other documents on behalf of your business. Depending on the state where you live, the agent may also be referred to as a registered agent or statutory agent.
What Does “Service of Process” Mean?
If someone sues your business, he or she must notify the business that a lawsuit has been filed. Every state has laws that describe how that notice must occur. For example, in some states, a copy of the lawsuit must be personally delivered by process servers, while in other states it must be mailed by the court clerk. The person who delivers the lawsuit makes a record of the date of delivery, or “service,” and this determines your deadline for filing a response.
Delivery of the lawsuit is known as service of process. “Service of process” can also refer to delivery of other legal documents, such as subpoenas requiring you to testify in court.
Why Do I Need an Agent for Service of Process?
If someone sues your corporation or LLC, they need to know who to serve the lawsuit, or “process” upon. And as a business owner, you need to know that if your business is ever sued, you will actually receive notice of the lawsuit. You wouldn’t, for example, want a lawsuit delivered to a part-time teenage employee who’s about to quit.
For this reason, every state’s laws require each business entity to designate a person or company that will accept service of process for the business in that state.
You are required by law to have an agent for service of process in the state where your business was formed and in each additional state where your company is registered to do business.
What Does a Registered Agent for Service of Process Do?
The registered agent is responsible for accepting legal documents that are served on your business. The agent must then forward the documents to the appropriate person in your company.
The agent’s name and address will appear on your business entity’s public records. As a result, the agent may also receive notifications from the secretary of state and taxing authorities. The agent must also forward these notifications to you.
If the agent’s address changes, you must make sure the agent’s address information is updated with the state. Your business may be subject to penalties if it fails to maintain a registered agent.
Who Can Provide Registered Agent Services?
A registered agent must have a street address in the state where he or she is acting as agent – not just a P.O. box. Some states call this the “registered office.” The agent must be available at that address during normal business hours.
Most states allow anyone aged 18 or over to act as agent. You can choose an owner or employee of your business as your agent. You can also name an outside person such as a lawyer, or a business entity that provides registered agent services.
Who Should I Choose as My Registered Agent?
The registered agent has an important job, so the person or entity you select should be responsible and trustworthy. Although you can save money by acting as your own agent, there are instances where you might prefer to hire someone else to do the job. Here are some things to consider:
- The agent must be available during normal business hours. If you are not usually in your office during the day, you should choose someone else as agent.
- If you or one of your employees act as your agent, you may suffer the embarrassment of having a process server deliver court papers in front of your customers and employees.
- The registered agent’s name and address appear in your corporation or LLC’s public records. If you have privacy concerns, you may prefer to appoint someone else as agent.
- If you do business in more than one state, you will need an agent in each state. For consistency, you may find it easier to hire a registered agent company to provide this service in all states.
A registered agent is a necessary part of any business entity’s operating structure. By choosing a reliable agent, you ensure that you are promptly informed about legal actions and official correspondence so you can take the proper steps to respond.