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The Importance of Designating a Third Party Registered Agent

So you’ve formed your corporation or LLC, you’ve got your tax ID, bank account, and business is humming along. Things are going well and so you fill out your first required Statement of Information and write your own name and address in the area for designating the company’s registered agent for service of process – you’re doing everything else, so this should be easy, right? As you likely read in the instructions for the forms, a registered agent is the person designated to receive service of process when a business entity is served with legal papers such as a summons or subpoena. Although the appeal of performing that role for your business may seem like an attractive option, there are several reasons why you should designate a professional to handle those responsibilities. Your business needs to run as smoothly and efficiently as possible and receiving all communications and keeping your corporation or LLC in good standing is crucial.

A physical address in the state of incorporation is required by the California Secretary of State and in most other jurisdictions in the United States. A post office box does not typically meet the requirement, especially when designating an agent for service of process. By designating a professional, this ensures you will have a permanent physical address where critical legal documents can be delivered. If your company conducts business in other states, it will be necessary to appoint a professional in each state as you cannot physically be at each location at all times. Also, it’s important to consider the following factors when designating a registered agent:

1. Business Hours:
Will you be available at your designated address during regular business hours to receive documents? Many companies fall outside of the regular 9-5 business model and do not adhere to those hours or are not tied to an office location. For example, if you are a landscaper, private investigator, or real estate agent, your work may require you to spend a lot of time outside of a designated location. Or are you an individual in an office single handedly operating your company? What happens if you step out for lunch or an appointment and you can’t be served with legal documents? In order to receive important legal and state documents, someone must be available during regular business hours to accept receipt.

2. Change of Address:
It is important that a registered agent’s address be current with the Secretary of State. You can save time and money by not having to file updates with the Secretary of State when you designate a professional registered agent. If you were to move and miss receiving a notice regarding an important filing date or fail to receive legal documents that require response, moving will not be an excuse to not have responded to those missed documents. There may also be penalties and fines associated with being non-responsive, be it with the Secretary of State, a court or the IRS.

3. Privacy:
A registered agent’s address is publicly available for any and all to access. If you want to keep your personal and/or company information private, you should designate a professional registered agent. Once listed as a registered agent, your information becomes accessible to marketing companies, mailing lists and to anyone else who wants to know where you live/work. Save yourself the hassle of unsolicited mail and protect your privacy by designating a professional registered agent. Another benefit of designating a professional registered agent is to avoid service of tax and legal documents in front of clients and/or friends. Having a designated professional agent adds security to you, your business and your reputation.

4. Save Time & Money:
If you designate your business with a litigation attorney as your registered agent you will ensure that the attorney receives important documents directly, saving time from you (or another professional) receiving the documents, then passing them to you, then passing them to the attorney. When the attorney receives the document(s) directly, your attorney should have plenty of time to respond to any court actions or notices to ensure your ability to also respond in a timely way to the documents received.

Registering yourself as the agent for your business may perhaps seem like a good idea; however, designating a professional as registered agent protects you from the above pitfalls. It will also ensure your company is in compliance, good standing, and that your documents will be organized in one place when needed.

Carmel & Naccasha LLP attorneys do not charge our existing clients an annual fee to act as your registered agent for service of process.

Dallas K. Mosier is an associate attorney at Carmel & Naccasha LLP and can be reached at (805) 546-8785 or by the email address listed on his biography page here. Dallas works closely with businesses and business owners in the areas of contracts, corporate law, business planning & transactions, entity formations, and exit planning.