Highlights
- Your registered agent is responsible for accepting legal documents that are served on your business.
- Your registered agent should be available during regular business hours to accept any notices on behalf of your business.
- In California, a business entity cannot act as its own agent for service of process unless it has been certified by the state to do so.
- If you do business in more than one state, you will need an agent in each state.
Why Do I Need A Registered Agent?
By Toni Y. Long
Once upon a time, not long ago, ACME LLC Co. Ltd. (not a real company) was sued and served with a lawsuit. ACME listed one of its employees as its registered agent (or agent for service of process), that section on the Statement of Information form you tend to ignore. This employee was unaware of the designation and accepted service of a summons and complaint. The complaint remained on the employee’s desk for weeks. He had no idea what it was and soon forgot about it.
A few months later, ACME received notice that a default judgment had been entered against them because they never responded to the lawsuit. According to this judgment, ACME now owed $100,000 for a bogus breach of contract claim. Had ACME responded in time (via their attorney), the matter could have been settled out of court for much less, dismissed entirely or ACME could have prevailed and been awarded their attorneys’ fees (if the contract provided for this). But none of this happened because ACME filed its Statement of Information (California’s annual or biennial report) and didn’t give two thoughts as to who the registered agent was. The moral of the story… don’t be like ACME!
In this article, we discuss why the choice of registered agent matters.
What Is A Registered Agent?
An agent for service of process or registered agent is a person or company in California designated to receive certain correspondence on behalf of your company and relay that information to the owner of the company in a timely manner. This includes legal documents (e.g., being served with a summons or subpoena), as well as government and tax correspondence.
Why Do I Need A Registered Agent?
When you form corporate entity, (a corporation, limited liability company, limited partnership, or general partnership), you will need to choose an agent for service of process. Under California Corporate Code section 1505, all business entities registered in California must designate a person or company that will accept service of process for the business. That is your company’s registered agent.
If someone sues your company (corporation, LLC, partnership), they need to know who to serve the lawsuit upon. When you are sued, the plaintiff has to notify you that a lawsuit has been filed. Delivery of the lawsuit is known as “service of process” and the date of service determines your deadline for filing a response.
As a business owner, you need to know that if your business is ever sued, you will actually receive notice of the lawsuit. If you do not receive notice of a lawsuit and respond in a timely manner, you could default on the lawsuit and lose automatically, like ACME.
Who Should Act As Your Registered Agent?
The registered agent has a very important job. The person or entity must be trustworthy, knowledgeable about the legal process, and responsible.
A registered agent is responsible for accepting legal documents that are served on your business. The address cannot be a PO Box, should not be a home address (it will be listed on the Secretary of State’s public website), and the agent must be available during regular business hours, Monday through Friday.
Some business owners will act as their own registered agent. However, under California law, a business entity cannot act as its own agent for service of process unless it has been certified by the state to do so.
If you serve as your own agent, you may have to deal with the embarrassment and disruption caused by being served court documents at your place of business, in front of your customers and employees, or you may miss a critical deadline because the documents were misplaced. With an attorney or registered company as your agent, you can avoid that.
What Do We Do As Your Registered Agent?
For a nominal annual fee, The Long Law Group acts as the registered agent for many of our business clients. As your registered agent, the firm’s name and address will appear on your business entity’s Secretary of State records.
Upon receipt of these documents, our duties include but are not limited to:
- Being available during regular business hours to accept any notices on behalf of your business.
- Accepting legal documents and official mail on behalf of your business.
- Notifying you when they receive official mail, notifications, or documents for your business.
- Scanning and forwarding documents to the appropriate person in your company in a timely manner.
- Informing you of general next steps as it relates to the document received.
Conclusion
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 when selecting your registered agent:
- The agent must be available during normal business hours. If you work from home or 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 company’s public records. If you have privacy concerns, you may prefer to appoint a third party as your 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. If you have any additional questions about this, please do not hesitate to contact us.
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We know this is a lot of new information to digest. If you have any questions relating to this topic or any other issues, please do not hesitate to contact either Toni Y. Long or Randy A. Lopez directly.
DISCLAIMER: The information contained above is solely provided for informational purposes and does not constitute legal advice. All readers should consult with legal counsel for additional and/or current information, and before acting on any of the information presented in this post.