If you are looking for ways to expand your sources of income, you may be considering offering statutory agent services. What do statutory agents (also called “registered agents”) do and what does it take to become one? This article explains how these service providers help companies and who can be a legal agent.
A statutory agent is a person or entity that a limited liability company, S corporation, C corporation or other legal business entity appoints to receive legal notices (service of process), government correspondence and compliance documents business on his behalf.
Here are examples of the types of documents statutory agents accept for their clients:
- Notice of Prosecution;
- Company filing notifications (such as annual reports);
- tax notice;
- Official State and Federal correspondence;
- subpoenas; and,
- Wage garnishment notice.
All states require business entities (LLC, corporations, etc.) to appoint a registered agent in their jurisdiction. Entities that operate in more than one state must have a registered agent in each state where they do business. Fortunately, some statutory agents offer their services in all 50 states.
Businesses must maintain a registered agent at all times to ensure compliance with state laws. Registered agent service providers usually offer one-year or multi-year contracts. It is essential for business owners to renew their contract with their current provider or sign up with another registered agent when their existing contract expires.
Failure to maintain a registered agent can result in fines and penalties, including loss of the business’s status in good standing with the state. The loss of a good reputation can be detrimental to business owners, as they risk losing the personal liability protection offered by their registered business structure.
What does it take to be a corporate officer?
The rules may vary slightly from state to state. Therefore, it is important to review the specific requirements of the states where you wish to provide registered agent services.
In general, a legal representative must meet the following criteria to be recognized as a legitimate service provider:
- Have a physical address (a “head office”) in the state where they provide registered agent services to businesses (the address must be a street address, not a PO box or postal service);
- Maintain office hours of 8:00 a.m. to 5:00 p.m. Monday through Friday; and,
- Be an individual at least 18 years of age who is a resident of the state or an official business entity (e.g., LLC or corporation) that meets all qualification requirements and is certified with the state for serve as a registered agent.
An LLC or corporation cannot be its own statutory agent. However, he may engage a third party company (a commercial head office provider) to act as his registered agent. Alternatively, it can appoint its owner or another person in the business (eg, an employee, director, or officer) to serve as its legal agent. The in-house registered agent route has potential drawbacks, as individuals may find it difficult to be available from 8 a.m. to 5 p.m. every weekday. Additionally, there could be privacy concerns and other issues when business owners or employees act as a registered agent of their business.
Third Party Benefits
It is generally beneficial for a business to contract a third-party registered agent rather than appointing the owner, worker, or other business stakeholder to take responsibility.
Along with the trade compliance benefits of appointing a legal trade agent, entrepreneurs also enjoy some privacy protections. With a third-party registered agent, that agent’s address is published publicly rather than the business owner’s home address.
A registered commercial agent also offers the advantage of discretion. When a statutory agent receives sensitive notices for a business, it saves business owners the embarrassment of being handed notices of lawsuits or subpoenas to appear before clients.
A nationally recognized statutory agent facilitates the expansion of a business into other states. Rather than having to establish a relationship with a different registered agent in each state, the business only needs to coordinate with one point of contact no matter where it moves or expands.
Steps to become a registered agent
The process of expanding an existing accounting or tax consulting business to include statutory agent services depends on the state. Generally, the general steps for an individual or business to become an authorized registered agent are:
- Meet state criteria (e.g., physical address, availability during business hours, in-state residency or foreign qualification, etc.).
- If it is a sole proprietorship or partnership, form a legal business entity according to state rules. This also provides personal liability protection for the business owner.
- Follow the state’s process to become certified as a registered agent in its jurisdiction.
- Provide the name and address of your legal agent business to clients who sign up for your services and ask them to list this information on their training or other documents that require registered agent information.
Professional service providers like you can make exceptional statutory agents. However, branching out into registered agent services is not ideal for everyone.
Consider seeking information and advice from other professionals who offer registered agent services. They may have excellent insights into best practices to adopt and pitfalls to avoid. Speaking with a lawyer for advice, particularly if you are creating or changing your business structure, can also help you take the right steps and cover all the bases.