CALIFORNIA REGISTERED AGENT FOR SERVICE
During the formation process of setting up a limited liability entity, one quickly notices that one is required to appoint a registered agent and identify him or her to the State of California. This article will discuss who that is and why it is required in California.
Basic Role of the Registered Agent:
A registered agent for a business may play many fundamental roles in the business. But the most typical role and one required by California law is to be the person that the state and third parties can utilize when notice to the entity is required.
The essential role of a registered agent is to accept service of process on behalf of a business. Service of process refers to personally delivering summons and complaint in a civil suit upon an opposing party to compel them to appear in court to answer the claim. Such service is normally to be personal, but if the agent is unavailable for personal service, may be achieved by various forms of substitute service. Usually, once served, the business has thirty days to appear and contest the matter in pleadings or default can be taken.
Thus, the agent is the person who is served with the papers and once served, legally the business is served. Because a business is a separate legal entity, a registered agent serves as a live person who can make sure important individuals within the business get notice of important legal documents. State law requires a registered agent to be listed in the business’ Articles of Incorporation.
A registered agent may accept service of process, communications from the Secretary of State, other documents from government entities, taxing authorities and other important entities. Because the registered agent receives such important documents, the business protects itself by making sure that it does not miss important deadlines. It is clearly vital for the business to select an agent who is dependable and will contact the company upon receipt of those documents since even if the company knows nothing because the agent failed to notify it, the company is still deemed legally served.
A registered agent provides a live person who can accept important documents that pertain to the business. It is particularly important to select a registered agent when the business does not have a physical office in the state, not unusual in today’s world of remote offices. Post office boxes are not sufficient for registered agent purposes.
Most states permit the business owner to also be the registered agent for the business. There are disadvantages to this approach. Business owners often have many responsibilities in the company, so they may not remember a date on a piece of paper they received. Additionally, a business owner may not be physically present at the site where the legal documents are served, so this may cause unnecessary delays. Many business owners also do not want to have documents publicly served on them where employees or customers may observe the exchange.
At the same time, being your own agent does save the cost that is possible if you ask a third party to act as the registered agent and if the business is in several jurisdictions, you may need one in each jurisdiction, depending on local law.
By having a registered agent, the business can protect its interests by ensuring that someone is always available to claim or accept such documents. Additionally, the business owner can prevent his or her personal information from appearing on a public site like the Secretary of State database.
If a Registered Agent Is Not Designated:
A business that fails or refuses to select a registered agent subjects itself to potential liability both in terms of violation of state law and possibly facing civil default without even knowing an action has been filed against it. Additionally, businesses that fail to designate a registered agent may lose their good standing status from their Secretary of State office. Businesses may face repercussions such as losing their business license, having fees imposed against them, being unable to enter into valid business contracts or being unable to seek recourse in the court system. These drawbacks are in addition to not having a person available who can accept service or losing days when such filings are made to a post office box that no one is checking.
Professional Registered Agents
Many businesses retain a professional registered agent to fill this role. There may be many factors that a business owner considers in selecting a registered agent. For example, the business owner may want the registered agent to have a working office where he or she could accept service during regular working hours. Additionally, business owners may want their registered agent to be able to forward mail in a safe and efficient manner. Even if the registered agent can accept mail and legal service, he or she will still need to notify the business owner of this information.
Professional registered agents may be able to assist with compliance matters. The registered agent may receive important documents from a variety of state entities and may assist with the application and renewal process so that the business owner can remain compliant without having to take away from the business to complete this tedious work.
Professional registered agents often use detailed organizational systems to keep track of important documents that they receive on behalf of the business. Registered agents may be responsible for retaining important documents like bylaws, an operating agreement and articles of incorporation and then uploading them to a cloud system.
Selection of a registered agent is a necessary and appropriate act of any new entity and must be altered officially if the agent dies or goes out of business. It should be considered a standard legal necessity as common as keeping corporate minutes and paying taxes.