Do I need a Registered Agent for My Syndication Business Entity?
This is a common question, and fortunately, the answer is straightforward: Yes! Every state in the U.S. requires a registered agent for your entity—no exceptions. Failing to meet this requirement can lead to severe consequences, including losing your ability to conduct business in the state and forfeiting the asset protection your business entity provides.
What Are the Requirements for a Registered Agent?
There are two primary requirements for a registered agent:
The agent must be located in the state where the entity is formed. If the entity is registered to do business in another state, a registered agent must also be located in that state.
The address provided must be a physical address with a real person available—no P.O. boxes or mailbox services.
What Does a Registered Agent Do?
The sole function of a registered agent is to receive “service of process” if your entity is sued. This means the registered agent must be available to accept legal documents on your behalf, ensuring that your business has been properly notified of any legal proceedings.
Additionally, the registered agent’s address is typically where the state sends tax notifications, annual renewal reminders, and violation notices. Keep in mind that this address is not the official address of your business unless you arrange for mail forwarding services, which often comes with additional fees.
Can a Friend or Family Member Act as My Registered Agent?
Legally, yes, a friend or family member residing in the state of formation can serve as your registered agent. However, it’s not the best practice. If your registered agent—whether a friend, family member, or someone else—fails to fulfill their responsibilities, the consequences for your business could be significant.
For instance, if your company is sued and your registered agent neglects to inform you of a court summons, you might miss your opportunity to respond. This could result in a default judgment against your business, with no recourse to blame the registered agent.
Can I Be My Own Registered Agent?
If your business entity is located in the same state where you live, you can serve as your own registered agent. However, this decision warrants careful consideration. Let’s examine the pros and cons.
Pros:
You’ll save the $100–$125 annual fee typically charged by professional registered agent services.
Cons:
Public Disclosure: The registered agent’s name and address are public records. Are you comfortable with your home address being accessible to anyone?
Service of Process: Imagine being interrupted at dinner or having someone wait outside your house to serve legal papers. Process servers are focused on completing their task, no matter how inconvenient the timing.
Availability Requirements: The law requires the registered agent to be available during standard business hours. If you’re frequently away or on vacation, you risk missing important legal documents.
The Best Approach
In most cases, you’ll need to hire a professional registered agent, especially for out-of-state entities. Even if you have the option to act as your own agent, it’s often better to avoid the potential pitfalls and rely on a professional service to ensure you receive all critical documents on time.
While saving a small annual fee might seem tempting, the risks associated with acting as your own registered agent or delegating the responsibility to a friend or family member simply aren’t worth it.
