Being Your Own Resident Agent for Your Business Entity

I see many of my clients acting as the “Resident Agent" (RA) for their own businesses. Yes, it is cheaper as most RA services cost $10 per month or so. But I don’t believe most people know what responsibilities they are actually getting themselves into.

Did you know as a resident agent, you have to be onsite at the resident agent address from 8am- 5pm every work day or be subject to penalties?

Resident agents are the official point of contact for businesses and receive due process paperwork, such as lawsuits (service of process) and important state notices, which they are legally required to forward to the business entity to ensure proper notification and compliance. This includes legal documents, tax notices, and annual report reminders, ensuring the business stays informed and avoids penalties like default judgments or suspension.

If a resident agent isn't available to accept due process paperwork, the business risks missing critical legal notices, leading to default judgements in lawsuits they never knew about, potential business suspension, or even dissolution, as plaintiffs can seek alternate service methods, bypassing the entity entirely and making defense impossible. States provide procedures, like “substitute service” or court motions, for plaintiffs to complete service when the agent is unreachable, meaning the business loses its chance to respond.

What They Receive:

Service of process: Summons, complaints, subpoenas for lawsuits.
State Correspondence: Annual report forms, renewal notices, tax notices, and other official government communications.

Why It's Important:

Legal Compliance: States require them to ensure businesses can be officially contacted.
Due Process: Ensures businesses aren't blindsided by legal action, upholding fairness.
Timely Action: Enables the business to respond to legal or regulatory issues promptly.

Key Requirements for Agents

Must have a physical street address (not a P.O. Box) in the state.
Must be available during normal business hours.

What to Do

Ensure Your Agent is Available: Confirm your registered agent (whether a professional service or an individual) is always accessible during business hours.
Update Immediately: If your agent changes or becomes unavailable, update your business records with the state promptly.
Hire a Professional: Professional registered agent services ensure compliance and continuity, preventing these serious issues.

Consequences of Unavailability

Missed Lawsuits: You won't know you're being sued, losing the opportunity to defend your business.
Default Judgments: Courts can rule against your company by default, potentially awarding substantial damages.
Loss of Defense: You forfeit the right to present your side, even in frivolous cases.
Administrative Dissolution: The state might suspend or dissolve your business for failing to maintain a valid agent.

Give thought to becoming your own Resident Agent and determine the risk it places upon you and your business. Is it worth the cost of hiring a professional RA service?

This is one of your decisions as CEO of your business.

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