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How to Choose a Registered Agent for Your Corporation

written by: •edited by: Jean Scheid•updated: 6/25/2011

What is a registered agent and why do you need one? A registered agent is a person or entity that is assigned and agrees to have any and all legal notices sent to your corporation on your behalf. Jean Scheid looks at how to choose a registered agent for your corporation.

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    What is a Registered Agent?

    James Bond by BaLLYoOo 

    Unlike the agent James Bond, a registered agent for a corporation, limited liability company (LLC), or partnership is elected by the company's board of directors. The purpose of the registered agent is to offer a physical address (not a P.O. Box) and be available during normal working hours to receive legal notices on behalf of the corporation it serves. Registered agents often receive legal documents, litigation service of notices, tax filings, and other mailings from organizations who want to make sure the documents are indeed received by the corporation. The registered agent must sign for each document they receive on behalf of any corporation so there is a paper trail of acknowledge receipt.

    If you have a corporation, LLC or partnership registered with a corporation commission in any state, you must appoint a registered agent. In turn, you must report the name, organization, and physical address of your registered agent with the corporation commission. The name of the registered agent on file for your organization is then public information; available to anyone.

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    What's Best: Free Registered Agent or Registered Agent Service Firms?

    Obviously, if you can, it's easiest to have your board of directors appoint an officer, but not the president, of your corporation as your registered agent. Usually the corporation is not required to pay any fees to the person who is appointed the registered agent.

    There are some firms that offer registered agent services for a fee. But what do you get for that fee and is it worth another business expense? One registered agent firm we found on the Internet charges $160 a year to do the following:

    • Receive notices
    • Notify you or a designated person by telephone, email, and fax
    • Ensure your corporation complies with all state and federal requirements
    • Forward to your company the documents received at no cost.

    Keep in mind that registered agent firms are not attorneys, nor do they present themselves to be. They are also not accountants. If you have a company attorney or an accountant, which most corporations do, you should choose an officer of your corporation to be the registered agent. If any notices, legal or tax issues, are received by the registered agent, you can then discuss them with your accountant or attorney. So the question remains, why pay a registered agent service?

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    Federal and State Compliance

    Most registered agent service firms point out that for the annual fee they charge you, they will make sure your corporation is in legal compliance with both state and federal rules. What does that mean? It doesn't mean they will assist you in tax compliance or legal issues.

    What it does mean is that when you form your corporation you must registered and receive licenses from some agencies connected with state and federal governments. Items like business licenses, sales tax license, department of labor, and the federal government to obtain a Federal Identification Tax number or FEIN are just some examples.

    All of these processes can be done for free by you or a member of your company and the only fees you will pay will be filing fees. The best way to find out where and who you must file with in your state to be in compliance is to visit your city or town's small business development center. Here you will find business startup kits with information on where to file for what license and how much the filing will be. As far as obtaining a Federal Tax Identification number, you can do that for free online through the Internal Revenue Service.

    All other legal or tax situations should really be handled by a professional attorney or accountant. When you consider, how to choose a registered agent for your corporation, choose the free options and skip firms that charge annual fees for services you can complete on your own.