A statutory agent is a person who has been given the authority to represent an LLC in certain legal matters.
What does this mean for you? It means that if your business doesn't have one, it isn't legally allowed to conduct any operations.
This article will explain what a statutory agent does and why they are important for your business.
What Is a Statutory Agent?
A statutory agent, or "a registered agent" and "resident agent," as they are sometimes called in other states, is a person who has been given the power to act on behalf of a business entity.
A statutory agent can be an individual or a third party registered to do business in the business's home state. Statutory agents are given this power through a vote of the company or board.
Their authority is written into the articles of organization (or "certificate" as it's called in most states).
Business owners can find a statutory agent or a statutory agent service through an online search or word of mouth.
It is common practice that your state's Secretary of State website will have a list of statutory agents or agents' services.
A statutory agent is important for a business because it will receive process and legal notices on behalf of the company.
This means that if someone wants to bring a lawsuit filed against the company or serve the company with some other legal notice, the statutory agent will be responsible for receiving and handling that information.
By having a statutory agent on file, the state knows where to contact the company and get information, annual reports, government correspondence, or legal documents served.
This can be critical in cases where the company is not responding to mail or other communications from the state.
Some states also require that businesses have a statutory agent on file to operate, so it's important to check with your state's Secretary of State website to see the requirements for your business.
Who Can Be a Statutory Agent?
A statutory agent must be a resident of the United States. The statutory agent can be an individual or a company.
The statutory agent must have a physical address in the United States. The statutory agent cannot be a PO box.
The statutory agent must be available to accept the service of process and important documents on behalf of the LLC so that your company can stay in compliance with the home state.
Most states require that the statutory agent is at least 18 years old.
The statutory agent must consent to act as the statutory agent. The consent must be in writing and filed with the state's office.
Almost all states require that you already have an appointed statutory agent before you file the formation documents for your LLC.
This means that the person who will be the statutory agent must consent to act as an agent before you file your business formation documents.
Keep in mind that the statutory agent must be available during normal business hours. The statutory agent cannot be out of the country on business or vacation.
If the statutory agent is unavailable, you will need to appoint a new statutory agent.
For this reason, business entities must find a reputable statutory agent service.
Statutory agent services are typically very affordable and offer peace of mind to business entities.
What Are the Duties of a Statutory Agent?
The most important role of the statutory agent is to accept the legal process and important documents on behalf of the LLC.
This includes documents such as service of process, subpoenas, and tax notices. The statutory agent should also be listed on the LLC's articles of organization.
A statutory agent should also assist you with filing the company's annual report and other governmental filings.
The statutory agent should also maintain a registered office address for the company and receive mail on behalf of the LLC.
How to Choose the Right Statutory Agent?
Your statutory agent must be someone you can trust if you want to conduct business according to your state's laws.
To find a reputable statutory agent, you need to watch out for the following:
- The statutory agent should have a physical address in your state.
- The agent must be available during normal business hours to accept legal papers on behalf of the company.
- Make sure the agent is familiar with the laws governing LLCs in your state.
- A good statutory agent should have experience in the field and provide you with the guidance you need to stay in compliance.
- The agent should also have an online portal that will keep you updated about the process.
Sometimes, a statutory agent service will operate across multiple states, so it's easy to check whether they have a high rating and a proven history of serving clients.
Even though you are required to have a statutory agent, this does not mean that the person has become an employee of your company.
The role is similar to filing taxes and reporting with the government every year: someone must do it, but they aren't working for you daily.
The Risks of Not Appointing a Statutory Agent
Every limited liability company or corporation should appoint a statutory agent.
The risks of not appointing a statutory agent are high if you don't have one or forget to file for this position with your state government office within a few days after forming an LLC.
However, most states require that you have an appointed agent as soon as you file your legal document with the state, such as LLC Artiles of Organization.
Not having a statutory agent can lead to your LLC losing its good standing with the state, and the state may dissolve your LLC.
Additionally, suppose you haven't appointed an agent or failed to file for this position with the state office after organizing your company.
In that case, creditors will be able to sue you personally when your business fails because they won't be getting any returns from a defunct LLC.
An LLC owner may risk losing the liability protection LLC or corporation offer because the business owner won't receive legal documents or court summons.
Similar Article: Changing an LLC Registered Agent
Is a Registered Agent the Same as a Statutory Agent?
Yes. A registered agent is the same as a statutory agent. The company appoints a registered agent to receive legal notices and business filings on behalf of the company.
The law surrounding statutory agents may be different in other states. Still, generally, a statutory agent is appointed by the company to receive notice of legal actions taken against the company.
This could be an individual or a registered commercial service.
How Much Does an LLC Statutory Agent Cost?
The cost of a statutory agent will depend on how your business operates and what services you want from the agent.
Typically, statutory agents charge a flat annual fee for their services.
This fee can range from $30 to a few hundred dollars, depending on the size and complexity of your business.
Some agents also charge per transaction or hour, so be sure to ask about all potential fees before signing up with an agent.
Is Statutory Agent Public Record?
Yes, if your state requires it, a business's statutory agent can be a public record.
However, this isn't the case for every state.
If you are interested in knowing whether or not your LLC needs to have one--you should check with your Secretary of State office or an attorney who specializes in corporate formation and governance laws.
Most states, however, allow statutory agent details to be public records, which is why many business owners choose to hire a third-party agent because of privacy concerns.
Is a Statutory Agent the Same as the Owner?
No. A business designates a statutory agent or a statutory agent service to receive official correspondence and service of process on the business's behalf.
The statutory agent is not the company’s owner or an employee but rather a third party appointed to receive legal notifications.
However, many states allow members/owners to act as their LLC's statutory agent but keep in mind that this role can be time-consuming, and it can be difficult to keep track of all the official company business.
For these reasons, many businesses choose to have another entity appointed as a statutory agent service instead.
Can a Statutory Agent Open a Business Account?
It depends on the bank. Many banks will allow the statutory agent to open the account, but some will not.
The bank will likely want to see a copy of the LLC's certificate of organization or articles of incorporation and proof of the appointment of the statutory agent before allowing them to open an account.
Can My Statutory Agent Be My Business Address?
No. Your statutory agent must have a physical address in the state, and it cannot be your business location.
Your regular mail is sent to the address used when you first form an LLC.
Is a Virtual Address the Same as a Statutory Agent?
No. A virtual address is a service that provides you with a physical address to use on your business filings and correspondence.
In contrast, a statutory agent is an individual or company appointed by your LLC to receive legal notices (service of process) on behalf of the LLC.
A statutory agent must be located in the state where your LLC is formed, and they can't use a virtual address.
Does Ein Use a Statutory Agent Address?
No. Obtaining an EIN from the IRS implies providing the address where your business is physically located.
How Do I Change My Statutory Agent?
To change your statutory agent, you must submit a Change of Registered Agent form with the state where the company is registered, followed by canceling service with the old registered agent and a filing fee. The change to your statutory agent can be made anytime.
What Is a Statutory Agent...
If you want to start an LLC, you must have a statutory agent. Without one, your business may not remain in good standing with the state and could be subject to fines or penalties.
The investment for this service will pay off as it can help to ensure compliance with all of the tax laws so your small business does not land on any blacklists.
You'll also need an expert's knowledge when registering your company name because there are many do's and don'ts about how best to choose the business structure depending on where you're located.
Find someone reputable who understands what they're doing and who can provide legal advice; otherwise, costs might pile up down the line.