If you are starting a business, selecting the correct business structure is one of the first decisions that you must make. In general, you are free to operate your business using any type of entity that you wish, but be aware that the choice you make triggers a number of compliance responsibilities.
There are six major business structures:
- sole proprietorship
- general partnership
- limited partnership (LP)
- limited liability partnership (LLP)
- limited liability company (LLC)
- corporation (Inc.)
Registered agent requirements for sole proprietorships and general partnerships
Sole proprietorships and general partnerships are “common law” entities, meaning no state paperwork is required to operate. If you own a business alone and don't form an entity, you're a sole proprietor. If you do business with others without forming an entity, you're a partnership
Sole proprietorships and general partnerships are not required to have a registered agent.
Registered agent requirements for LLCs, corporations, LPs, and LLPs
Limited liability companies (LLCs), corporations (Inc.), limited partnerships (LPs), and limited liability partnerships (LLPs), are “statutory entities”. A statutory entity’s existence and characteristics are governed by state laws.
Operating as a statutory entity provides some level of asset protection for the owners. (The degree to which an owner’s assets are protected depends upon the type of entity and the specific state’s laws.)
However, in order to obtain this state-sanctioned shield, you must comply with the state’s registration laws.
All states require statutory entities to:
- File documentation with the state disclosing information about the business
- Appoint and maintain a registered agent within the state
The type of information that must be disclosed in the initial application for formation or foreign qualification with the state (such as Articles of Incorporation, Articles of Organization, or Certificate of Authority), as well as in the ongoing annual report filings, varies depending upon the state and type of entity.
Registered agent requirements across states
States are more uniform when it comes to registered agent requirements. Some states refer to a registered agent as an “agent for service of process”, resident agent” or “statutory agent”. Regardless of the name, the requirements and functions are the same.
All states require that any formal entity (corporation, LLC, LLP, or LP) designate a registered agent that -
- is an individual resident of the state or is a domestic or qualified foreign business entity
- has a physical address — not a post office box — within the state. The registered agent’s location is also known in some states as the registered office.
Most states also require that the registered agent be available during normal working hours throughout the year in order to receive service of process and other official court and government documents.
The requirements of state residence, a physical address, and availability must be considered when the corporation, LLC, LP, or LLP selects its registered agent. The temptation — particularly if the state of incorporation or formation is the primary business location — is to simply have the company manager or officer serve as the registered agent.
While this is possible, it is not always advisable. The documents delivered to a registered agent are often highly important and time-sensitive; they generally require action within a short period of time. If that company's designated officer is extremely busy, the mission-critical document could get overlooked.
Another scenario is that the designated officer is away on business or vacation. The server (the person who delivers that summons that commences a lawsuit) may just leave without serving the document, and the plaintiff (the party filing the lawsuit) may be able to serve in a manner less likely to result in the statutory entity receiving notice. This could have the unfortunate result of a default judgment against the company.
See Who can be a registered agent for more information on individuals or business entities serving as registered agents.
