Why You Need a Registered Agent if You’re Managing Companies Across Multiple States

Running a company is already serious work with plenty of inherent challenges. In fact, the Small Business Administration’s statistics show that 33% of businesses fail within the first two years. Further, only 50% make it past the fifth year. These odds are daunting enough with one firm, let alone multiple.

Whether you own a multi-state business or have multiple different companies under your belt, you need to ensure that you are on top of state regulations. After all, non-compliance is one of the most costly and reputation-damaging issues you can face. Recently, Washington saw the OCC fine American Express $15 million for third-party noncompliance. This is just the tip of the iceberg, too, as non-compliance racks up millions of dollars across industries every year.

One nationwide requirement that actually helps companies stay on top of their compliance is to have a registered agent. Make sure you know exactly why you need one and how to go about it with companies across different states.

What is a Registered Agent?

A registered agent is an appointed individual or entity that is meant to receive service of process and other legal documents on behalf of your company. This means any government communications, tax notices, summons, and lawsuits will be sent to the registered agent’s designated address. From there, they are in charge of receiving these documents and sending them over to the relevant parties.

As written in our article on HR management, these essential roles are central to the success of an organization. You will need to be mindful of the recruitment process as the ideal candidate will have to deal with state regulations and the swift transit of information.

Some states have other terms for registered agents, but they serve the same purpose. For reference, Ohio calls the role a Statutory Agent, and West Virginia calls this an Agent of Process. New York has a longer naming convention, with an Agent for Service of Process. It should also be noted that New York State’s government documents state that the Secretary of State is the default statutory agent for most business corporations and LLCs in the state. Make sure you check the details in your own state to be sure.

Why Do You Need a Registered Agent?

Aside from the fact that it’s mandatory for all businesses to have a registered agent, you will also want to have a great agent representing your business, as this helps you with business continuity. It ensures that you get the necessary notice in a timely fashion and are able to respond efficiently. Many compliance risks can be mitigated with a good registered agent in your corner.

If you use a commercial registered agent, you also have the added benefit of privacy and other services like mail forwarding, storage, legal services, and digitization. Because they have their own physical office, your own address doesn’t have to be put into the public record. This is useful for states that tend to be more dangerous to maintain business in. CNBC’s official ranking of worst states to work in includes Florida and more for their high rate of crime and low inclusivity.

When managing companies in multiple states, you may also be likely to rely on teleworking, which Techeminds has noted as one of the most cost-efficient ways to manage different locations. If you use this work setup, a registered agent ensures that you have a constant presence and means to receive urgent notice.

Do You Need a Registered Agent for Every State?

Every business entity requires its own registered agent for every state. Of course, this depends on whether you run multiple companies under one entity (like an LLC) and if they are separate brands or under the same umbrella.

It may seem contradictory to get one single agent as most states require an agent to reside in the same state where the business is operating. For starters, Namechk’s post on finding the best registered agent in Georgia states that the Secretary of State requires any registered agent to maintain a physical address in the state of Georgia. They also need to be available during regular business hours, officially mandated as 9:00 a.m. to 5:00 p.m. Since it’s impossible for one agent to be in multiple states at once, you may need to use a commercial registered agent service.

The way this works is that the commercial service legally operates in multiple states as well, allowing you to streamline all your registered agent responsibilities into one entity. They will likely assign a registered agent to represent you for every state you operate, but it’s more simplified than dealing with separate agents individually. It also helps with timely communication because you just have a single point of contact for all your companies or locations without sacrificing compliance requirements.

Finally, it helps to use a commercial service because you can count on Continuous Training, The Hallmark of efficient and successful team development. The responsibility of training for this role doesn’t fall on you and you can rely on professional skills that will service your company effectively.

Whether you do everything yourself or go for a commercial service, make sure you reach out to the Secretary of State wherever you have a business entity to ensure that you are compliant with all requirements to operate.