What Is a Statutory Agent?

A statutory agent, more commonly known as a registered agent, is an individual or entity appointed by a Limited Liability Company, S Corporation, C Corporation, or other legal business entity to accept legal documents, government correspondence, and compliance paperwork on its behalf.

Other names for a statutory agent include agent for service of process and resident agent. The state of Ohio, however, clearly uses the term statutory agent and requires businesses to appoint and maintain a statutory agent throughout their operation. Learn more about appointing a statutory agent in Ohio.

Statutory agents are critical for keeping statutory (state-registered) business entities in compliance with a state’s laws. Perhaps they’re not as fragrant as a rose, nor would they make an appropriate Valentine’s Day gift. But regardless of whether you call them statutory agents, registered agents, or some other name, they are extremely important!

States require business entities to designate a statutory agent. This is done when completing their registration forms to conduct business in the state. They must maintain a statutory agent at all times to stay compliant with the state’s rules. If they change who is serving as their statutory agent (or if their agent moves to a different location), they must notify the state. If a business entity has physical operations in other states, it will typically need to appoint a statutory agent in each of those states.

Examples of documents a statutory agent may receive on behalf of a business:

• Notice of lawsuits
• Corporate filing notifications
• Tax notices
• Official federal and state correspondence
• Subpoenas for information
• Court summonses
• Wage garnishment notices

Qualifications and Requirements

Statutory agents must meet the state’s qualification requirements to be recognized as legitimate registered agents.

A statutory agent must have a physical address in the state where the business it serves is located. The statutory agent’s location is often referred to as a registered office, which must hold office hours from 8 a.m. to 5 p.m. from Monday through Friday. Most states allow individuals who are at least 18 years old and a resident of the state to serve as statutory agents. Also, some companies provide statutory agent services to businesses. Note that while LLCs and corporations may not act as their own statutory agents, many states allow an owner or employee of the company to serve in that capacity.

The exact requirements that a statutory agent must meet may vary from state to state.

While designating someone within the business entity as its statutory agent may seem the easiest thing to do, there can be downsides to that:

• Privacy concerns – The individual’s address becomes available to the public.
• Availability feasibility – Can that person maintain the required office hours every week of the year? What about going on vacation or sick days, etc.?

Because of those potential snafus, it may be more practical for business owners to find an experienced third-party statutory agent. That provides some assurance that all necessary protocols and processes are in place to meet the state’s qualifications and handle registered agent responsibilities effectively.

Businesses that are located in—or aspire to expand their companies into—multiple states can streamline their efforts to fulfill their statutory agent requirement by selecting a registered agent services provider, such as CorpNet, that is authorized in all 50 states.

Benefits of Having a Statutory Agent

• Peace of mind – Businesses that have a statutory agent in the states where they conduct business gain peace of mind that their legal and government documents will be received and responded to promptly. Statutory agents are always available during the required business hours to accept important documents on their client’s behalf.
• Privacy – Having a statutory agent helps to assure the individuals in the business have some privacy. The professional registered agent’s (not the business owner’s or employee’s) name, physical address, phone number, etc. go on public record with the state.
• Ease of expansion – A nationally recognized statutory agent streamlines extending operations into other states. There’s no need to find separate registered agent services providers in each individual state when one statutory agent can handle the responsibilities no matter where the business moves or expands.
• Good standing status – Designating a statutory agent is a must when forming an LLC or incorporating if a business intends to stay in good standing with the state. It’s a compliance requirement!

Risks of Not Having One

• Penalties and fines – If a business fails to designate a statutory agent or doesn’t pay its registered agent’s fees, it could face state penalties and fines.
• Failure to take care of essential notices – If a business designates its owner or an employee as its statutory agent, legal documents and compliance notices might get mixed in (and lost in the shuffle) with other mail.
• Loss of personal liability protection for business owners – If important documents don’t get handled in time, it could put the business owner’s personal assets at risk if anyone were to sue the company or the business is unable to pay its debts.
• Loss of business entity status – If a business is required to designate a statutory agent but hasn’t, it could face suspension or termination of the entity. This could render the company not legally authorized to conduct business in the state.

Costs for Registered Agent Services

The prices vary when using a professional statutory agent’s services. All-in-all, businesses don’t usually find the costs prohibitive. Generally, the rates range from as low as $50 to $200 per year.

As I discussed earlier, most states will let a business designate an employee or owner of the company as its statutory agent. However, the potential drawbacks may not make it worth the negligible cost savings over using a professional statutory agent services provider.

Choosing a Statutory Agent

What are some things to consider when selecting a registered agent? Here are a few important ones:

• Are they authorized to serve as a statutory agent in the state(s) you want to do business in today and in the future?
• Do they have proven experience complying with the rules and filing deadlines of different states?
• Will they assist you in obtaining and maintaining copies of your LLC’s or corporation’s compliance documents (such as Articles of Incorporation, Articles of Organization, Operating Agreement, Bylaws, annual reports, etc.)
• Do they have an online compliance portal via a secure server to give you 24/7 access to your account, compliance requirements, and documents?
• Are they accredited with the Better Business Bureau and have an A+ rating?

Be selective because a statutory agent’s integrity, responsiveness, and thoroughness can directly impact your business legally and financially!

What if you decide to change your statutory agent? Typically, states require business owners to complete and file a form with their Secretary of State’s office. Some states require businesses to amend their Articles of Organization (LLC) or Articles of Incorporation (corporation) when changing their statutory agent. Filing fees vary depending on the state.