A registered agent is the individual or business entity that receives legal documents from the state, and then forwards them to your business address. But why is this a requirement, and who should you designate as your registered agent in California?
In this guide, we will break down all the details you need to know about California registered agents.
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What is a California Registered Agent?
One of the most common questions we receive from entrepreneurs in California is why a registered agent is required to form an LLC or corporation. While it might seem like an unnecessary middle-man type of role, the registered agent fills a vital role.
The registered agent’s job is to provide a reliable way for the state to contact an official representative of your business at any time, which is especially important if your business is ever sued. If you didn’t have a registered agent, a lawsuit could progress through the courts without you even knowing about it, which is obviously far from ideal.While California does not provide a recommended list of registered agent services, we reviewed the top options and compiled a list of the best California registered agent services based on price and overall value.
Who Can Be a California Registered Agent?
The California Secretary of State dictates that in order to act as an LLC or corporation’s registered agent, you must be either an individual resident of the state who has a physical address (P.O. boxes are unacceptable) or a corporation that is certified with the state through Form 1505 to serve as a registered agent. In California, you may not serve as your own registered agent.
Aside from the legal requirements, an important aspect to discuss is who should be your registered agent. You have the right to declare yourself as your own registered agent, which has its pros and cons.
On the positive side, you can save some money by not paying anyone to serve as your agent, but you’ll also likely need to make your home address a matter of public record, which is not ideal. Additionally, you’ll need to be physically present at your business during all standard operating hours (9-5, M-F).
Some entrepreneurs like to have a friend or family member serve as their registered agent, but if that person doesn’t have experience in this position, they might not know what is expected of them. In addition, designating your lawyer or accountant as a registered agent can work, but these options are usually quite expensive.
Our preference is to hire a professional registered agent service, which provides a combination of convenience, affordability, and peace of mind that is unrivaled by any of these other options.
How Do California Residents Get Served?
The most important part of a registered agent’s role is being served a summons.
For those wishing to take a case to court in the state of California, the first step is a drafting of a complaint. The complaint states the the cause of the claim and a demand for compensation. Complaint forms are county-specific; normally, a copy of the designated complaint form (sometimes called “Judicial Council Forms”) can be found on the California Courts website and submitted to the appropriate clerk for filing.
If these steps are taken correctly, the California clerk will give the plaintiff specific instructions on how to serve the summons to the defendant’s registered agent. In many cases, the local sheriff’s office can be hired to serve the summons on behalf of the plaintiff. After completion, it must be filed with the clerk of the court, who will give specific information on how to serve the defendant’s registered agent.
How to Designate a California Registered Agent
The answer to this question depends on what type of business you’re starting, but with either a corporation or an LLC, you’ll need to designate your registered agent when you form your company.
Depending on whether you are establishing an LLC or a corporation, you’ll need to designate your registered agent in field #3 of either the Articles of Incorporation form (used for corporations) or the Articles of Organization form (used for LLCs). In both cases, the registered agent’s name and street address is required to complete the document.
How Can I Change My California Registered Agent?
If you would like to change your registered agent for any reason, the process is pretty simple.
To change your California registered agent at any time, you may complete and submit a Statement of Information form to the California Secretary of State. You have the option to complete and submit the form online by visiting the “File Online” page here, and selecting either “LLC Statement of Information” or “Corporation Statement of Information” tabs.
Alternatively, you may choose to submit your Statement of Information by mail. To do so, you must complete and print either the Statement of Information for LLCs (form LLC-12) or the Statement of Information for Corporations (form SI-550) depending on the entity type.
The fee for changing your registered agent in California is either $20.00 or $25.00, depending on if the company is a corporation or an LLC, making the process to change your registered agent both straightforward and affordable.
How Does a California Registered Agent Resign?
Sometimes, a registered agent may have to resign from their position.
In order to proceed with resignation, the corporation or LLC’s current registered agent must complete the Resignation of Agent for Service of Process document (otherwise known as form RA-100). The document is a very straightforward document requiring five pieces of information: the entity’s name, the entity’s filing number, the name of the resigning agent, the statement of resignation, and a signature. This form does not cost to submit.
Why Should You Hire a Professional California Registered Agent Service?
Hiring a professional registered agent is basically the best of both worlds between serving as your own agent, and designating a lawyer or accountant.
The biggest benefit in our opinion is the privacy protection this allows, as you will be able to keep your personal address private. There’s also a major advantage compared to having an attorney or accountant serve as your agent, namely the fact that registered agent services are almost always much cheaper.
Another reason we like this option is that these companies specialize in providing quality registered agent service. They know exactly what’s expected of them, and there are rarely any issues to speak of.
The other major benefit of hiring a registered agent service is that most of them operate in all 50 states, so that if you ever want to expand your business into another state, you won’t need to hire an additional registered agent. Your same registered agent will be able to provide the coverage you need in your new state, while still providing the same service in California. If you hired a lawyer or accountant, they would only be able to help you expand to a new state if they have another physical office in that state.
You Stay Compliant
Finally, most professional registered agents operating in California offer some sort of compliance calendar. With this service, your registered agent helps you keep track of due dates for ongoing LLC maintenance requirements like annual reports, which is a valuable bonus.
The top registered agent service providers include some other appealing attributes, including access to their extensive customer support networks. Some of them include a full year of registered agent service with any business formation package, which can be a real money-saver. Another welcome attribute is that some registered agent services provide volume discounts if you require service in multiple states, or if you prepay for multiple years.
What Is the Penalty for Not Designating a Registered Agent in California?
You need to have a registered agent to form your limited liability company or corporation in California in the first place, but if you let your registered agent service lapse, there could be some serious consequences.
Failure to maintain a registered agent could lead to your business losing its good standing with the state of California, and the state also has the right to officially dissolve your LLC if they choose to.
Another issue would be the difficulty of being served if your business is sued. If the state cannot get ahold of your registered agent, a court may decide to go ahead with the lawsuit without your knowledge, which could even lead to a judgment against you. This can happen not just if you fail to designate a registered agent, but also if your agent is not present during business hours to accept the document delivery.
As you can see, the task of designating a registered agent for your California business isn’t quite as easy as just writing down your own name.
There are significant downsides to just about every option in our opinion, but we recommend hiring a professional registered agent service because that option has the fewest disadvantages. They charge affordable rates, and you never have to worry about losing your good standing, having your LLC or corporation dissolved, or having a lawsuit proceed in your absence.
If you have any further questions, you can contact the California Secretary of State:
Office of the California Secretary of State
Business Entities Division
1500 11th Street
Sacramento, CA 95814