Why Does My Small Business Need a Registered Agent?

The simple answer: it’s the law.

CA Corporations Code §1502 requires foreign and domestic corporations to designate a person or entity qualified to accept service of process as follows:

“(b) The statement required by subdivision (a) shall also designate, as the agent of the corporation for the purpose of service of process, a natural person residing in this state or a corporation that has complied with Section 1505 and whose capacity to act as an agent has not terminated. If a natural person is designated, the statement shall set forth that person’s complete business or residence street address. If a corporate agent is designated, no address for it shall be set forth.”

These requirements are extended to LLC’s, LLP’s and other entity formations by other Sections of the California Code.

However, a more practical answer to the question requires the recognition that a corporation is a fictitious entity, a creature of state law not biological processes. As such, this fictitious entity cannot itself do anything. Perhaps thankfully, it cannot talk, walk, sit, or stand.

In the most literal sense, it can only sue and be sued by and through the actions of natural beings—humans. Therefore, state laws require that fictitious entities, including LLC’s and partnerships, designate a person or other fictitious entity (also by and through a natural person) who is capable and willing to accept service of process when the fictitious entity being formed is sued.

Without naming a registered agent, the Secretary of State’s Office will typically reject your articles of incorporation or organization, and your company will not be formed, preventing you from enjoying the benefits of a formalized business entity. For most individuals and partners, this means they will not be shielded from liability should their company be sued and a judgment entered against their business. Instead, their own personal assets can be attached and seized to satisfy the business debt.

To avoid the possibility of being held personally liable for business debts, business owners often do benefit from creating a fictitious entity, which includes a registered agent to accept service of process on behalf of the entity.

For additional information related to why your small business may need a registered agent in California or to find out more about our registered agent services, feel free to contact us anytime. Mention you read this blog and receive a discount on corporate compliance services.

By | 2017-09-12T00:46:29-08:00 February 20th, 2014|Corporate Compliance|Comments Off on Why Does My Small Business Need a Registered Agent?