Registered agents and entity management systems

The process of incorporation can be a crafty sleight-of-hand trick. Perhaps one of your companies is managed out of London, has production facilities in Alabama and stores data in Oregon, but, for the purposes of the friendly tax courts, is officially incorporated in Delaware. It’s a complicated, but all too common, puzzle. What makes it that much trickier are laws requiring companies to have registered agents in their states of incorporation and in each state in which they are qualified to conduct business.

What exactly is a registered agent?

Think of it this way: States that require a registered agent want your company to have a real-life resident representative, that is, an actual human who works for you but who resides full time in that state. This person would do things like receive and forward legal documents, such as service of process (SOP) notices or correspondence from government entities. He or she would also provide your company with a legal office address and be available during normal business hours.

In some respects, it may sound like a glorified mailroom job. The agent receives documents, and then passes those documents on to the appropriate people in your company.

Easy, right?

Wrong.

A skilled professional in the role of registered agent is going to do a lot more than just act as a courier. He or she is oftentimes a paralegal with experience in executive administration. The registered agent’s duties include filing such business forms as local licenses, tax permits and other documents in order to maintain corporate compliance within the state’s jurisdiction. Empowered by a robust entity management system, the registered agent becomes an integral part of your team, helping to keep your company running smoothly and to avoid costly penalties.

But let’s assume that your company is not going to pay to relocate an employee to go and live in each of the states or jurisdictions that require a registered agent. There are many third-party companies that offer registered agent services. How, then, do you outsource this important role? What qualities do you look for to make sure your registered agent is an angel at the gate rather than a devil in the doorway?

Read and learn, friends. Read and learn.

More Than Just a Friendly Face

Yes, it is true that part of a registered agent’s duty is to provide a legal domestic address for your corporation and to be available during business hours. Again, you might get an incomplete notion of their role and services, thinking that this sounds a bit like a receptionist or a greeter. Consider instead all a registered agent can do for you:

• Save you time by automating corporate governance processes
• Reduce the risks and complexities involved with complicated compliance filings
• Improve compliance management by creating a centralized platform with which you can view all associated business entities
• Avoid costly penalties and delays in production brought on by late or incomplete compliance filings
• Assist with document retrieval and data searches
• Provide annual filing services that allow you to easily review your overall business standings

Powering Up the Registered Agent Through Entity Management Software Systems (EMS)

Many of the companies that offer registered agent services use Entity Management Software to help streamline their processes and provide you with a more dynamic customer experience. Some of the benefits of using an EMS in this role include:

• On-demand documentation
• Data reconciliation with state and local records
• Annual report calendars and processing services
• Help with SOP notices and garnishments
• Filing change-of-agent forms and receipt processing

More broadly, the use of an EMS can benefit your company in a variety of ways, allowing you to:

1) Ensure compliance for each entity and jurisdiction

EMS can provide you with the ability to:

• Track security filings
• Check assumed business name registries
• Maintain agreements and documents required for tax status

2) Manage Legal Entity Risk by:

• Isolating potential liabilities in discrete companies
• Detecting possible risk early, before it becomes a problem
• Maintaining protection of the corporate veil

3) Provide faster, more reliable information to company members

• Facilitate data-sharing among counsel, legal teams, paralegals and management

What to Consider When Looking for a Registered Agent

Perhaps by now you are convinced; you know in your heart that you need to find a great registered agent on the double. A quick search will reveal loads of agents for hire, all of whom will promise you excellent service, some at very reasonable prices. How do you choose? Here are some ways to get beyond those sales pitches and to pop the hood and kick the tires of any registered agent service provider.

• Price: As we said above, some of the agencies offer their service for as little as $67. But you need to ask them, or any agent you are considering, what services are really included in their price. Do you pay extra for each SOP received, or is there a standard monthly or yearly fee? Do they offer some of the extra services mentioned above, like filing and document retrieval? Do they offer a free annual report that allows you to check in on their progress? If the answer to any of these questions is no, then that low initial rate may not really reflect the cost to your company. You might be better served to go with a more expensive, more extensive agent.
• Change-of-Agent Process: If you are already using a registered agent, but you want to change to a new one, there is a change-of-agent protocol that requires paperwork and fees. Some agencies will do this work for you and cover the fees in order to secure your business. It’s worth asking so as not to be surprised by a charge later.
• Do They Use an EMS?: Remember all of those added benefits we just covered? It might be that your prospective agent uses such software and can offer those to you. Or maybe not. You need to know. Also, it might be that they have the software, but will require you to pay extra for them to use it. Or it might be that they have the software, but it is not compatible with the software used in the rest of your corporation, making data-sharing that much harder.
• Do They Offer Services in All of the Locations You Need?: Your business might need an agent in multiple states or jurisdictions. Can one prospective agency cover all of those needs? If not, it is not worth your time.
• How About Customer Service?: Will you be working with a dedicated agent or team of agents who will come to know your specific business needs? That sounds good. But if you are not careful, you can get funneled to a different agent every time you contact them with a problem or request, requiring you to help them get up to speed on what you really need.

Closing Thoughts

Registered agents are required by law in many states and jurisdictions. They can perform important duties for your company and save you a lot of time and aggravation. Coupling an agent’s know-how with the organizational tools provided by a robust Entity Management Software System can enhance the value, efficiency and reliability of your company’s future.