Registered Agents and Your Healthcare Business Entity
What are registered agents, when are they required, and how do you find one? We cover the basics.
When you’re starting a healthcare practice or business, you may learn that you need a registered agent. A registered agent accepts legal notices on behalf of the business. Such notices include service of process – the notice that someone has filed a lawsuit against the business entity, i.e., “getting served” – and correspondence from the state about your annual report.
Business entities such as professional limited liability companies (PLLCs) and professional corporations (PCs) are required to identify a registered agent and provide their address. So how do you go about selecting one?
Requirements for Registered Agents
Registered agent requirements vary from state to state. But generally, a registered agent can be any person or company who agrees to perform this service for you and is located in your state. Also, If you form entities in multiple states, you will need multiple registered agents. Some larger companies that offer these services have locations nationwide.
It is important to note that you must have the consent of the registered agent. So, for example, you shouldn’t list an employee as a registered agent without first talking to them. You’ll need to ensure that they understand the responsibilities and affirm that they’re willing to perform the required duties.
Typically, the address of the registered agent must be a street address and not a post office box. Legal notices demand timely attention, and lawsuits are ideally served to an actual person, so states may require a true physical address where they can physically locate the registered agent. Leaving documents at a P.O. box raises the probability that they will sit unseen for a long period.
Listing Yourself As the Registered Agent
Let’s say that you own a brick-and-mortar business. You can designate yourself as the registered agent and list your business address.
But let’s say that instead, you have a virtual business and you work from home. You can list your home address, but it will be visible to anyone who searches for your corporate entity through your state’s official lookup. Some states allow you to list the address of a virtual office or a co-working space where you work. Before doing this, consider whether your mail delivery is reliable and whether the front desk is able or willing to receive service of process. Many of the larger coworking office chains specifically address this situation in their lease agreements.
Registered Agent Services
One safe and easy option is to use a dedicated registered agent service. These companies specialize in being available to receive and deliver your legal documents to you in a timely manner. For an annual fee, you can protect your privacy and reduce the risk of not receiving important legal documents promptly.
Some accountants and small business attorneys offer registered agent services in addition to their core services. But remember, you need the explicit consent of your CPA or lawyer before you designate them as your registered agent. The role comes with additional duties: the registered agent must keep current on your contact information, make themselves physically available for service of process, and notify you immediately of any notices. A busy law or accounting firm that agrees to fulfill this role may charge higher rates than companies that specialize in these services.
What Happens If You Don’t Designate a Registered Agent?
It is essential to list a registered agent on your initial state filings when forming a business entity such as a PLLC or a PC. If you do not, the state will likely reject your filing. It is equally important to ensure your registered agent’s name and address remain up-to-date after you establish your business.
Note that missing or outdated registered agent information will not prevent you from being sued. A process server or sheriff, depending on your state, could still locate an officer of your company and serve them at your business, their residence, or elsewhere. Each state has its own rules about which members of the organization can receive service and where.
In some states, the Secretary of State would be served automatically on your behalf, or notice of the lawsuit could be published in a local newspaper. In other words, not having a registered agent just makes it harder for you to learn of a lawsuit — not harder for someone to sue you. Additionally, states impose penalties for failing to keep a registered agent. These penalties range from fines to the involuntary dissolution of your entity.
Get Legal Support
Starting a new corporate entity can get complicated fast. It’s important to meet all of the requirements so that your filing can be processed smoothly and your corporate liability protections are maximized. The experienced healthcare attorneys at Jackson LLP can help you navigate the ins and outs of filing a corporate entity. If you are located in one of the states where we have licensed attorneys, reach out for a free consultation.
This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader. It should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.