What Is the Liability of a Resident Agent for an LLC Company?

By Tom Speranza, J.D.

What Is the Liability of a Resident Agent for an LLC Company?

By Tom Speranza, J.D.

A resident agent—sometimes called a registered agent or statutory agent—serves as the official contact for a business entity in the state in which the entity formed and every other state where the entity is formally registered to do business. The LLC laws in each state require a limited liability company to either act as its own registered agent or appoint a third party located in the state to serve as its registered agent.

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What Do Resident Agents Do?

The purpose of a resident agent is to give the state government, private citizens, and other companies a permanent, reliable location to send mail and legal documents to an LLC that operates in a state. The kinds of correspondence the resident agent is responsible for receiving include:

  • Service of process, i.e., the pleadings that commence lawsuits and other legal claims
  • Other litigation documents generated in a lawsuit or legal claim, e.g., motions and discovery requests
  • Correspondence from the state government about tax matters, annual filings and reports, and other compliance matters
  • Notices that an employee's wages have been or may be garnished

The address of your LLC's resident agent is public information that the state and individuals can look up if they can't otherwise locate your physical place of business. By sending mail to the resident agent, anyone making claims against your LLC can fulfill their obligations to notify the LLC about important matters—which might include unpaid taxes, overdue state filings, or litigation.

Who Can Be an LLC's Resident Agent?

If an LLC has a physical business location in a state with employees working there, the LLC can appoint itself to act as its own resident agent. It is crucial that employees at the location understand that the official correspondence that arrives at that address is important and requires prompt review by a member, manager, or officer of the LLC.

If an LLC's office in a state only has a few junior-level employees or salespeople, it may not be appropriate to impose resident agent responsibilities on those workers. Similarly, designating the home address of a board member of the LLC who happens to live in a state is probably not the most reliable way to fulfill the resident agent requirement.

Most LLCs use the services of reputable third-party companies that specialize in serving as resident agents. These companies staff their offices during all business hours and very reliably forward the correspondence they receive to the members, managers, or officers of their LLC clients.

Resident agent companies typically charge an annual fee for their services for each state for which your LLC needs coverage. Many resident agent companies have offices in all 50 states, making them convenient for LLCs with locations throughout the country.

What Happens If an LLC Lacks a Resident Agent?

If an LLC doesn't appoint a resident agent at the time it files its initial formation documents, the state simply won't approve the initial creation of the LLC.

If an LLC fails to maintain a resident agent after forming or registering in a state, there can be severe consequences, including:

  • Not receiving crucial correspondence in a timely manner. Unpaid taxes and unanswered litigation can result in fines and default judgments.
  • Losing good standing with the state. If an LLC is not in good standing in a state, it may be prevented from commencing a lawsuit in the state or acquiring necessary licenses, permits, or financing.
  • Fines or penalties for members, managers, and officers. Some states impose monetary fines for noncompliant LLCs.
  • Dissolution. If a state dissolves the LLC, members may lose the limited liability protection a legal entity affords, thus exposing themselves to personal liability for debts and other claims against the LLC.

Maintaining a resident agent is a crucial part of running your LLC. Be sure to stay on top of all the requirements so that your company remains in good standing.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.