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When registering your LLC or corporation, you have to give your registered agent’s name and address. This person will be the official point of contact for your business and responsible for accepting important business correspondence.
A registered agent’s role is undoubtedly crucial, but there are still many questions about how they apply to one’s business. The Model Registered Agent Act (MoRAA) was implemented to simplify the role and clear up any confusion.
Read on as we go into detail about the MoRAA Act, as well as cover tips and strategies to help comply with requirements by hiring a reliable registered agent for your business.
Why the Model Registered Agent Act Is So Important
The Model Registered Agent Act is an effort spearheaded by the American Bar Association and the International Association of Commercial Administrators (IACA) to standardize rules and regulations concerning a registered agent’s role for American business entities.
But before going into further detail about MoRAA, let’s understand the role of a registered agent.
Any business entity other than a sole proprietorship—partnership, limited partnership, LLC, corporations, and cooperatives—has provisions for registered agents in their organic statutes, regardless of where they live.
There are three main purposes for registering an agent:
- To receive service of process
- To determine the venue for any legal action
- To publish notices required by the entity’s organic law
While the registration process of agents is virtually the same for all entities, the law governing agent registration can be enforced more efficiently, no matter the kind of entity. But if different state laws governing business entities have different provisions, it can cause unnecessary administrative headaches and confusion.
As the same office is responsible for registering every kind of entity in every state, it makes sense to have one uniform law for every kind of entity.
Prior to MoRAA, every state had its own set of laws and role definition, resulting in a considerable amount of variance from one state to another. The law was enacted to unify business entity laws relating to annual reports, registered agents, and other laws and forms used to file business entities.
Put simply, MoRAA helps accelerate the administration efficiency of entity law in every state. It tries to enact agent registration best practices and extend the potential efficiencies—all the while removing any state-wise variances.
Quick Tips to Choose a Reliable Registered Agent
As mentioned, businesses must appoint a registered agent to receive legal documents and other official notifications on their behalf. And while anyone with an office located within the state can receive these deliveries during business hours, a registered agent is much more than a legal formality and has responsibilities that go far beyond accepting your mail.
To make sure you get the best value and protection for your investment, here are some tips for choosing a reliable registered agent:
Hire a Professional Service
At first glance, a registered agent’s job description seems simple: receiving official documentation. It’s why business owners often end up recruiting an employee or officer to serve as a registered agent as opposed to hiring a professional registered agent. Others decide to take on the responsibility themselves.
Unfortunately, these tactics don’t always work well.
If you or the person you choose to serve as your registered agent is unavailable due to any reason, you can be held legally responsible for whenever the state attempts delivery. Even worse, if the notice concerns a legal action, you may have a judgment entered against you by default—even before you’re aware of the lawsuit.
Keeping this in mind, it’s best to hire a professional company that offers registered agent services. You won’t have to worry about filing an update with the state every time your contact information or office location changes. Instead, you’ll always get timely updates concerning critical correspondence.
Incfile is one of the most reputable companies in the market that has helped form over 500,000 businesses. It provides various business formation services targeted at small business owners, plus registered agent services in all 50 states. What’s more, you don’t have to pay for your registered agent during the first year.
Besides this, you also get free business tax consultation, next business day processing, online access to all documents, and lifetime company alerts and customer support.
Prioritize Value Over Price
While you should definitely consider your budget when choosing a registered agent, don’t simply go ahead and select the cheapest option. Instead, go beyond the price.
Look for a registered agent who can assure foolproof and immediate document delivery. They should also provide customizable electronic notifications to keep you up to date with all proceedings. Access to compliance tools to help you effortlessly navigate your state requirements can also come in handy.
Let us explain this with an example. Your authority to operate in your state is dependent on filing annual reports on time, which is why your registered agent should notify you about deadlines and other information beforehand to ensure you file the documents on time and in the correct manner. Otherwise, you risk forfeiting your good standing with the secretary of state.
To reiterate, prioritize choosing a registered agent that gives you annual report reminders, accurate and clear state forms and filing instructions, and the necessary software tools—even if it costs you slightly more.
Select a Nationwide Provider
Registered agents are state-specific appointments. This means you’ll need a registered agent with an address in every state you expand into to meet state requirements.
If you hire different registered agents for different states, you’ll find yourself dealing with tons of extra paperwork—something that will also compound the risk of renewal or other documents falling through the cracks.
On the other hand, choosing a nationwide registered agent service lets you operate through a single provider. As a result, you can meet each state’s requirements and file necessary documentation stress-free.
All good nationwide providers support your organization as it grows, helping you save time, become more efficient, and give you greater peace of mind. It’s certainly a better bet than having to deal with individual agents.
Long-Term Strategies to Ensure Compliance with the Model Registered Agent Act
In this section, we’ll outline a few strategies you can follow to comply with the Model Registered Agents Act and improve your experience with registered agents. Here’s what you need to know:
Understand the Commercial vs. Non-Commercial Registered Agent Categories
MoRAA categorizes registered agents into two different categories: commercial registered agents and non-commercial registered agents. While there aren’t any significant differences between the two where their roles, functions, and responsibilities are concerned, they do vary in the eyes of the MoRAA in terms of where they operate.
- A commercial registered agent often maintains physical addresses in multiple states as they work with hundreds—or even thousands—of business entities. They file a special listing statement containing their company name, entity type, and address to which service of process should be sent, with the state agency responsible for business registrations and compliance.
- A non-commercial registered agent is an individual or small company that works with one or a select few states only. These individuals or entities don’t file a listing statement with the secretary of state where they serve clients and only represent a small number of companies. It’s also likely for non-commercial registered agents to not want added benefits typically conferred on commercial registered agents.
While the law has made it mandatory for businesses to provide a registered agent for service of process when completing the business entity filings, it depends on whether it’s a commercial registered agent or a non-commercial registered agent.
When appointing commercial registered agents, you don’t have to provide an address in some states. However, it’s always required of non-commercial agents.
If you list yourself as the registered agent of your small business, you’ll fall into the non-commercial category. Similarly, any small registered agent entity in your home state that only provides services to businesses in that specific jurisdiction would also come under the non-commercial category.
Any other registered agent gets designated as commercial under MoRAA.
Know Whether MoRAA Is Applicable in Your State
Despite how MoRAA can create uniform laws and streamline processes for a registered agent’s role, not every U.S state has adopted it.
At the moment, only 12 American states have fully adopted the Model Registered Agent Act:
- District of Columbia
- North Dakota
- South Dakota
That said, a few states have adopted specific aspects of MoRAA, while some have created similar provisions of their own.
For instance, Pennsylvania requires state agent service providers to designate a physical address within the state despite the state not having a specific designation for commercial registered agents. But individuals can register with the Pennsylvania Department of State as a Commercial Registered Office Provider (CROP).
Other states under this category include:
Cross-check state rules for registered agents as the number of states that recognize MoRAA can change going forward. Verify the different forms, terminology, filing requirements, and other variations from state to state to avoid making any mistakes.
Again, hiring a professional service can give you access to experienced attorneys who can help you navigate state laws better and keep you updated about any changes in the law concerning MoRAA.
Don’t Be Your Own Registered Agent
Becoming your own registered agent is a big responsibility. You have to be available during regular business hours to receive government correspondence and service of process. This means no impromptu leaves from the office or spur of the moment vacation plans.
If you aren’t available at 3 PM on a random Wednesday or Friday to receive the service of process, you can land up in big trouble. Besides, do you really want to receive a legal notice informing you someone has sued your business in front of your employees and customers? Exactly.
Not only will hiring registered agent services save a lot of your time and protect you from getting penalized, but they’ll also give you greater peace of mind while being easy on the pocket. As mentioned, you’ll find many business formation services that offer free registered agent services.
Now that you’re familiar with the Model Registered Agents Act, the next step is to start looking for a registered agent and get your business registered.
To help you find the best agents, we’ve compiled a list of the best online legal services that not only offer registered agent services free of cost for an entire year, but they also assist you in registering your business and providing reliable legal advice as needed.
We hope this article helps you expand your understanding of MoRAA and hire a reliable registered agent to help you with your business. Best of luck with your business!