If you're wondering, "does a sole proprietorship need a registered agent," the short answer is no. However, there are reasons for you to consider adopting business structures that do require you to have a registered agent.

Business Structures That Require Registered Agents

When you start a new company, one of the first things you'll need to do is decide what kind of structure you would like to adopt. While you're free to choose any structure you like, each business structure comes along with its own rules, requirements, and responsibilities. The six main structure types to choose from are:

  • Sole proprietorship
  • General partnership
  • Limited partnership, or LP
  • Limited liability partnership, or LLP
  • Limited liability company, or LLC
  • Business corporation, or Inc.

Two of these six business structures fall under the category known as "common law entities." They are:

Common law business entities are not required to file paperwork with local state authorities to conduct business within state borders. If you are the only owner of your business and you don't specifically incorporate under another type of business structure, you are automatically classified as a sole proprietor. If you're in business with others, and you don't specifically incorporate your company under another structure, your company will be automatically classified as a partnership.

There are a total of four business structures that can be classified as "statutory entities." They are:

Statutory entities are defined by local state laws. That is, the characteristics and existence of a company incorporated as a statutory entity will be governed by your state's specific business laws. Companies that incorporate as a statutory entity are provided owners with a measure of asset protection that many find desirable. The degree of this protection is determined by local state laws and the specific business structure you select. To take advantage of this protection, however, you'll be required to comply with your state's specific laws as they pertain to business registration.

Every state has these two requirements pertaining to statutory entities:

  • Documents must be filed with appropriate state authorities that provide detailed information about owners and the way the business is structured.
  • Statutory entities are required to have a registered agent in the state they are conducting business in.

There are a number of documents you may be required to file with your state when you form a statutory entity, such as Articles of Organization. The specific documents you'll be required to file, as well as any annual filing requirements, will vary from one state to the next and can be affected by:

  • The specific business structure you have selected
  • How "business-friendly" your particular state is

The following states, for example, have very light requirements:

  • Delaware
  • Nevada
  • Wyoming

Requirements for Registered Agents

When it comes to requirements that pertain to registered agents, most states are much more uniform than they are in terms of corporate filing requirements. Depending on your specific state, you might hear the following terms in place of "registered agent":

  • Resident agent
  • Statutory agent

No matter what term is used to describe a registered agent in your state, the functions and requirements are largely the same. Every state requires statutory entities to have a registered agent that:

  • Is a legal resident of the state your business is registered in
  • Has a physical address within state borders (not a PO box)

Many states will also require your registered agent to be available during normal business hours to make sure they can accept correspondence such as:

  • Service of process
  • Official court documents
  • Government documents

Carefully consider these requirements when selecting a registered agent for your statutory entity. It can be tempting, especially when the state you're incorporating in is your primary place of business, to designate a manager, member, or officer of your company as the registered agent. While there are no rules against this, it's not always a good idea.

The documents that a registered agent receives are usually very important and normally require swift action and response. If your registered agent is too busy with other duties, it's easy to overlook these documents. This can have serious consequences for your business.

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