Selecting a Registered Agent is an important decision that has long-term consequences. As a business grows—whether it is a corporation or an LLC—it is important that it designate a Registered Agent for every state in which it is doing businesses. Not only does this fulfill state requirements, but it can also help protect a business from risk. Since compliance obligations vary extensively from state to state, having a Professional Registered Agent can prove to be especially beneficial for multi-state companies.

Alan Stachura, Senior Manager of Government Relations at CT, discusses the reasons for having a Professional Registered Agent and how to decide whether a service provider is best suited for managing your compliance activities. He describes the key areas in which a potential service provider should be evaluated, including accuracy, responsiveness, knowledge of individual state laws, security protocols, and more.

TRANSCRIPT

Greg Corombos: Hi, I'm Greg Corombos. Our guest this week on Expert Insights is Alan Stachura. He's a Senior Manager [of] Government Relations for CT Corporation. Today he joins us to explain the need for a Registered Agent and how to choose one wisely. And Alan, thanks so much for being with us again.

Alan Stachura: Absolutely.

Greg Corombos: So let's begin with the obvious what is a professional Registered Agent?

Alan Stachura: So a professional registered agent is an entity that represents multiple entities, often governed under the Model Registered Agent Act. The most qualified entity provides compliance protection, governance assistance, and helps streamline all of the litigation preparations. A professional registered agent is uniquely qualified and positioned to minimize exposure to risk by proactively combining two vital areas of knowledge--really the knowledge of your entity structure and also the knowledge of the jurisdictional compliance requirements, as they vary greatly from state to state.

Greg Corombos: So explain in a little more detail why a business needs one of these? And how do you know if your business does?

Alan Stachura: Sure. So by law, you're actually required to designate an in-state Registered Agent when you form a company, and also in any jurisdiction where you qualify to do business. It's an ongoing requirement to maintain that Registered Agent. It acts as a physical location to receive official documentation, lawsuits or any other notices. So it is required wherever the business is conducting business,

Greg Corombos: What are some of the long-term consequences here? What...and what should be your criteria in choosing a Registered Agent?

Alan Stachura: So your registered agent should have a lot of different aspects to them. They should certainly be reliable, [they] should be actually accurate, they should be consistent. They need to always be available at the physical locations. So if items are hand delivered, there's someone there to receive them and that the documents get the proper attention.

They need to know your business entity and the compliance rules in the jurisdiction in which they're located, as every states’ rules differ. They need to have professionally trained staff with expert knowledge so that they're aware of how to properly handle and forward your service of process papers.

They need to have state-of-art processes in place to deliver crucial documents to you with your delivery instructions and the required timeframe. And they need to make sure that they have offices in all of the jurisdictions that you currently do business in, as well as all of the jurisdictions where you may expand to as you grow your business because you'll have to have a Registered Agent in those states as well.

Greg Corombos: What are some of the most critical questions to ask when you're screening applicants for a job like this?

Alan Stachura: Sure, I mean, you certainly want to know if they have the right resources deployed in the right places. Can you physically act as my registered agent in that jurisdiction?

You want to find out if they're an expert in navigating the laws in each individual state as they can become more and more complex, especially as you add additional jurisdictions. You want to know what their track record is for accuracy and timeliness. Having an agent that doesn't deliver what you need isn't quite helpful.

You want to know how responsive they can be to urgent, complex or unexpected situations. You want to know that the agent is proactively looking after the interests of your business. You want to know if the agent can reduce the time required on your behalf to manage complex situations. You want to know if the agent is aware of the latest anti-money laundering rules and regulations; they're quite complex as well. And every agent should be up to speed on those.

And you want to know their commitment to key information security principles. The documents that are being delivered to you are highly sensitive, and you want to make sure that they're protected. It's important to assess the Registered Agent’s security measures. There's a lot to consider when choosing your agent.

Greg Corombos: That is a lot to consider. And it's good to do due diligence on something this important, this critical of a position inside your business. Once the hire is made, what's the smartest way to evaluate how good of a job they're doing?

Alan Stachura: Well, it's important to ask a lot of questions. You want to make sure that everything is being delivered the way that you opted it to be. So checking timeliness, checking accuracy, checking in with them, making sure that all of the delivery instructions are up-to-date. And that all of the documents that you're expecting have, in fact, been delivered in the method that you've requested them to be.

Greg Corombos: And then what are signs that--as you've asked those questions, and done your evaluation-- that this is definitely the right person, we made a great choice here? And at the same time, what are some indicators that maybe we didn't make the right choice here, and maybe it's time to make a change?

Alan Stachura: Well, if your documents aren't coming in a timely fashion, or if you're not receiving things that you're expecting to receive, that those are certainly red flags.

If you're receiving the documents that you know, should be delivered, you're receiving tax notices with ample time to pay him and file your taxes, you know that you've made the right choice.

Communication is key, though. A professional registered agent is always willing to take your call, to answer your questions, to have you check in and to make sure that everything's on track.

Greg Corombos: Alan, you've obviously worked with a lot of different businesses on critical issues like this. So let's end on a positive note here, not about whether or not it's time to replace someone. But the benefit that you see in the clients that you have when they have a Registered Agent and the workload that that takes off business executives, as opposed to those businesses who don't think they need one.

Alan Stachura: Sure. I mean, having a Registered Agent is really having a partner in the field for you. They assist with so many tasks that quite frankly, you and your staffers are not experts at. And it really detracts from doing your day-to-day business. So having that Registered Agent takes the load off of your shoulders and really moves it to make sure that in so many ways, someone who's highly qualified is pulling that load for you so that you can focus on everything else

Greg Corombos: [A] registered professional agent can make a huge difference and...anything that's a major asset to a business is something worth exploring. Alan, thank you so much for being with us today. We greatly appreciate your expertise.

Alan Stachura: Absolutely. Thanks so much for having me.

Alan Stachura is Senior Manager [of] Government Relations at CT Corporation. I'm Greg Corombos reporting for Expert Insights.