Do I Need A Registered Agent In Every State?

Real estate investors who use an LLC for business operations may wonder if they need a registered agent in every state where they have properties or transact business.

Sometimes, entrepreneurs choose a state other than their residence for forming an LLC, and different jurisdictions may have different rules about registered agents. Here is what the law says about registered agents and options you should know about.

Where Do You Need A Registered Agent?

The state laws are clear on where you should have a registered agent:

If you have formed an LLC in your home state and own only local properties, you need a registered agent only in the home state. You also can be your own registered agent—more on this later.
When you are doing business in multiple states, you may need to register your LLC in each state where it has significant business operations.
If the LLC is registered in any state other than your home state, you will need a registered agent in the state of registration and in other states where you operate.

Registered Agent In Your Home State

Those who form an LLC in their home state and invest only in local properties will need to have a registered agent only in the home state. In this situation, many real estate investors consider becoming their own registered agents, saving the annual service fees.

While becoming your own registered agent in your home state might seem a no-brainer, there are still things to consider. First, the registered agent must physically reside in the state of business formation. Secondly, the registered agent should be able to accept service of legal papers during regular business hours.

He or she is also responsible for all legal and tax filings. Last but not the least, the registered agent should disclose his or her address in all company documents, which may raise privacy concerns. Meanwhile, there are other options for a registered agent in your home state, as we'll see.

Registered Agents Where You Are Doing Business

Whether you have a traditional LLC with properties across several states or a Series LLC, you need to have a registered agent in every state where your company is doing business. Although it may sound clear at first sight, the tricky part of this requirement is what is considered as "doing business" in the state.

For example, the Texas Business Organizations Code doesn't provide any clarification of the meaning of "transacting business." Thus entrepreneurs and lawyers are left with a non-exhaustive list of what is not considered a business transaction. The confusion is similar in other states.

Meanwhile, those real estate investors who buy properties in other states and then flip them are considered as "doing business" in these states. Remember, you are required to have an LLC registered agent in each such state.

Registered Agents For Out-of-State LLCs

Some investors register their LLCs in business-friendly states such as Delaware, Nevada, Wyoming or Texas even if they reside in other states.

To do this, you'll need a registered agent at the place of LLC registration—you cannot even file the initial paperwork for your LLC without it. You should also have a registered agent in all other states where you conduct business.

What Happens If You Fail To Appoint A Registered Agent?

As you already know, there is no way to skip appointing a registered agent when forming an LLC. However, when buying or selling local properties in other states, you may be tempted to delay or totally skip appointing a registered agent in the state where you are now doing business.

This could lead to legal expenses, loss of limited liability protection, and even criminal charges. In Texas, a failure to appoint or maintain a registered agent (and registered office) may result in the closure of the business along with other liabilities.

The best solution is to have a registered agent immediately before your company initiates any business transaction in any state.

Registered Agent Services

As was already mentioned, you can be your own registered agent in your home state if you are comfortable with tax and legal filings, if you are ready to disclose your address to the public in company documents, and if you can receive legal papers during business hours (even when on vacation or sick).

If the above doesn't sound like a good fit, another option would be to hire a company offering registered agent services for a small fee, ranging from $45 to $75 per year. These companies offer a standard set of services, and many of them are present in multiple states.

Another alternative would be to hire a law firm offering registered agent services. A professional lawyer would not only act as your registered agent but will be able to assist with other aspects of company formation and compliance.

The Takeaway?

Now you know that not having a registered agent in the state where you do business can lead to high penalties and injunctions and even criminal prosecution.

There are numerous companies offering the services of professional registration agents for a small annual fee. It is even better to involve a professional attorney as your registered agent—he or she can assist with whatever legal issues may arise and ensure compliance across the board.

5 Reasons Why You Need a Qualified Registered Agent

If you own property using an out-of-state entity, you probably already know the importance of having a registered agent. If this term is news to you, get hip: most states make having a registered agent for your LLC a legal requirement for non-residents. While there are many good reasons to hire an effective and qualified registered agent, we have boiled down the top three you need to know below.

Reason #1: Easily Operate In Multiple States

If your business is considering operating in multiple states, the business must be registered in each of these states. Having a registered agent on your team streamlines this process when you pick a service or attorney that has a presence in each necessary state. You don’t have to worry about the headache of registering or finding agents for each state.

Reason #2: Quickly Manage Mountains of Paperwork for a Low Annual Fee

For the actual amount of work your registered agent will do, the fee you will pay is negligible--particularly if you compare it to the number of hours it would take you to manage your business’s legal correspondence yourself. The density of paperwork involved in serving as a registered agent is another good reason to go with a professional or attorney in this role, as well. A lawyer is more likely to know their duties and the legal requirements attached to them intimately, and is less likely to make foolish mistakes or oversights that a layperson might.

Reason #3: Maintain Your Anonymity

If you served as your own registered agent, your home address would likely end up on business correspondence, undermining your anonymity. Using a registered agent keeps your own name off of public records and away from prying eyes.

Reason #4: Never Worry About Business Hours

Some legal correspondence must be sent or received during “normal business hours.” Of course, not every investor or real estate business operates on “normal hours,” particularly if the real estate business exists for passive investment income. Fortunately, outsourcing your registered agent needs means this is yet another detail you won’t have to worry about. Most are aware of and easily able to meet time-sensitive obligations.

Reason #5: Save Your Own Time

If you were so moved, you could do all of the research to serve as your own registered agent. But would you be confident in your abilities, and is this the best use of your time? For most investors, the answer is simply no. Fortunately, registered agent services and legal professionals can help. At Royal Legal Solutions, we offer not only Registered Agent services, but subscription-based business compliance services so you can let us worry about the paperwork while you run your business. If you think you could benefit, contact us today to ask any questions you have or set up your consultation.

Most Real Estate Investors Don't Need To Pay For A Registered Agent

If you don't own an LLC yet and you plan on getting one, read this first.

You may or may not know that you're required to have a registered agent in every state where your LLC does business, including the state you formed your LLC in. Each state has different rules when it comes to who can and can't be a registered agent.

The purpose of a registered agent is to receive and process government notices and file annual reports. As I said, every state has their own rules about registered agents. But there are 3 rules that you can find in almost every state:

The Registered Agent must be a resident of the state he or she plans on being a registered agent.
The Registered Agent must have a physical address in the state. (Meaning you can't use a PO box.)
The Registered Agent must be available during “normal” business hours. (As in from 8 to 5 Monday through Friday.)

A registered agent is a permanent requirement. You're required to have one as long as your business continues to operate.

What Happens if I Don't Get a Registered Agent?

Your business could be administratively dissolved (they'll revoke your license) and lose it's ability to do business in a state. Furthermore, you will lose your legal protections and be vulnerable to lawsuits. But where they really stick it to you is the reinstatement process.

The reinstatement process can take several months to a year in some states. Then there's the fees, which can get expensive depending on what state we're talking about.

Should I Be My Own Registered Agent?

That depends.
I'm going to assume you're a real estate investor. If you only own properties in your home state (your state of residence) I wouldn't bother getting an agent. But if you have privacy concerns, then you may want to get one. Otherwise save your money and be your own registered agent.

Learn more about being successful as a real estate investor. Or better yet, contact us to discuss your individual situation. And yes, we can serve as your registered agent in many cases.