Sunday, October 18, 2009

LLC Registered Agent

California's Secretary of State requires that each LLC designate a registered agent (or agent for service of process), who will accept summonses or other court papers in the event of a legal action. Failure to comply with this requirement could result in a costly default judgment. Companies operating in California are not allowed to act as their own agents, so this is yet another cost of doing business in the Golden State.

We formed our LLC using LegalZoom, whose LLC packages include one year of registered-agent service. We considered renewing with them, but they charge $159 per year (or $144 per year for a two-year renewal), which is more expensive than many other agents. For example, we received a solicitation from Patel & Alumit, who charge only $50 per year.

The Secretary of State provides a list of private service companies, which is too lengthy to serve as a useful starting point, but can be used to verify that a company can legally serve in this capacity. I found this blog post and this site to be good places to start a search. We selected InCorp Services because of their price guarantee, track record, and Web offerings (i.e., entity management system). They charge $99 per year, but they will match the price of any other registered agent in the same jurisdiction. I called their 800 number and confirmed that this is, in fact, the case. Bonus: If you register through this site, the first year is free!

After hiring a new registered agent, you will need to notify the Secretary of State by filing an updated Statement of Information (Form LLC-12). If you file the updated form outside the normal filing period*, the $20 filing fee is waived, which was the case for us.

Update: Read this to avoid a potential hazard.

*The normal filing period for an LLC occurs every other year during the calendar month in which its original Articles of Organization were filed and the immediately preceding five calendar months. For example, we filed our Articles in October 2008, so our next filing period will be May through October 2010, during which time we must file a new Statement of Information to comply with the biennial requirement.

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