One of the things you’ll need to determine before filing your paperwork to form a limited liability company (LLC) in California is who will serve as your agent for service of process. The state requires all LLCs to have one, but what is an agent for service of process? What are their duties, and what are the requirements to be one?
What is an Agent for Service of Process in California?
An agent for service of process (referred to as a “registered agent” in most states) is an individual or business that is designated by the LLC to receive important legal documents on behalf of the company. This position is crucial to ensure that the correct people within an LLC are notified in person when there are time-sensitive events, such as service of process for lawsuits. The agent also receives important notices from the state, such as garnishment notices against employees, notices of the annual report due dates, and tax notifications.
What does a California Agent for Service of Process do?
California LLCs must designate and maintain an office (which need not be a place of business) in California (Cal. Corp. Code § 17701.13(a) where a registered agent will be available during normal business hours to accept any service of process, notice, or demand pertaining to the entity and forward it to the appropriate individuals within the LLC.
Who can be a California Agent for Service of Process?
By state law, California LLCs must designate and maintain an agent for service of process in California, which may be:
- a natural person who resides in California; or
- a domestic or foreign (out-of-state) corporation that has filed the required certificate with the California Secretary of State, and otherwise complies with the California Corporations Code, including being authorized to do business and being in good standing in California. Citation: (Cal. Corp. Code § 1505).(Cal. Corp. Code § 17701.13(a)(2), (c).).
Can I be my own California Agent for Service of Process?
You can be your own agent, as long as you are a resident of California and are fully available during all business hours.
Should you be your own California Agent for Service of Process?
Although it may seem like the simplest option is to be your own agent for service of process, there are some compelling reasons to instead use a registered agent (agent for service of process) service instead, such as:
- Availability – An agent for service of process must be available at the principal address during normal business hours. This makes it difficult to leave the office to run errands, meet up with potential clients, etc.
- Avoiding Embarrassment – If you serve as your own agent for service of process and the LLC is sued, you could have papers served to you at your office in front of clients. Obviously, that could be bad for business.
- Compliance Reminders – Some registered agent services (like ZenBusiness) provide reminders of upcoming state requirements, such as filing annual reports. Forgetting compliance obligations can get you in trouble with the state of California.
- Penalties and Fees – By not continuously maintaining a current agent for service of process, the LLC may be responsible for penalties and fees, in addition to the potential for administrative dissolution (the state dissolving your LLC).
How is an Agent for Service of Process Appointed?
You must name your agent for service of process when you complete the official paperwork with the state to form your LLC, so you need to decide who your agent for service of process or registered agent service will be before you begin that process. Of course, you need to be sure to inform whomever you’re appointing and get their permission before appointing them.