One of the things you’ll need to decide before filing your paperwork to form a limited liability company (LLC) in Texas is who will serve as your registered agent. The state requires all LLCs to have one, but what exactly is a registered agent? What are their duties, and what are the requirements to be one?
What is a Texas Registered Agent?
A registered agent is an individual or business that is chosen by the LLC owners to receive important legal documents on behalf of the company. This position is needed 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 and tax notifications.
Who can be a Resident Agent in Texas?
Texas LLCs are required to have a registered office and a registered agent (Tex. Bus. Orgs. Code Ann. § 5.201(a)). The registered agent may be either:
- a natural person who resides in Texas and has consented to act as a registered agent; or
- domestic or foreign (out-of-state) entity registered or authorized to do business in Texas that has consented to serve as a registered agent (Tex. Bus. Orgs. Code Ann. § 5.201(b)(2)).
Should you be your own Texas Registered Agent?
Although it may seem like the simplest and cheapest option is to be your own registered agent, there are some compelling reasons to instead use a registered agent service, such as:
- Availability – A registered agent needs to generally 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, go on a vacation, or even have a sick day.
- Avoiding Embarrassment – If you serve as your own registered agent and a lawsuit is filed against the business, papers could be served to you at your office in front of clients. Obviously, that would look bad and could be damaging to your business.
- Compliance Reminders – Some registered agent services (like ZenBusiness) provide reminders of upcoming state requirements to help keep your business compliant with the state of Texas.
- Penalties and Fees – By not continuously maintaining a current registered agent, the LLC may be responsible for penalties and fees, in addition to the potential for having the state dissolve your business.
How is a Resident Agent Appointed in Texas?
You must name your registered agent when you complete the official paperwork with the state to form your LLC, so you need to decide who your registered agent or registered agent service will be beforehand. Of course, you need to be sure to inform whomever you’re appointing and get their permission to serve in that role.