Hiring an Agent for Service of Process

April 13, 2006

	Visited: 159
	Not rated
	Rate:

When forming a limited liability company (LLC) or corporation, every state requires that the business owner name a resident of that state (an individual or an entity) as an agent for service of process. The agent is named in the articles of organization. In addition, an entity that registers to do business in another state also must name a resident agent in its foreign registration certificate.

Service of process refers to the delivery of a summons and complaint, which is the required way of initiating a lawsuit. Generally, a state will have personal jurisdiction over a party only if the party is served with the summons and complaint within the geographical boundaries of the state.

By naming a resident agent in the state, the entity is, in effect, consenting, in advance, to the state's assertion of personal jurisdiction over the entity, in the event of a lawsuit in that state. To sue the entity in the state, a plaintiff merely has the summons and complaint served on the resident agent, who then mails a copy to the entity. Of course, if the entity will not be doing business in that state, it is unlikely it will be sued there.

If the owner is a resident of the state in which the entity is formed (or will be doing business, in the case of the registration of a foreign entity), usually the entity can simply name the individual owner as the agent for service of process.

Where the entity will be formed, or will be doing business outside of the owner's home state, a resident agent will have to be located. In states that are popular for business formation, including Delaware, numerous organizations exist that provide this service. Many companies that provide incorporation services also serve as agents for purposes of service of process. The fees charged vary, but should be less than $300 a year. Attorneys who form corporations may also act as agents for service of process. Attorneys might tend to charge a somewhat lower fee for serving as registered agent because of the likelihood that they will get the business if process papers are served that require legal action. In addition, in some states (e.g., New York), the owner can name the secretary of state's office as the resident agent.