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Choosing a Resident Agent for Your Business

November 7, 2012

California business owners who decide to incorporate their business routinely overlook a very important decision amidst all of the registration paperwork. When organizing as a business entity in California, as in most states, the business entity is required to designate a Resident Agent for Service of Process. Business owners commonly list themselves or a trusted employee as their Resident Agent. But is this a wise decision? Most California business attorneys would say no.

If we are to explore why this Resident Agent designation is so crucial, it is important to begin with some terminology. A Resident Agent is a person (or sometimes a corporate entity) who is entrusted with the receipt of "process" arising from litigation in which the business entity is involved. "Process" is merely the term for the documents that initiate the litigation, such as a complaint for a law suit. "Service of process," therefore, refers to the manner in which the litigation documents are delivered to the attention of the business entity. If one is designated as a Resident Agent for a business entity, he or she is, in essence, the one who can certify to the court that the business entity is aware of the suit brought against it.

While technically there is nothing wrong with a business owner or an employee being designated as a Resident Agent, there are some considerations that may make the prudent business owner inclined to appoint a California business lawyer as the Resident Agent for the business. First and foremost, business owners and their employees, as a general rule, are not as well-versed in the legal process. They may be unaware of the existence of strict deadlines or of an obligation to respond to or to deny allegations in a complaint. Failure to recognize these deadlines and obligations could jeopardize the business's ability to prevail in the law suit.

Secondly, law suits against a business entity may contain sensitive or even sensational allegations whose disclosure could negatively impact the reputation of the business or its owners or employees. California business attorneys are accustomed to protecting the confidentiality of such materials, and understand that dissemination of the allegations can be harmful.

Finally, appointing an attorney as a Resident Agent establishes an existing relationship with the attorney, and can streamline the process in the event that the attorney might be consulted to litigate the case. If not, the attorney is far more likely to know of a reputable colleague who would be better suited to handle the case. This existing dialogue between the business and the attorney could very well save time and lessen the likelihood that the business would fail to meet one if its aforementioned legal deadlines or obligations.

California business lawyers routinely offer Resident Agent services for a modest annual price, and most businesses would say it's well worth it. When incorporating your business, consider designating a lawyer as your Resident Agent. A licensed professional should handle your most sensitive legal documents, especially when your bottom line is at stake.

Client Reviews
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Kristina Reed handled the legal work of creating a corporation for my photography business in the state of California. She was extremely professional to work with and very prompt in her response times. She explained everything in language I could understand and helped me navigate the process smoothly from start to finish. I was very happy with her services and will definitely return to her for any future needs! Amy W.
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As the co-owner of a small business, the process of selling assets was overwhelming. It was great to have [Kristina Reed's] advice throughout every step of a very demanding and hectic process. We were very pleased with [Kristina Reed's] class, focus and approachability. [Kristina Reed] always acted as a valued associate to the company and became a reliable advisor. Furthermore, we thank [Kristina Reed] for [her] calm encouragement when it was most needed would recommend [her] expertise unequivocally. Todd S.
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I reached out to Kristina to assist with drafting some contractual real estate paperwork, and was not disappointed. She provided a prompt response and was very helpful in accommodating my request. Her expertise ensured a thorough conclusion. I would gladly recommend Kristina to other individuals needing real estate expertise. Stephen R.
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I'm extremely impressed with my experience with Kristina Reed. I used her services to negotiate a commercial lease in Folsom. Our agent had actually recommended a few attorneys to us but we didn't feel comfortable with any of them. I was very impressed with Kristina on our first conversation. The landlord group was one of the hardest you can find to deal with. There were lots of going back and forth but Kristina's knowledge and experience made my life very easy. She was always quick to get back to us whenever we have questions. She pointed out issues on my lease that my previous lawyer totally missed. I recommend Kristina's services to everyone I know. My friend just used Kristina's services for his lease negotiation in Davis and he was very impressed as well. Devin B.