What Happens if You Don’t Have a Registered Agent?
Registered agents perform a necessary task for corporations of all sizes. We’ve written a lot about why you need a registered agent for your business, as well as the benefits of hiring one. However, what happens if a business doesn’t hire or designate a registered agent? Are there consequences? The short answer is yes. Keep reading to learn what can happen if you do not have a registered agent.
You Can’t Incorporate
If you’re just starting your business, you are required to list a registered agent. The state will not approve your articles of incorporation, no matter what state you choose to incorporate your business within. Even the most lenient, business-friendly state of Delaware requires a registered agent. If you’ve already incorporated, but are thinking about discontinuing having a registered agent, consider the following repercussions, which are severe, below.
Lose Your Right to Due Process
One of the integral tasks that a registered agent performs for a company is serving as a contact to receive service of process. Service of process is the act of giving an individual (or company, in this case) appropriate notification of impending court proceedings, which affords the recipient the ability to respond. If your business does not have a registered agent on file, your business could be sued and you wouldn’t know it as there would be no one listed to contact. The repercussions of that could be severe, and a default judgement could be entered against your company if you do not respond. Additionally, registered agents also accept and deliver other important documents, and not having a registered agent puts these documents, such as annual reports or important communication from the government, at risk of being lost.
Because you are required to have a registered agent and his or her contact information published, by not including one, you could be subject to fines and penalties.
Not having a registered agent means you can lose your certificate of good standing, which means you can have a whole host of problems, including (but certainly not limited to) personal liability. This one simple act of not having a registered agent could result in a windfall of penalties. For example, you lose your business protections if you’re not in good standing, which means that debt and/or lawsuits that the business incurred are now going to be your personal problem.
Lose Your Certificate of Good Standing
Every state offers businesses a certificate of good standing, which essentially serves to be a declaration from the government that authorizes you to do business. It declares that you have followed the appropriate protocols, filed the right documents, and are not indebted to the state with respect to fees, etc. Losing your certificate of good standing has a ton of consequences, including: loss of naming rights (someone else could take your business name), issues securing financing, liens, inability to file lawsuits, fines and penalties, personal liability as the business owner, and more.
Lose Your Business
Ultimately, not having a registered agent can result in you losing your entire business. For many, this would not only be a huge financial burden, but it would also result in a significant amount of stress and hardship. It’s simply not worth not having a registered agent!
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