The US Small Business Administration has reported that small California businesses number 4.2 million and that this makes up 99.8% of all businesses in the state. Small businesses employ 7.3 million people in the state which makes up 48.2% of all employees. Additionally, between March of 2019 and March of 2020 opening and expanding businesses in California added 1.7 million jobs while businesses that were contracting or closing lost 1.6 million jobs. This means that there was a net increase of 103,514 jobs in the state over the year period. Small businesses contributed 83.9% of the net increase for a total of 86,817 jobs.
What Registered Agents are and Why They Are Necessary
A registered agent is also known as an agent for service of process in California. The registered agent is a legal requirement for all formalized businesses in California. This is the person or business that receives all official documentation from the Secretary of State as well as service of process notices should a business be served with a lawsuit. An owner or employee of a business can act as the business’s registered agent however, the business itself cannot be its own registered agent. Additionally, the registered agent must be over 18 years of age and they must have an address within the state that cannot be a PO Box. The registered agent must be available every business day of the year to receive documentation. This is one of the reasons why many businesses choose to use a registered agent service.
A registered agent is necessary because they function as the point of contact between the business and the state. They serve as the bridge between businesses and the state so that the state can communicate effectively with the business. This is necessary because the state needs to keep in contact with the business to inform them of their various obligations as well as the highly important service of process notices. If a business is not informed that they have been sued, the lawsuit can move all the way through the court system without a business ever knowing that they have been sued. This can be very damaging for a business and can result in huge losses.
Why Businesses Choose to Use Registered Agent Services
Registered agent services provide the function of being a registered agent for a business. This is not a necessity but it does provide a wealth of benefits for a business. One of the first benefits for business owners is compliance. Registered agent services maintain a compliance calendar and will remind a business when their annual reports and other important documentation is due. They will also help a business file these obligations. This helps a business to avoid fines and maintain the good standing of a company which is important for the maintenance of limited liability asset protection. Complications can arise if a business does not respond to service of process notices. A registered agent service will scan documents and send them to a business as well as notifying the business when these documents are available.
Another benefit of a registered agent service is privacy and discretion. The address of the registered agent of a business becomes public record and can be accessed by anyone. As a result registered agents are typically met with a great deal of spam. Additionally, if a business operates from home or a private business address they will have to disclose this address to the public. This is why a registered agent service is preferable as they will use their own address and a business will not need to disclose their own address to the public. Additionally, if a business is sued and served with a service of process notice this will often be delivered by law enforcement officers. This can be a sensitive matter and many businesses would prefer to keep this private. That is why a registered agent services can help with privacy and discretion.
Final Thoughts
A registered agent is a vital part of any business in California as well as being a legal requirement. This individual or business helps a business to stay on top of their obligations as well as their legal requirements and their potential lawsuits. This is highly important because a business needs to maintain its compliance with the state in order to maintain its limited liability protection. Additionally, business owners need to be kept informed about any potential lawsuits which they may be faced with so they may defend themselves adequately.