Think of all the people you communicate with regularly to run your LLC. Business partners, employees, banks, lawyers, and financial advisors all probably come to mind. But what about the state? It may not be at the top of your list, but running a successful LLC in Alabama requires consistent interaction with the state.
Formation documents, business information changes, lawsuits, professional licenses, and Business Privilege Taxes – all of these (and more) require you to work with state agencies. The good news is that you don’t need to do it yourself.
Introducing the registered agent. An Alabama registered agent is an intermediary for your LLC, a person or company that handles your communication with the state. They’re a vital part of any LLC’s success. Before you file your Certificate of Formation, you’ll need to have a designated registered agent. How? Why? Who? Read on to find out.
You’ve got enough on your plate. Hiring a registered agent service lets you hand off those responsibilities so you can focus your energy where your passion lies. Let us at ZenBusiness handle the paperwork for just $99 the first year (LegalZoom charges $299).
What is an Alabama Registered Agent & is it Necessary?
An LLC cannot be formed or do business in Alabama without first having a registered agent on file with the Secretary of State. This is required by law and the penalties can be serious. Maintaining a registered agent doesn’t just keep you in good standing. It also provides an important service.
Think of your registered agent as your ambassador to the state, handling all your LLC’s important legal, tax, and compliance information. This can either be an individual, company or registered agent service, as long as they meet the state’s requirements (see below) and agree to take on the role.
As soon as they’re appointed, your registered agent must be consistently available in Alabama to receive and act on mailed documents and service of process. If at any time, your LLC does not maintain a valid registered agent, it can lose its good standing with the state and risks administrative dissolution.
What are the Requirements of a Registered Agent?
Alabama doesn’t put a ton of restrictions on who you can appoint as your registered agent, so you have some flexibility there. But there are a few non-negotiable rules you must follow by making sure that your agent:
- Is an individual Alabama resident or a corporation authorized to do business in the state.
- Has a physical address in Alabama.
- Has a mailing address in Alabama (no P.O. boxes allowed).
You can even serve as the registered agent yourself as long as you meet these requirements and don’t mind taking on the added responsibilities.
Your registered agent’s name and address are required to complete your Certificate of Formation, and the document will be rejected if you fail to include them. Here’s a screenshot of what you’ll see on the form:
When you’ve got potential options for your registered agent, review each one to make sure that they meet these requirements. If they do, you’re good to go! If not, you’ll need to keep looking.
Who can be a Registered Agent in Alabama?
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Alabama’s registered agent requirements are pretty broad, so you’ll have no shortage of options. On top of that, your agent can be either an individual or a professional service. But think carefully before choosing, because each option has its own pros and cons. Let’s take a closer look.
You may choose to appoint a single person as your registered agent. Some LLC owners take on registered agent duties themselves. Others appoint one of their partners or managers. Some will even appoint a family member. As long as the proposed agent fulfills the state’s requirements, they’re a valid option.
In addition to being an Alabama resident, your agent must not currently be establishing residency or receiving benefits in another state, even if that residency is still forthcoming.
Some smart registered agent choices include attorneys, accountants, or other LLC partners, people who understand the ins and outs of business operations.
- Convenience – Having familiarity and mutual trust with your registered agent is extremely beneficial, and appointing an acquaintance can provide both. Plus, you’ll always know how to contact them.
- Cost – Hiring someone you know often won’t cost a dime. It’s certainly cheaper than a professional service.
- Scheduling – Part of a registered agent’s duty is being consistently available to receive mailed documents and service of process. If your agent goes on vacation or moves out of state, it will throw a wrench in your plans.
- Punctuality Risks – Some state communications and filings are very time-sensitive. If your agent is unavailable when documents are delivered, it could slow down the entire process and put you at risk for late fees and penalties. Even worse, a friend or family member could lose or misplace a document. So if you’d rather not interrogate Aunt Louise about the location of a particular tax form, you might consider using a registered agent service instead.
Registered Agent Service
If safety and reliability is your goal, hire a registered agent service. A business acting as your registered agent must be either a domestic entity in Alabama or a foreign entity who has foreign qualified in Alabama.
- Privacy – Some documents delivered to your registered agent will contain sensitive information. Do you want details about your lawsuit or taxes lost out there in the world? Definitely not. A friend or family member might misplace these documents, but a professional service will not. Plus, in Alabama, all registered agent names and addresses are available to the public. This might make an individual uncomfortable, but hiring a company will keep this personal information off the record.
- Reliability – Handling and processing time-sensitive documents is a registered agent service’s specialty, its area of expertise, its main game. Hire a professional service and you can be sure that your filings will be submitted properly and punctually, so you’ll never have to deal with late fees or other penalties.
- Location – Many registered agent companies offer service in most or all 50 states, so if business is booming and you decide to expand outside Alabama, you won’t need to find a new agent for each state.
- Cost – There’s no getting around it – hiring a service costs more than appointing an individual who’s willing to do it for free. However, for a reasonable price (roughly $100/year), you’ll receive premium services. Taking your car to a mechanic costs more than letting your neighbor try to fix it, but the mechanic gives you peace of mind that the job will get done right, and that may very well be worth the cost.
All of the other steps in the LLC formation process will keep you busy, but take some time to ensure you find a registered agent that fits with your business model, goals, and values. Do this, and your LLC will reap the benefits for years to come.
Registered Agent Changes and Resignation
You may have a wonderful registered agent, someone who takes care of everything efficiently and who you trust completely. But you know what they say: all good things must come to an end. At some point in the life of your LLC, you may need to change your Alabama registered agent.
You might not look forward to making this change, but at least it’s a pretty straightforward process. You just need to mail two copies of the Change of Registered Agent or Registered Office form and a $25 payment to:
Secretary of State
Business Services Division
P.O. Box 5616
Montgomery, AL 36103-5616
Or, you can email the form to firstname.lastname@example.org.
You might need to change your agent for any number of reasons, but the most probable is that your current agent resigns.
The idea of your agent leaving probably isn’t a pleasant one, but don’t worry; you’ll never be blindsided by an agent’s departure because state law requires agents to notify their company before submitting an official resignation. Then, the resigning agent must retain his or her duties for 31 days, giving you plenty of time to bring on a replacement.
But don’t get too comfortable with this month-long cushion. Get your new agent on board right away because the state will dissolve any business that goes more than 60 days without one.
Have Questions or Concerns?
This guide contains almost everything there is to know about Alabama registered agents. However, you might have a unique situation that requires additional information. Reaching out to the Alabama Secretary of State is easy, and they’ll have the answers you need. Here’s how to go about it:
Visit Their Website
You might find answers to your questions on the Secretary of State website, which contains a bunch of useful information on registered agents and the rest of the LLC formation process.
Give Them a Call
Sometimes it’s just nicer to chat with a real person. If you’d prefer to call, reach out to their Montgomery office at (334) 242-7200.
Familiarize yourself with Alabama Law
Here’s what Alabama Code 10A-1-5.31 says regarding registered agents:
Designation and maintenance of registered agent and registered office.
(a) Each filing entity, each foreign filing entity, each foreign registered limited liability partnership registered pursuant to Article 7, and any registered limited liability partnership that does not maintain a place of business in this state shall designate and continuously maintain in this state:
(1) a registered agent; and
(2) a registered office.
(b) A registered agent:
(1) is an agent of the entity on which may be served any process, notice, or demand required or permitted by law to be served on the entity;
(2) may be:
(A) an individual who is a resident of this state; or
(B) a domestic entity or a foreign entity that is registered to do business in this state; and
(3) must maintain a business office at the same address as the entity’s registered office.
(c) The registered office:
(1) must be located at a street address where process may be personally served on the entity’s registered agent;
(2) is not required to be a place of business of the filing entity or foreign filing entity; and
(3) may not be solely a mailbox service or a telephone answering service.