Starting a business as a corporation or LLC requires having a Statutory Agent in Arizona. Learn what the Statutory Agent is, their job duties, and the requirements to be one.
What is a statutory agent?
A statutory agent (also referred to as a resident agent or registered agent in some states) is a person or company that is designated to be the official point of contact between the government and your business entity.
What are the duties of a statutory agent?
The primary responsibility of a statutory agent in Arizona is to accept important legal notices and tax documents and then forward them to the appropriate person in the business.
Why is a statutory agent required in Arizona?
A Statutory Agent is required by the Arizona Corporation Commission when filing for a business entity such as a corporation and Limited Liability Company. This appointment is first made in the entity formation documents (Articles of Organization or Articles of Incorporation) but can be changed at any time.
Related: How to form an LLC in Arizona
Sole proprietorships and general partnerships do not need a Statutory Agent.
The requirements for an entity to have a Statutory Agent are formed under Arizona Statutes Section 10-501 (corporation) or Section 29-604 (LLC), which mandate registered entities will have and continuously maintain a Statutory Agent and office within the state.
The reason for having one makes sense. If a business is owned by one individual, it’s easy to determine who should be notified in the event of an annual report renewal, lawsuit, or tax notice. However, if a business has several owners, members, or partners, it would be difficult to determine who the correct contact is. By requiring a central point of contact there is no question that time-sensitive documents are going to the right person in a timely manner.
What happens if you don’t have a statutory agent?
Not only is a statutory agent required when forming an LLC or corporation, but you must maintain a statutory agent to keep the entity in compliance. Besides the requirement of designating a statutory agent at the time of formation, there are several reasons to not be with one:
- Not Receiving Legal Notices – If the listed statutory agent cannot receive legal notices, this lawsuit will still proceed. If a process server is unsuccessful in reaching the company’s statutory agent, the court can proceed with the case. This could result in a judgment being placed against the business without the owners knowing.
- Administrative Dissolution – In Arizona, if the business doesn’t have a statutory agent, the Secretary of State can dissolve the entity.
- Penalties and Fees – By not maintaining a current statutory agent, penalties and state fees can be levied against the entity and, in some cases, the owners too. Once an entity is no longer in good standing with the state, the owners may lose their liability protection and are at risk personally.
- Entity Closure – Waiting too long to remedy the lack of a statutory agent may result in the administrative closure or dissolving the entity.
Who can be a statutory agent in Arizona?
A statutory agent in Arizona can be any resident of the state who is 18 years or older, a registered Arizona domestic business entity, or a foreign business entity authorized to do business in the state. An entity may not be its own agent.
The statutory agent needs to have a physical street address (often referred to as a registered office or principal office) in the state of Arizona. This can be your home address, the address of a family member, an accountant or attorney, the address of the business, or an Idaho statutory agent service. Any physical address in the state may be used, but PO Boxes and mail drop services are not acceptable since someone has to be available to sign for documents.
The agent will also need to be available to receive Service of Process on behalf of the business during normal business hours. Service of process refers to the delivery of legal documents, often a summons, subpoena, or lawsuit filed against a business entity.
An important requirement for a statutory agent is they must sign the Statutory Agent Acceptance form and file it with the Arizona Corporation Commission.
Can I be my own statutory agent in Arizona?
Yes! Any individual, owner, member, officer, director, etc., of a business entity that meets the state, statutory agent requirements above can be a statutory agent.
Why you may not want to be your own statutory agent
Provided one of the members or officers live in Arizona, it is less expensive to act as your own agent rather than hiring a service. While this is the route many businesses take, there are a few reasons to consider hiring a service.
- Privacy – The address of the statutory agent becomes public record and is available for anybody to see. This can be especially concerning if someone is doing business on the side, and they don’t want their employer knowing about the business. Also, if the business is sued, the notice will be delivered to the address on file. This could mean employees, customers, or even neighbors witnessing the event. There is always the remote possibility of a vindictive litigant or upset customer showing up at your house.
- Availability – Arizona requires the statutory agent to be available at the principal address during regular business hours. The biggest issue with availability, especially if a home address is used, is if the agent goes on vacation or is otherwise away for some period of time and can’t be reached.
- If the Business Expands to Additional Locations – If the business has a physical presence in multiple states (offices, warehouses, employees, etc.), a foreign entity registration will often need to be filed with those states. A statutory agent will need to be appointed with a physical address in each state.
- Due Date Reminders – Statutory agent services provide annual report reminders and updates on any state requirements.
How much does a statutory agent service cost?
If you act as your own Statutory agent, there is no cost. Depending on the services provided, a commercial statutory agent typically costs between $100-$150 per year. Northwest Statutory agent’s service is $125 per year and offers several extras such as document scanning and mail forwarding. Some entity formation companies like IncFile, include a Statutory agent at no cost for the first year when you register your corporation or LLC with them.
Can a statutory agent be changed?
If the statutory agent changes, the entity is required to file a change of statutory agent.
A Statutory Agent can be changed by submitting the Statement of Change of Known Place of Business Address or Statutory Agent (corporation Form, LLC Form) along with the filing fee to the Arizona Corporation Commission.
Is a statutory agent liable for the actions of the business?
The only liability a statutory agent faces is from a lack of timely transmission of correspondence. If the statutory agent is negligent in sending documents promptly, and the entity suffers a financial loss, the statutory agent is responsible for paying those damages.
Can a statutory agent sign on behalf of an LLC?
Unless the statutory agent is also authorized to sign on behalf of the entity, they are not legally allowed to.
Does a sole proprietor need a statutory agent?
Only entities registered with the Secretary of State, such as corporations and LLCs, need to register a statutory agent. Sole proprietorships and general partnerships do not.