Starting a business as a corporation, Limited Liability Company (LLC), Limited Liability Partnership (LLP) or Limited Partnership (LP) requires having a Resident Agent in Michigan. Learn who the Resident Agent is, their job duties and the requirements to be one.
What is a Resident Agent?
A Resident Agent is an individual or company, designated by the entity to receive important legal documents on behalf of the business. In essence, the Resident Agent is the mailbox for the entity.
Why is a Resident Agent Required in Michigan?
A Resident Agent is required by the Secretary of State when forming a Michigan LLC, corporation, LLP or LP. This appointment is first made in the entity formation documents (Articles of Organization or Articles of Incorporation), but can be changed at any time.
Sole proprietorships and general partnerships do not need a Resident Agent.
The requirements for an entity to have a Resident Agent are formed under Michigan Statutes Section 450.4207 (LLC) and Section 450.1241 (corporation) which mandate registered entities will have and continuously maintain a Resident Agent and registered office within the state. The agent must be also be available during normal business hours to forward any service of process, notice or demand pertaining to the entity to the appropriate individuals.
The reason for having one makes sense. If a business is owned by a single-person, it’s easy to determine who should be notified in the event of a 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 in the state 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 Resident Agent?
For starters, the Michigan Secretary of State won’t approve the formation of the entity without one.
Even after starting the business, a Resident Agent and registered office must be continuously maintained. Not having one can result in issues such as:
- Not Receiving Legal Notices – If the listed Resident Agent isn’t able to receive legal notices, this doesn’t mean a lawsuit can’t proceed. If a process server is unsuccessful in reaching the company’s Resident Agent, the court can proceed with the case. This could result in a judgement being placed against the business without the owners knowing.
- Administrative Dissolution – In Michigan, if the business doesn’t have a Resident Agent, the Secretary of State can dissolve the entity.
- Penalties and Fees – By not maintaining a current Resident Agent, penalties and 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 have lost their liability protection and are at risk personally.
Who can be a Resident Agent in Michigan?
A resident agent in Michigan can be a resident of the state who is 18 years or older, a registered Michigan domestic business entity or a foreign business entity authorized to do business in the state. An entity may not be its own agent.
The resident agent also needs to have a physical address (often referred to as a registered office or principal office) in the state of Michigan. This can be your home address, the address of an accountant or attorney, the address of the business, or a resident 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.
Can I be my own Resident Agent in Michigan?
Yes! Any individual, owner, member, officer, director, etc of a business entity that meets the state requirements can be a Resident Agent.
Why use a Commercial Resident Agent Service?
Provided one of the members or officers live in Michigan, it is often more convenient and 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 Resident 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 a vindictive litigant or upset customer showing up at your house.
- Availability – Michigan requires the Resident Agent be available at the principal address during normal 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 will have a physical presence in multiple states (offices, warehouses, employees, etc.), a foreign entity registration will often need to be filed with those states. A Resident Agent will need to be appointed with a physical address in each state.
- Annual Notices – Resident Agent services provide reminders on the state requirements such as annual report filings.
How much does a Resident Agent cost?If you act as your own Registered Agent, there is no cost. Depending on the services provided, a commercial Registered Agent service typically costs between $100-$150 per year. Northwest Registered Agent’s service is $125 per year and offers several extras. Some entity formation companies like IncFile, include a Registered Agent at no cost for the first year when you register your corporation or LLC with them.
Can I change my Resident Agent?
A Resident Agent can be changed by submitting the Certificate of Change of Registered Office and/or Change of Resident Agent along with the filing fee to the Secretary of State.