This Article explains exactly what you need to know to ensure that you have the right person or entity serving as the registered agent for your company.

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WHAT IS A REGISTERED AGENT

This role is pretty simple. It is a person or legal entity that must be available at a designated address to accept legal papers or any official documents sent to the LLC. The registered agent must have a permanent physical address located within the state where the limited liability company has been formed.

The agent is merely an administrative appointment with the limited role of accepting deliveries made to the limited liability company and forwarding the documents, packages, papers to the last known business address of the business.

The person or business serving in this role has no duties to advise or consult the LLC and does not even have to open the packages received. But because any delivery made to a registered agent will usually be important documents, it is important that every company appoint a reputable and reliable service to serve this role.

WHY IS ONE NECESSARY?
The LLC, just like the corporation, is a fictitious being which means that it only exists because the law says so. It does not have its own physical being and presence the way a natural person has a body.
Because of this, there can be confusion by other parties or the public generally as to how to officially communicate with the company. This becomes really important when a state agency or another party needs to serve legal papers or official notices to the business.

WHO CAN SERVE AS A REGISTERED AGENT
Each state varies when it comes to determining who is qualified to serve as a registered agent for a legal entity registered in the state. For most states, there is a requirement of a permanent physical address located within the state. The person or entity should be present at such address during business hours to be able to accept any deliveries made.
Some states impose additional requirements such as mandating that the designee also be a member or manager of the company, a lawyer licensed in the state, and/or a legal entity that is properly registered and authorized to do business in the state.

CHOOSING A REGISTERED AGENT PROVIDER
If an owner of an LLC has a permanent address within the state and does not mind disclosing it on the public corporate records, he or she can serve as the registered agent of a limited liability company.
However, the better decision is to retain the services of a professional and credible national provider of RA services. By doing so, you can have more peace of mind that there will always be a person present to accept legal papers on your behalf of your business and notify you promptly of any activity. Some services also offer additional valuable services such as notifications about state filing requirements and online tools for ensuring your legal entity always remains in compliance.

When choosing an LLC registered agent provider, insist upon using a reputable and national provider.  Do not trust just any company to serve in this role because this agent is going to be the officially appointed person or entity for receiving important legal papers on behalf of your limited liability company.

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An officer typically includes a President, Treasurer and Secretary.  Each of these officer roles were traditionally defined in the corporation legal structure and each of them has defined roles and authority when operating a business.

While officers are not legally required for a limited liability corporation, it is recommended that one have officers.  This is because it is expected that a serious business will have senior officers.  As a business, you will need to interact and conduct transactions with other parties such as banks, suppliers, partners, government agencies and landlords.

Each of these parties will want to know who the senior officers are and who has authority to act and make decisions on behalf of the LLC business.

Rather than risk losing the business transaction or losing credibility with your business colleagues, it is the better path to appoint at least these three major officer roles as the inception of an LLC once formed.

You can always provide for specific methods too remove or replace an officer in the LLC operating agreement.  One person can hold multiple officer roles- this is typical in a small business or a single owner LLC.

You should NEVER sign a business document or other contract on behalf of your LLC as owner.  This is because when you are serving as the person running or managing the business, you are not doing so in your capacity as an owner of the business but rather in your capacity as a manager or officer of the LLC business.

This is an important concept to get if you care about preserving the limitation of liability protection offered by your limitation of liability company.  You never want to do anything that implies that you are doing business in your personal capacity.

One way to evidence that it is the LLC and not you personally that is entering into a legal contract is to make sure you always use a standard title when signing an agreement.  The ideal scenario is to have your LLC appoint officers like a President and you can sign agreements as the President of your LLC. For some very simple management structures, if there are no appointed officers and your LLC is member managed, you can sign as Managing Member or if your LLC is manager managed, Manager.

Your legal agreements are very important to your LLC business as they outline the business rights and obligations with other parties.  So make sure you take the time to read them properly and have them reviewed by your attorney to make sure you are not legally binding your company to something unintended or unreasonable.

This is a tricky question because there is always the interplay between the liability protection afforded to an LLC officer under the limited liability company laws and the general law that requires that you be personally accountable for your actions.

Making decisions in a business is difficult.  You need to decide on things when you may not have complete information and you may make decisions that may ultimately prove to not be the best one.  The law acknowledges this and so generally does not hold an officer or a manager personally liable for the acts made on behalf of the business AS LONG AS the person acted reasonably and did his homework when making such decisions.

This is a standard of care that is imposed on those who run a business which benefits others (like the other members) and the specific standard actually differs based on your state.  Some have a very low standard while others impose stricter requirements.  However, the general concept is that you should “mind the business” when serving in your officer role.

Gather all the available information you need in any business situation and take the time to review it.  Consult with your employees or advisers if need be. Spend the time to think through each business decision and always ask what is in the best interests of the LLC business.  If you maintain this standard and engage in some diligence, the LLC liability protection laws should protect you.

One additional protection you could ask for before serving in an officer role is an indemnity agreement where the LLC business will agree to cover your personal liability if one ever came up.  Another layer of protection is requiring a director and officer insurance policy to cover you.

Now, if you engage in unlawful or illegal conduct or you make decisions that are clearly in your interests but not the interests of the LLC business, you could be found personally liable.

A member managed and a manager managed LLC are formed the same way and subject to the same LLC formation requirements in each state. Some states require that you designate the structure in the formation documents.  Once your LLC is formed, you need to set up your desired structure (manager managed or member managed) in the LLC Operating Agreement for your new limited liability company.  This is how you set up your desired structure.

CLICK HERE FOR INFORMATION ON FORMING AN LLC (which is the first step to either a member managed or a manager managed LLC).  LLC FORMATION

CLICK HERE TO SEE MORE INFORMATION ON MEMBER MANAGED AND MANAGER MANAGED LLC OPERATING AGREEMENTS: MEMBER AND MANAGER LLC OPERATING AGREEMENTS

Once an LLC is formed, the members of that limited liability company will need to select a management structure to govern the LLC.  There are two main structure: (i) member managed and (ii) manager managed.

In the great majority of states, the LLC is member managed by default.  This means that if you do not make a choice, the choice is made for you.  In some states, if you want your LLC to be manager managed, you will need to include certain required provisions in the formation documents you file with the state.  So, please look out for these requirements or make sure the lawyer or document filing service you use to form your LLC knows you want your LLC to be manager managed in this case.

So- which structure should you choose?

If you look at most small business LLCs, you will see that they are member managed.  Member managed is the simplest structure and means that every member has authority to act on behalf of the business.  If all your members will have direct involvement in the management of the company, then a member managed LLC usually makes the most sense.    Internally, the members will agree on how they vote and when they will vote on certain LLC matters and agree with each other that they will each not act on behalf of the LLC until the proper votes are obtained.

A manager managed LLC is generally used when there are “passive” members in the LLC.  Passive means investors in the LLC who do not actively manage or otherwise operate the business of the limited liability company. If your limited liability company has passive investors, it is usually recommended you have a management layer between the members and the managers.

With a manager managed LLC, the members, by virtue of being members, do not have authority to manage and operate the business of the limited liability company.  Instead, the members elect “managers” and it is the managers who have this authority.  It is important in a manager managed LLC that the LLC Operating Agreement have specific rules and processes for the managers to follow when managing the LLC.  They have duties to act in the best interests of the LLC.

Now, a manager can also be a member of the LLC.  If a manager is an adult (over 18) natural person, the LLC laws do not imposed any restrictions on who can serve as managers.  In some states, there may be restrictions on having a legal entity (such as another LLC or a corporation) be a manager.

How Do You Set Up the Management Structure For Your LLC?

The management structure of an LLC is set up and is governed by the Operating Agreement of the limited liability company.  It is important that your operating agreement not only be clear about the type of management structure, but that it contain sufficient provisions detailing how members will manage (if it is member managed) or how managers are elected and how managers will vote and operate to manage the business.

The LLC Expert.com has attorney drafted, state specific LLC operating agreements for both member managed and manager managed LLC entities.  Plus, the forms come with an excellent LLC Operating Manual Guide to help LLC business owners with the management of the business. 

CLICK HERE TO SEE MORE INFORMATION ON MEMBER MANAGED AND MANAGER MANAGED LLC OPERATING AGREEMENTS: MEMBER AND MANAGER LLC OPERATING AGREEMENTS

GENERAL AUTHORIZATION

The limited liability company can only act through its members, managers and/or officers.  The LLC Operating Agreement should provide who has the authority to act on behalf of the limited liability company.  In the more simple member managed LLC structures, the members themselves have the authority to act on behalf of the LLC and are the agents of the LLC businesss when conducting business activity.

It is also common for a limited liability company to have operating officers such as a president, vice president, treasurer/CFO, and secretary.  Each of these officer positions are given authority with respect to its title.  An LLC can also hire employees and grant employees certain authority and responsibilities that can include acting on behalf of and binding the limited liability company.

SPECIAL ACTIONS USUALLY REQUIRE A MEMBER VOTE

It is not practical to require that every LLC action or decision be brought to the Members for an official vote of approval.  Accordingly, for day to day operational matters, the managing members, managers and/or officers make such decisions. 

However, it is often recommended that the agents of the LLC should not be able to make certain major decisions for an LLC without a proper and formal LLC member vote.  These decisions are generally listed out in the LLC Operating Agreement and subject to a specific rule that requires the approval of Members holding a certain percentage ownership of the limited liability company.

Common examples of such decisions include borrowing money, entering into transactions with a Member, selling all of substantially all of the assets of the LLC, entering into any major purchases of assets, and entering into a strategic transaction.

With some limited liability companies, only a majority vote will be required to approve while in others a higher vote or a unanimous vote is required. Each limited liability company has the flexibility to determine its own set of rules for how the LLC will operate in business, who can properly act on behalf of the limited liability company and when prior member or manager approvals are needed.