An LLC, or a Limited Liability Company, is a legal entity allowed by the state to operate a business and hold assets. This business structure is often touted as an appealing option for small and medium-sized business owners as LLCs benefit from pass-through taxation like sole proprietorships and partnerships while enjoying limited liability protection just like corporations. Registering an LLC is relatively straightforward and understandably, it requires a business address. However, it is important to consider the difference between a registered agent’s address and the business address.
A registered agent address can be used as the business address. However, it is extremely inadvisable since having both addresses be the same could potentially pierce the corporate veil that provides members of the LLC with limited liability protection. In a situation where an LLC lists the address of the registered agent as their business address but does not operate their principal business there, they make themselves vulnerable to claims that could leave the members of the LLC liable.
What is a Registered Agent?
A registered agent is an important role and state laws typically require LLCs to have a designated registered agent. Anyone can be a registered agent and the law only requires individuals to be at least 18 years old. Aside from individuals, entities such as other companies can also act as registered agents for LLCs.
Essentially, the registered agent acts as a point of contact between the state and the LLC. If ever the LLC will be served, the legal documents are sent to the registered agent. Aside from receiving documents in the event of legal action, registered agents are also recipients of official government notifications, tax forms, compliance information from the state on behalf of the LLC.
Usually, registered agents are also required to keep important documents pertaining to the LLC such as the Articles of Organization and the Operating Agreement. The Articles of Organization are the legal documents necessary for the establishment of the LLC. The Operating Agreement is a set of documents that outline the financial and functional decisions of the LLC such as rules, regulations, and provisions. While the Articles of Organization contain the initial statements required to form the LLC, the Operating Agreement is used to govern the internal operations of an LLC.
One important requirement that the registered agent has to abide is that the registered agent must have an official address – also known as the registered office – in the state where the LLC is established. This is important since the registered agent is the official contact of the state on behalf of the LLC. The address of the registered agent is where the state sends legal documents. They must also be available at the address during normal work hours in case the state has to contact the LLC due to legal action.
What is a Business Address?
A business address is an official address listed in the official LLC documents that specify where the principal place of business will take place. The business address implies where the business is operating from or where it can be reached.
States are often very flexible when it comes to business addresses. People can even list their home address as their business address as long as it does not violate any zoning law and HOA (homeowner association) rules (also keep in mind disability claims and discrimination). Many also employ the use of a virtual address, a remote physical address offered by a virtual address service provider that acts as a mail forwarding facility for a business.
Can the Address of the Registered Agent be Used as the Business Address?
According to FundsNet the address of the registered agent can be used as a business address. However, the situation where this is permitted is highly specific. Since anyone can be a registered agent, even the sole member of a single-member LLC can act as their own registered agent if they choose to do so. In this case, they would list their registered address as the business address as they are all one and the same.
Even if an LLC is using a third-party registered agent, they can still use the registered office as the business address. However, many sources cite that this decision is highly inadvisable. Since the business address is supposed to be the principal place of business, the business address has to be an address that the LLC has some control over. If the LLC has no control over the registered office, they are vulnerable to liability.
The main appeal of forming an LLC for a business is that the members, owners of the LLC, are protected by limited liability. This means that if the LLC is sued or falls into debt, the financial burdens of the LLC will not put the personal assets of the members such as property, cars, and bank accounts at risk.
However, if the LLC is using the registered agent’s address as the business address but in actuality does not have control over the registered office, they can potentially be vulnerable to a claim that the LLC is engaged in fraudulent behavior – a circumstance where the corporate veil is pierced, and the limited liability protection of the LLC might not be enough to protect the members of the LLC.
Another circumstance where the LLC is left vulnerable by using the registered office as the business address is that a claim can be made that the LLC is not following corporate formalities by not following the statute that requires the disclosure of where principal business takes place. Although these scenarios do not imply instant liability to the members, these situations surely do make it a possibility.