Congratulations! After all of your hard work and belief in your product, you’re finally getting your big break. Private equity investors are interested in your new business idea, and have committed to financing the launch of your product throughout the United States. Since your goal is to take your company public within 5 years, your tax and legal advisors have advised you to form a Delaware corporation and register it (a/k/a qualify as a “foreign corporation”) in all other states, plus Washington, D.C.
The Role of a Registered Agent
Typically, your law firm will work with a registered agent to coordinate the filings in all jurisdictions and provide your investor group with evidence of the formation and registrations for doing business in all states. The registered agent will be named in each of your filings as required by statute.
Generally, the role of the registered agent is to receive any legal process and tax notices and forward these time sensitive documents to the designated contacts at your company. But the registered agent is also another partner on your team and can assist your lawyers and in-house legal and accounting teams with ongoing services even after your company is formed.
Tips for Forming Your Company
While there will be many tasks that you need to take care of as you prepare to launch your business and complete the first round financing, below are a few tips for working with your lawyers and registered agent:
- Choosing the Name of the Company:
- Before you fall in love with a name for your new company, make sure it’s available in all 51 jurisdictions and doesn’t have any words that may require additional consents that could take a longer time for approval (i.e., “insurance”).
- If you’re not filing right away, reserve the name to ensure no one else can take it. (The law firm you’re working will typically coordinate with your registered agent to file the name reservations and renew them, if necessary, depending on the timing.)
- Prepare the Certificate of Incorporation and Applications for Authority for All Jurisdictions:
- Do this well in advance of your filings so you can ensure that you include all required information (amount of information varies from state to state), and arrange to proofread to minimize the risk of rejection when submitted.
- Know which filings require original signatures! Many allow for a PDF copy to be submitted to the Secretary of State’s filing office, however, some jurisdictions, such as Washington, D.C., require that an original be submitted.
- Have your law firm coordinate with the registered agent to ensure that all filings get submitted on the same date.
- Make sure the person signing the Certificates and Applications is the proper authorized signer per each state’s statutes. (One of the most common causes of rejection of a filing is the incorrect signer’s title. Your registered agent can review the documents and bring errors like this to your attention so that they can be corrected before the filings are submitted.)
- Post-Formation and Qualification: Obtain a Certified Charter and a Good Standing Certificate from the State of Delaware:
- Again, your law firm will likely request the above from your registered agent to provide evidence of the formation of your new company and its registration in all required states to your investor. (This is just one of the many items on the law firm’s closing checklist that will be required before you complete your first round of funding for your business.)
- Know What the Annual Compliance Obligations Are For Your Company:
- In order to maintain the good standing of your company in all 51 jurisdictions, you’ll be responsible for income and franchise tax payments and the filing of income and franchise tax reports and returns.
- As with all other filings, the fees and required disclosure will vary from state to state.
- Your trusted group of partners, your tax and legal advisors and your registered agent can help ensure that you maintain good standing in order to conduct your business and meet all of the obligations you agree to under the terms of your financing agreements with your investors.
In addition to the above, depending on the nature of your business and what states you will have employees in, there are likely to be other filings or registrations required. Again, your lawyer, registered agent and other partners can assist with providing guidance and forms and can also coordinate these filings for your new company along with advising on what annual requirements are.
Knowing what is required in advance, and being clear on which advisor or partner can best assist will allow you to focus on successfully executing your business plan and growing your business!
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.