Anaya Nolan
In business law, an agent is someone who is given permission to act on behalf of another individual or business entity. A person appointing an agent must be mentally and legally competent to do so. Agents can be appointed by individuals or businesses for various reasons, such as selling a home, executing a will, managing a career, or handling business transactions. In the case of businesses, a registered agent is often appointed to receive legal documents and official communications on the business's behalf. This registered agent can be an individual or another business, as long as they are located in the same state as the business.
| Characteristics | Values |
|---|---|
| Who can appoint an agent | Any competent person who is mentally and legally competent to appoint an agent |
| Who can be an agent | Any competent person with expertise in a specific industry |
| Types of agents | Enrolled agent, Registered agent, General agent, Special agent, Sports agent, Contract agent, Statutory agent, Resident agent |
| Enrolled agent requirements | Pass an IRS test or be a former IRS employee |
| Registered agent requirements | Over 18 years of age, located in the state where the business is registered, provide a physical address |
| General agent | Authorized by the principal to transact all the affairs of a particular kind of business |
| Special agent | Authorized by the principal to handle a particular business transaction or perform a specific act |
| Sports agent requirements | Bachelor's degree, sports license, register with the state, join a sports agency |
| Statutory agent requirements | N/A |
| Resident agent requirements | N/A |
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What You'll Learn
Agency by Necessity
In finance, agency by necessity often involves replacing an individual's investment or retirement decisions. It gives a broker or financial advisor the discretion to act on behalf of a client. For example, a wealth manager may be involved in the creation of wills, trusts, and the oversight of inheritances. If a family member managing a family's wealth becomes incapacitated, another close family member with a similar understanding of the family finances may take over as an agent of necessity.
It is important to note that agency by necessity relationships can face legal challenges, especially when the decisions made by the agent concern large amounts of money or the distribution of assets to descendants. In such cases, family members may question the actions of the agent and voice their frustrations, potentially leading to lawsuits.
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Appointing a Sports Agent
A sports agent is a professional who represents athletes during contract negotiations and other financial matters. They also oversee their clients' careers by promoting and managing their press image. Agents are often appointed when individuals need someone with more expertise or when they don't have the time to complete a task.
In the context of business law, a person appointing an agent must be mentally and legally competent to do so. A minor child, for instance, cannot legally act through an agent appointed by them. The usual method of creating an agency is by expressly appointing one person to act for another. This appointment may be oral, or it may need to be in writing, depending on the context. For example, most states require that agency appointments be in writing when the agent will be authorized to buy or sell land.
To become a sports agent, you will typically need a bachelor's degree, and advanced degrees, such as a master's or a law degree, can be beneficial. You will also need to obtain a sports license and register with the state, although this is not required in all states. A sports agent's salary is largely determined by commission, so it is important that they negotiate contracts firmly and fairly.
Sports agents perform a variety of tasks, including:
- Acting as talent scouts, marketers, and press directors
- Advising, speaking for, and negotiating on behalf of their clients
- Recruiting top talent
- Managing their clients' personal brands and overall careers
- Acting as a liaison between athletes and their financial affairs and legal teams
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Who Cannot Legally Appoint an Agent
In business law, an agent is someone who is given permission to act on behalf of another individual or business. An agent is often entrusted with a specific task that requires more expertise or time than the principal has.
While any competent person can be a principal and act through an agent, there are some individuals who cannot legally appoint an agent. These include:
- A minor child: A minor child cannot legally act through an agent appointed by them.
- Mentally incompetent individuals: A person must be mentally and legally competent to appoint an agent. Therefore, someone who has been declared mentally incompetent by a court cannot appoint an agent.
- Deceased individuals: The death of either the principal or the agent will generally cause the agency to be automatically terminated.
- Bankrupt individuals: Bankruptcy of either the principal or the agent usually terminates the agency.
In addition, there are certain acts that cannot be delegated to an agent and must be done in person. These include testifying in court for another individual, making a will, and voting.
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Enrolled Agents
To become an enrolled agent, one must pass the Special Enrollment Exam (SEE), also known as the EA Exam, a three-part comprehensive IRS test covering individual and business tax returns. Alternatively, one can become an enrolled agent through experience as a former IRS employee. Enrolled agent status is the highest credential awarded by the IRS, and individuals with this status must adhere to ethical standards and complete 72 hours of continuing education courses every three years.
In addition to their work with taxpayers, enrolled agents can pursue career opportunities in public accounting firms, banks, and law firms. They may also open their own tax firms or consultation companies and even explore government careers. The path to becoming an enrolled agent is often more accessible than becoming a Certified Public Accountant (CPA) or tax attorney, as it does not require a college degree or formal secondary education. However, enrolled agents are expected to have a strong understanding of tax concepts, laws, and regulations, and most have a background in finance or accounting.
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Registered Agents
A registered agent is an individual or organization appointed to receive legal documents and other official correspondence on behalf of a business. They are also known as a resident agent or statutory agent. Registered agents ensure that businesses remain compliant with state regulations and can promptly address any legal matters that may arise. They are also responsible for forwarding important documents to the company in a timely manner.
Any competent person can appoint a registered agent, as long as they are mentally and legally competent to do so. A person who has been declared mentally incompetent by a court cannot appoint an agent. In the case of a minor child, they cannot legally act through an agent appointed by them.
The cost of engaging a registered agent typically ranges from $99 to $300 annually. Most states require that agency appointments be in writing, particularly when the agent will be authorized to buy or sell land. A written authorization of agency is called a power of attorney, and the agent is referred to as an attorney-in-fact.
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Frequently asked questions
Any competent person can appoint an agent to act on their behalf. However, the person appointing an agent must be mentally and legally competent to do so.
The usual method of creating an agency is by expressly appointing someone to act for another. This appointment may be oral, but some agency appointments, such as those involving the buying or selling of land, have to be in writing. A written authorization of agency is called a power of attorney, and the agent is referred to as an attorney-in-fact.
An agent can be an individual or a business. The agent must be over 18 years old and have either their primary residence or a usual place of business in the same state as the principal.
There are general agents, who are authorized to transact all the affairs of a particular kind of business, and special agents, who are authorized to handle a particular transaction or perform a specific act. Agents can also be further categorized based on their function, such as enrolled agents, registered agents, and sports agents.
