Whether you choose to form an LLC or corporation, and no matter which state you choose to form it in, you’re required by law to have a registered agent.
Does that mean you need to hire a registered agent service?
Not necessarily. In many states you can appoint yourself or your business to act as its own registered agent. Is it the smartest business decision to make?
Your registered agent plays an important role in your business and its success. And the responsibilities of a registered agent go deeper than simply accepting your mail. In fact, your registered agent is the one who can provide early warning signs of legal issues, as well as other business matters.
A registered agent is an individual or entity chosen by an entity like an LLC to be their intermediary agent for communication with the government, service of process, and any compliance documents for the business. Essentially a registered agent represents the LLC for matters not internal to the LLC.
What is a Registered Agent?
A registered agent is the responsible third-party person or entity that accepts legal documents on behalf of the corporation or LLC.
The registered agent must be located in the same state in which a business entity was established, and be designated to receive service of process notices, correspondence from the Secretary of State, and other official government notifications, such as tax forms and notice of lawsuits.
What does a registered agent Do?
A registered agent accepts mail and important documents on behalf of your business, but the main purpose is to ensure your operation maintains corporate compliance. This included receiving tax and legal documents on behalf of your business, making sure you don't miss important information regarding tax payments, lawsuits, or judgments involving your business.
Why You Should HIre a Registered Agent
Having a registered agent for your business is required by law because of due process. A lawsuit cannot properly move through the court system if your business is not formally notified. Having a registered agent is the legal system's way of knowing your business and maintaining a reliable way to be contacted if necessary.
Aside from it being a requirement for businesses to have a registered agent, there are also some benefits to having the services of a registered agent, such as:
Privacy – A registered agent saves you from having to list your name and personal address on public records. State records are permanent, and once your name and address go into the system, it stays there for decades to come. With a registered agent, you list their name and physical address and the point of contact for your business.
Physical address – If you’re a web-based business, a common problem is having a physical mailing address or location. Part of a registered agent's service is to provide a physical address for your business.
Reduce paperwork – For a small fee (between $100-$300 a year), registered agents track official notices and annual reports with the state. They notify you with reports to help keep your business in compliance and also keep all important documents in one safe place.
Multiple locations – Your business can operate in multiple states, but you’ll need a registered agent with a physical address for each state. Many business owners hire agents to comply with state regulations and ensure all notices to the businesses are being kept and up to date.
If you’re a small business with a regular storefront, who keeps regular business hours, and who only operates in one state, then hiring a registered agent service may not make sense for you. The owner of the business can list their personal name as the registered agent on the paperwork and manage the annual reports. However, if any of the reasons above make you feel better about conducting legal paperwork, then hire a registered agent.
How to Choose a Registered Agent
A registered agent plays an important role in your business. To ensure you get the best protection and value for your investment, there are some requirements and qualities you should look for in an agent.
Choose a professional – While you can recruit an owner or employee to serve as a registered agent, you want someone who knows what they’re doing with no guidance needed from you. A professional registered agent specializes in handling sensitive and critical documents and ensuring they get an immediate response.
Look at value and experience – Price is one factor, but you also want to choose a registered agent who has experience and knowledge in handling sensitive material and information. Look at their reputation and see if they have missed any filing dates.
Evaluate their service level – A registered agent should have no added or hidden fees and should provide same-day electronic uploading services.
Check out their software – See if the registered agent of your choice uses state-of-the-art software to ensure timely transmission of documents. What do they use for monitoring and tracking? How do they manage annual reports?
A registered agent can be any person who is over the age of 18, works normal business hours, and resides in the same state that you formed your business entity. An agent can also be another business that provides services to corporations or LLCs.
If you want, you can also appoint yourself or your business to be its own registered agent. Remember, this puts your personal information in the public eye and puts all of the heavy lifting on you when it comes to annual reports.
There are a few different options for choosing a registered agent for your business, keep reading to decide which is best for your situation.
The first option is to appoint yourself as the registered agent for your business. This can be a good choice for reliability, but can also end up taking more time out of your day than some would like, especially for an individual as busy as a small business owner.
It is also possible to designate another member of your business or even a close friend as the registered agent. However, this does have some additional requirements, including that the person elected is 18 years or older, has an address in the state of formation, and is available in-person during business hours if necessary.
Another option is to go through an online registered agent service. These services provide qualified and reliable registered agents for a reasonable charge and are often worth the money both for one’s time and for the peace of mind that comes with a professional at work.
The use of a professional service ensures complete compliance with the law for your business, and is generally recommended for non-professionals who require a registered agent for their business.
What Happens If You Don’t Have a Registered Agent
There are serious consequences to not having a registered agent for your business. Your business can be dissolved by the state in which it was formed and forfeit the right to conduct business in other states.
Conducting business without a registered agent puts your business at risk for hefty fines and lawsuits. Additionally, if you fail to file an annual report, you also lose your good standing status, which will make reinstatement hard and expensive.
Why a Business Lawyer Should be your Registered Agent
Having the right registered agent is like having the silent business partner that contributes to your success. While you can act as your own registered agent, having a reliable, experienced lawyer as your agent can benefit you greatly.
When a lawyer acts as your registered agent, you avoid unnecessary embarrassment of being served in public. You also maintain your privacy and avoid having your personal information entered into the Secretary of State’s database. A lawyer acting as a registered agent also ensures that all important paperwork will get answered promptly and filed and reported accurately.
To protect your business, contact a reliable lawyer who can provide top-notch registered agent services.
When are Registered Agents used?
For most states LLCs, partnerships, and corporations are required to appoint a registered agent when forming their businesses. This registered agent is usually appointed when the business’ Articles of Organization are officially filed with the government.
This registered agent then consistently has a role in the upkeep of the legal entity, including receiving items like tax forms, legal documents, summons, and more for the LLC. It is extremely important that the registered agent of an LLC stays up to date with all necessary functions of the LLC in order to keep the business in good legal standing and avoid any unnecessary losses due to items like a missed summons or government document.
A registered agent is a necessary part of operating a business of any size and unreliable registered agent can be detrimental to the legal standing and functionality of a business. As such, it’s very important that a registered agent be reliable and capable of performing all the necessary duties for the business they represent.