How to Choose a Registered Agent
If your business is ready to take the next step and form an LLC or corporation, you will need to designate a registered agent.
A registered agent is crucial to your business and ensures compliance with the state. Running a business also comes with tedious paperwork and tax documents, which you might not have time for. A registered agent is there to handle the administrative work that comes with running a company.
So, what does a registered agent do, and how should you go about hiring one?
This article explains everything you need to know about registered agents, how you can choose the best option for your business, and why a quality registered agent is essential to keep your company running.
- March 17, 2021
What is a Registered Agent?
A registered agent, also known as a statutory agent, is an entity or person accessible during business hours to receive lawsuits, documents, and other forms on behalf of your business.
If your business gets sued, the other person must communicate the lawsuit to you. Depending on the state, the lawsuit is delivered by mail or by a person. Each state maintains a database of registered agents to make this process simple.
Apart from lawsuits, registered agents accept tax notices, subpoenas, correspondence, official documents, and service of process. Registered agents enter an agreement to fulfill these duties and pass on the necessary documentation to the designated person at the limited liability company or corporation.
Requirements Needed to Act as a Registered Agent
The registered agent requirements differ slightly by state, but here are the consistent qualifications:
- An LLC or corporation is not allowed to serve as its own agent (although owners or employees can act as the agent in a few states)
- The agent is required to be available at the designated address during regular business hours
- The agent is required to have a physical address on file within the state (P.O. box does not qualify)
- Most states require the agent to be at least 18 years of age
The Importance of Registered Agent Services
Registered agents are a necessary step in opening your LLC. Your business cannot process its formation papers without the presence of a registered agent. You will also miss out on critical notices to keep your business functioning properly.
If you do not hire a registered agent, the following issues can occur:
- Dissolution for your business
- Denials in financing
- Being prohibited from filing a lawsuit
- Variety of state fines
- Being limited from expanding your business operations into different states
Key Advantages of a Hiring a Registered Agent
Although there are a few advantages to acting as your own registered agent, businesses hire someone to do this for them for several reasons.
Eliminate Extra Paperwork
Paperwork is a headache for many business owners. It is often worth it to pay a registered agent $100-$300 per year to handle the extra documentation.
The registered agent has a robust system to track the official notices, legal documents, and other annual reports to keep your business functioning and compliant with the state.
Privacy
Acting as your own agent requires you to list your personal information on public records. You could deal with privacy issues if you run a home-based business.
Many companies scan the internet for this type of data and sell it to other third-party businesses. You can eliminate this worry by going through a registered agent or company to handle the reporting.
Helps Business with No Physical Address or Irregular Business Hours
Smaller, web-based business entities are more common than ever. When a company cannot list a physical address for its business entity, a registered agent solves this issue.
Hiring a registered agent addresses the issue of someone not wanting to publish the home address. Registered agents can also accept legal mail from the state, while the business owner’s home address stays off public records.
You or a registered agent also need to be present during regular business hours to accept documents. Some business owners travel frequently or are not available during regular hours to receive documentation. A registered agent solves this issue because they are required to be available during the regular course of business throughout the day and week.
Assists Business that Operate in Multiple States
If your business operates in multiple states, you will need a registered agent physically located in each state.
This is the main reason why business owners choose to hire a registered agent for service. To comply with state laws and regulations, having a registered agent to accept your mail in multiple states is a must.
How to Find the Best Registered Agent for Your Needs
Hiring a registered agent is a critical step for your business. You want to have confidence and trust in the right person to accept the legal notices and documentations for your business. If you do not choose a quality registered agent, it can cause serious problems for your business.
As you decide on the right registered agent for your business needs, consider the following factors.
Consider More than the Upfront Price
Price is a significant factor, but you should think about the overall value too. You must focus on a registered agent who can deliver a robust, comprehensive system of document management and delivery.
Remember, you are hiring someone to save time and headaches. Beyond the price, you should look for a quality registered agent who will create minimal work for you and your business.
Prioritize Nationwide Providers
If your business operates in multiple states, it is vital to have a good standing in all areas. A nationwide provider allows you to work with a single entity while eliminating the time and headache of managing multiple registered agents.
You can also trust that a nationwide provider will keep you in good standing, which increases your chances of qualifying for loans in the future.
Utilize a Professional Service (if budget allows)
Acting as your own registered agent can seem like a simple, cost-efficient task. However, there is a laundry list of items that a registered agent takes care of so that you can focus on other areas of your business.
You may want to hire an employee to be present and available during business hours, much like a registered agent service would. If the staffer goes on vacation, then you must scramble and spend more time worrying about receiving any legal documents.
A registered agent means you do not have to stress or invest time filing an update with the Secretary of State each time your contact information or office location changes. You can sleep better at night knowing that the registered agent is a reliable team player in receiving necessary correspondence.
Evaluate and Analyze Different Service Levels
Not all registered agents are created the same. You will find different service levels, extra fees, and turnaround time for receiving legal documents.
As you shop around, look for services that have no hidden or added fees. Companies that offer same-day document processing are also valuable options.
Transparency is also essential in your relationship with the registered agent. An excellent service provider will give you courtesy notices whenever they forward a document to you. If there is consistent communication between you and the registered agent, it allows you to respond to critical notices promptly.
Frequently Asked Questions
Are you still unsure about the process of finding the right registered agent? Here are some other frequently asked questions to consider.
Can you be a Registered Agent for your business?
Although an LLC or corporation cannot act as its own agent, naming an owner or employee is allowed. This option can save costs on the fees you would pay for a registered agent. It also provides privacy and assurance that all official documents get delivered straight to you.
However, it is critical to note the drawbacks of being your own registered agent:
- Your address and name will appear on file within the state. Because these are public records, your privacy could be compromised if your business is home-based.
- You could receive a lawsuit at your place of business, in front of your customers and employees to see.
- If your business moves locations or your agent moves on from your company, you will need to spend time and energy to update records (small business owners often forget to perform this small detail)
- Registered agents receive more than official documents, including other solicitations, notices, and junk mail. This extra paperwork can be a headache to sort through.
- Registered agents must be physically located in the same state. If your business operates in multiple states, it might be easier to hire a company that specializes in registered agent services.
- If your business requires you to travel frequently, you may not be as accessible as a registered agent should be.
What types of documents does a Registered Agent manage?
A registered agent is responsible for a wide range of paperwork, including:
- Annual filing documents
- Tax documents
- Formation documents
- Subpoenas and other legal papers
After a registered agent receives any of these documents, they must pass along everything to the business owners. The business can also designate an employee within the company to receive the documents from the registered agent. This person is usually a manager, secretary, or another executive at large corporations.
Is a registered agent the same as the owner?
Although the registered agent cannot be the LLC or corporation, it can sometimes be the same as the owner. The business itself can designate an owner or employee to be the registered agent. There are tradeoffs to the owner acting as the registered agent, including invasion of privacy, always being available during normal business hours, and the extra paperwork.
What is a statutory agent?
A statutory agent acts the same as a registered agent. In fact, the two terms are interchangeable. Depending on the state, the registered agent could be labeled as the statutory agent or registered office.
