If you’re forming a new business entity in the United States, there are quite a few important steps you need to take. From coming up with the perfect business name, to securing all the necessary licenses and permits to operate in compliant fashion, you need to make sure each step is completed correctly.
One aspect of business formations that we get lots of questions about from our readers is that of the registered agent.
The role of the registered agent is to receive important document deliveries from your state government, then forward them to your business. While this position might seem outdated or unnecessary in the digital age, it’s actually still vitally important to any American business. But does your company really need to designate a registered agent?
In this article, we’ll dig into several different aspects of the registered agent. Along the way, we hope to clear up any misconceptions you have about the way the registered agent’s role applies to your business.
What Is a Registered Agent?
On the most basic level, a registered agent is the person or business entity that’s in charge of accepting legal documents from the state on behalf of your company. These documents include service of process for lawsuits, tax forms, compliance reminders, and other official forms from the Secretary of State’s office.
Whenever the registered agent receives one of these documents, they immediately inform you of its arrival.
Then, they scan it to create a digital backup copy, before forwarding it to your place of business. Most registered agents will also help you with record-keeping for compliance matters, and some will even assist you with annual reports or other filings.
Do I Need a Registered Agent?
No matter what type of business structure you operate or what line of business you’re in, every American company is required to have a registered agent. You will not even be able to finish forming your business without designating a registered agent, as your formation will be deemed incomplete if you leave this portion of the articles of incorporation/organization blank.
Other than the legal aspect, registered agents are tremendously helpful to you as a business owner in many different ways. The most important aspect of a registered agent is that they keep you informed of any pending lawsuits against your business.
If you didn’t have a registered agent, the state wouldn’t know where to contact an official representative of your company if they need to deliver service of process documents to you. In this scenario, it’s possible that a lawsuit could progress without you even knowing it’s happening.
Who Can Be a Registered Agent?
The legalities of providing registered agent service are quite simple. While they can vary slightly from state to state, the general guidelines for being a registered agent are as follows:
- Must have a street address (not a P.O. Box) in the same state where the business operates
- If the agent is an individual person instead of a business entity, that person must be at least 18 years old
- Must be available to receive document deliveries during standard 9am-5pm business hours every weekday
If you want to serve as your own registered agent, this is legally allowable, but we don’t think it’s particularly advisable. While this option does save some money, simply because it eliminates the need to pay someone else to serve as your registered agent, that’s the only positive aspect of being your own agent.
The negatives start with your availability ― if you are your own registered agent, you will need to be present at the address provided to the state during all standard business hours. You cannot take any vacations or sick days, and even stepping out to go to lunch or a doctor’s appointment is an impossibility, due to the risk of missing an important document delivery. Also, because you need a registered agent in each state where your company does business, this option severely limits your ability to expand to additional states.
Furthermore, if you receive a court summons while serving as your own agent, there’s a good chance your customers, employees, or neighbors could see you being served, because the delivery would take place at your place of business.
If you own a business based out of your home, this aspect obviously isn’t as much of a concern, but in that situation you will need to make your home address a matter of public record, sparking some serious privacy issues.
In general, we simply don’t think it’s worth saving a small amount of money to be your own registered agent. Many of these same issues also apply to other DIY options, like having a friend or family member handle registered agent duties, or assigning the role to an employee.
Should I Hire a Registered Agent?
Another option is to hire someone to be your registered agent. Some people like to designate their attorney or accountant to this position, which can provide some peace of mind because you already work with and trust this person.
However, this still runs into the problem of not being able to expand into new states. Also, these professionals can charge high rates for registered agent service, but often don’t have much experience in the role at all.
The route that we overwhelmingly recommend to our readers is that of the professional registered agent service. These companies have their main focus on providing top-rate registered agent service, so you can trust their high level of expertise ― these companies know every little nuance of each state’s requirements for registered agents. Furthermore, most of them have offices in all 50 states, so your expansion plans are never limited by their availability.
The other big advantage of these services is the price. Many professional registered agent services charge very reasonable rates, often $10/month or even lower. When you consider how inexpensive these companies can really be, there’s even less of a reason to not use their services.
How Do I Choose the Right Registered Agent Service?
There are quite a few professional registered agent services available these days, and because of this, it can be difficult to discern which one would be the best fit for your business. With this in mind, we put together an extensive guide to the best registered agent services, which we suggest you peruse at your convenience.
Overall, ZenBusiness, LegalZoom, Northwest, and Incfile are the services that come to mind for most entrepreneurs looking for a good registered agent service.
Conclusion
When it comes to the question of whether or not you need a registered agent for your business, the answer is always yes. The registered agent is a crucial part of any American company’s responsibilities, and you need to designate your registered agent when you start your business.
While you do have a handful of options regarding who will serve as your registered agent, we find that the best choice is almost always to hire a professional registered agent service.
They’re reliable and inexpensive, and they can save you a tremendous amount of hassle while also protecting your privacy. What’s not to like about that?