What Is a Registered Agent and Why Do I Need One?
Last Updated: January 11, 2023
Thinking about running a business or an LLC? Don’t forget about your prospective employees. The very first one you’ll need to hire or appoint is a registered agent.
Now, what is a registered agent, you may ask. Simply put, it’s a person who’ll be dealing with all the legal documents on behalf of your company when it comes to its formation.
But bear in mind that the paperwork isn’t over once you have your company running. There will also be legal notices to manage. In addition, they typically have strict deadlines you may easily miss due to loads of documents you need to handle. Luckily, there is that one person who can save your day.
Let’s further inspect the register agent’s main activities and responsibilities!
What Is a Registered Agent (RA)?
Even though an agent stands for someone representing a company or individual, an RA doesn’t have such duties.
A registered agent, also referred to as a statutory or agent for service of process, is an individual or a business in charge of receiving service of process and tax notices, compliance-related documents, and government correspondence on the side of the company.
But do I need a registered agent in the first place?
Generally, small businesses don’t have to have a registered agent. Yet, if you’re planning to establish an LLC, i.e., a limited liability company, then you’ll need to appoint one.
Now, what is a registered agent for LLC?
An RA for LLC could be an individual or a company offering such services, a colleague or an employee, or even yourself. All states require a registered agent for limited liability companies. Therefore, you must appoint one regardless of your business’s location.
What does a registered agent do?
In addition to dealing with the legal action and services mentioned above, an RA is responsible for assisting your business with keeping efficient corporate compliance. To do so, they need to inform you about legal notices or remind you to file obligatory annual reports.
In a nutshell, a statutory agent is a business entity gatekeeper that allows you to take adequate legal actions and deal with any possible issues promptly. Their role might seem simple. Yet, notices, subpoenas, and lawsuits typically have stringent deadlines and require urgent reactions. If you miss them, you may face both legal and financial consequences.
No matter if you are a small business owner or you run a huge corporation, the duties of a registered agent include receiving the following:
- All legal documents
- Tax forms and notices
- Government correspondence, aka annual reports
- Notice of a lawsuit, i.e., service of process
Who Can Be a Registered Agent?
Generally speaking, anyone could be designated as a registered agent if they meet specific requirements. Alternatively, you can appoint a third party or business to serve as an RA, particularly those specializing in providing LLC or legal services. However, do note that your own company can’t serve as its own RA.
How to become a registered agent?
In terms of requirements, they may vary from state to state. But the most common ones for all states are legal age and place of residence. The person aiming to serve as an RA has to be 18 or older and reside in the state in question. In addition, regarding business entities offering registered agent service, at least one of their agents must be a resident of the state.
Furthermore, the Secretary of State requires RAs to have a physical address in their state of residence to receive letters and documents. Therefore, P.O. boxes aren’t allowed.
Lastly, your LLC registered agent must have fixed business hours and be physically present at the given address during their office hours. Therefore, commuters and telecommuters and those who work part-time or have off-site business meetings aren’t quite a good choice.
Can I Be My Own Registered Agent?
To put it simply, yes. There aren’t restrictions on who can become an RA, provided that they are 18+ and with a physical address in a given state.
Given that anyone could be an RA and offer registered agent services regardless of their experience, you may come up with an idea to become your own registered agent. This might seem practical at first glance due to several reasons. Yet, you may want to consider all the pros and cons of being your own RA before deciding to assign yourself this responsibility.
Having found the answer to the question “what is a registered agent for LLC,” many enterprise owners may choose to act as their own RA. They find it more convenient than hiring one, mainly because they’re already familiar with all the necessary information, taxes, deadlines, etc.
But, one of the main reasons business owners appoint themselves as statutory agents is saving money. Namely, when you hire an RA, you’ll have to pay a registered agent fee. But, if you designate yourself, you won’t need to pay a fee. So, a great way to cut extra expenses and save some cash, isn’t it?
Another advantage is that you won’t be sharing any business information or secrets with others. You’ll be responsible for managing government correspondence or lawsuits, and no one will have an insight into any confidential matters. Besides, as having a choice might make things difficult, you won’t be troubled with the question “how do I choose a registered agent” popping in your head.
Still, appointing yourself as an RA has way more downsides. The very first thing you should take into account is your privacy. The RA’s personal name and address are a public record. This means that your home address will be in the public database managed by the state. Understandably, you may not be comfortable with that, particularly if you run a home-based business.
Secondly, considering that registered agent responsibilities involve handling lawsuits, your reputation might be exposed should there be legal action against you.
Remember that an RA must be at the stated location during their office hours? Well, this might be quite a bother if you need to run errands on business or have meetings to hold. Also, failing to be found at the address for any reason may have dire consequences for your business. Hence, it’s wiser to appoint a registered agent than to take on the responsibility.
Legal documents typically require urgent action. Unfortunately, due to your duties as a business owner, you may forget about the notices. Expectedly, such negligence may result in ruining your business and your reputation. An experienced registered agent will never let this happen. They will make sure to deal with all important documents promptly and responsibly.
Finally, you’ll need to change your address as a registered agent should you decide to move your business. While this may not seem a nuisance, it certainly is extra paperwork to do. Even though paying a registered agent cost would mean spending extra money, particularly if you hire a third-party agent, you’ll be free to change the addresses whenever you want. The RA will get you covered with all the paperwork, and most importantly, their address won’t be affected.
What Are the Benefits of Using a Registered Agent Service?
Now that you’re familiar with the purpose of a registered agent, the time has come to designate one. You can become your own RA, as experience is not necessary to take over this responsibility. Or you can appoint your friend, family member, or an employee, Yet, since it’s your and your business reputation that might be at risk of embarrassment, you would want to hire a professional who excels at their work. Don’t hire a relative just because they promised to do the job for free.
The only drawback of hiring an RA service is the registered agent fees you’ll need to pay annually. Typically, they range from $100 to $300 per year. However, in return for that fee, you may rest assured that all the documents will be received, sent, and forwarded to you promptly. Some of the best registered agent companies will even scan all the documents so that you can access them online.
Ability to move or expand business
Remember that your RA must be located in the same state as your business? If you want to move your business, they’ll have to move too, or you’ll need to find another RA. With a registered agent service, this won’t be an issue as they’re likely to have officers in various states across America. Plus, hiring a registered agent for a corporation will allow you to open and do business in multiple states without any hassle. The RA service can act as your agent in several locations.
No extra paperwork
Even though sending and receiving letters seems easy, having to keep track of the official notices’ or annual reports’ due dates could be tiresome, particularly when you’ve got tonnes of other things to manage. Hiring a professional or a business entity that will deal with all the paperwork would eventually mean you’re not having to think about keeping your business in compliance with the state. Furthermore, a professional RA will store all your essential documents in one place. All things considered, though the LLC registered agent cost may seem high initially, it’s definitely worth paying extra money for their services.
Let’s suppose you have appointed yourself or your family member as an RA to save some money. In such a case, you’d probably need to provide your home address as the contact point. Since all registered agents are listed in the state public record, anyone can find your home address.
While for some people this isn’t much of a concern, others may be worried about it. If you don’t want to compromise your privacy, getting a registered agent service is a perfect alternative. An LLC registered agent that you hire has already provided their address so that you don’t have to expose yours. This way, you’re protecting not only your reputation but your privacy as well.
In the “Big Data” era, many websites may access public databases and misuse the information found there. Refusing to designate yourself or your spouse as an RA and hiring a professional service instead is a small but significant step towards protecting your privacy.
Now that you’ve got the answer to the pervasive question “what is a registered agent,” the time has come to start looking for one.
The easiest solution would be to designate yourself as an RA. Yet, this is just a temporary impression. Once you become loaded with business-related paperwork you need to handle, it would be difficult to remember all the deadlines for tax notices, government correspondence, legal actions, etc.
After all, as a business owner, you should be focused on ways to develop and improve your business. So, naturally, legal matters and statutory representation aren’t your cup of tea. However, there is that one person who should be responsible for that — a registered agent.
A commercial registered agent is an individual or business that an LLC, corporation, or partnership designates to receive, send, and forward legal and tax notices on behalf of the organization. The agent is supposed to manage the documents promptly and in a timely manner so that the company they represent doesn’t suffer the consequences of legal actions or lawsuits.
Basically, a noncommercial registered agent is the same as its commercial counterpart. They have identical purposes, duties, and responsibilities. The sole difference is that the former isn’t listed in the Secretary of State records, so their data aren’t publicly available to anyone. The latter, however, needs to register with the state. Anyone can have access to their name and business address.
To put it shortly, yes. You must have an RA who has a physical address (a P.O. box isn’t an option) in the same state in which your business is. Should you decide to move your enterprise to another state, you’ll need to appoint a business registered agent from the state in question.
However, if you use a registered agent service, you needn’t worry about addresses — the chances are that the service you hire has officers nationwide. Plus, you’ll have the possibility to expand your business to other states instead of limiting yourself to a single location.
Anyone can become an RA, provided that they meet basic registered agent requirements — they must be 18+ and have a physical address in the given state. They must also have fixed office hours and be at the given address at the time so that they could receive the documents and forward them to you.
Experience isn’t crucial. Thus you can appoint yourself or your family members as an RA. But, indeed, since your and your company’s reputation is exposed, you would normally want an RA who is experienced enough.
We hope that we’ve managed to give all the necessary information so that you don’t have to wonder “what is a registered agent.” Now that you’re familiar with the definition and purpose, you’re all ready to search for one.