Regardless of location, if you’re building an LLC or corporation, you’re required by law to have a registered agent and a registered office in your state. However, this doesn’t necessarily mean you need to hire a registered agent service.
What is a registered agent?
A registered agent is an individual or service that receives correspondence concerning your business, such as legal documents, tax paperwork, or other important office mail. In some states, lawsuits are served in person, so in those cases, having a registered agent makes this an easy and orderly process.
All official business entities, such as an LLC or Corporation, must have a registered agent listed in their state. Exceptions include sole proprietorship and general partnerships as they are considered common law business entities. Since common law businesses don’t need to file formal paperwork with the state, these entities aren’t required to have a registered agent. When you go to register your business with your state, you’ll need to name an agent.
What is the role of a registered agent?
A registered agent’s job is to receive documents on behalf of the business and, if necessary, deliver them to the appropriate person in the company. Once you’ve chosen a registered agent, if other than yourself, you can inform the agent who to contact if they receive documents that need attention. The agent’s role might sound simple, but many notices such as lawsuits and subpoenas tend to have strict deadlines. Missed deadlines can result in both legal and financial consequences. For this reason, it’s imperative to have a responsible agent that can be trusted to deliver information without delay.
There aren’t many restrictions on who can be a registered agent, though some laws can vary from state to state. Generally speaking, your agent can be anyone who is at least 18 years of age, holds a street address in the state, and is present in-person at that address during operating business hours. Your registered agent may be a company on record with your state qualified to provide registered agent services. You can also name yourself as your own registered agent, as well as your spouse or an employee, but keep in mind that this person must be someone who is at the recorded address during business hours on a daily basis.
Benefits of hiring a registered agent service
Some small business owners serve as their own registered agent. Others might name a friend, relative, or employee. On one hand, this can save you money, but it may not always be a good idea. When selecting a registered agent, there are a few key benefits to investing in a registered agent service instead.
Privacy protection: If your registered agent is yourself or an employee, you run the risk of the embarrassment of having a legal action served in front of customers or colleagues. Also, know that a registered agent’s address is a public record, which could pose a potential concern if you have a home-based business or are planning to name someone in your home as your agent.
Consistency: If you designate an individual as your registered agent, you are required to keep your registered agent’s information updated when there are changes made. The trouble is, few business owners remember to do this, and failing to sustain a registered agent can put your business standing at risk.
Peace of mind: Registered agent services are skilled and professional, making it more likely that important documents will get into the right hands in a timely manner.
It can be easy to disregard maintaining a registered agent after initially designating one when you registered your business. However, you may face significant consequences if you do this. Failing to sustain an agent will compromise the standing of your business, and you may be subjecting your company to potential penalties and fines.
Bottom line
For many new business owners, hiring a professional agent service isn’t necessary. If you have a brick-and-mortar, operate solely in their home state, maintain normal business hours, or if you aren’t concerned about privacy, you’ll survive without recruiting a service.
In those cases, the business owner him/herself would be the best name to list down as the registered agent for the business. If there’s any question or hesitation around any of the reasons listed above, hiring a service might be a good idea. Just keep in mind that an agent serves a pivotal role, and no matter who you appoint, make sure this person or service can consistently meet the needs of your business and handle the job punctually and professionally.