Whether your business is a sole proprietorship, LLC, or corporation, a registered agent is a good idea and, in most cases, a necessity.
A registered agent is an important part of business formation and plays a major part in the legal and compliance obligations of your business.
But what is a registered agent, what does it do, and most importantly, do you actually need one?
What Is a Registered Agent?
The term registered agent means an individual or business entity that is available and physically present during standard business hours to receive legal documents, official mail, official correspondence from government agencies, and legal notices. In case of litigation, an agent will also accept service of process from a process server on your business’s behalf.
Of course, it does no good for the registered agent to accept this information if you never receive it. That’s why the other half of a registered agent’s job is to transmit important notices and information to the business owner.
A registered agent is also sometimes referred to as a statutory agent or resident agent, so if you see either of those terms on your formation documents or in your research just know it’s all the same.
Registered agents are required in all 50 states for any company registered as a business entity. If your business operates in more than one state, you’ll be required to maintain registered agent services in those states, so it’s a good idea to hire a registered agent service there or designate someone who can be present at those locations.
Registered Agent Requirements
There are a few requirements for registered agents that are true for every state. Here are a few requirements that every registered agent must meet:
- Physical address. Every registered agent must list a physical address and be present during normal business hours at the physical location listed on your formation documents. This means that a registered agent’s address can’t be a PO box. Furthermore, this physical location must be in the same state as your business.
- 18 years+. Your registered agent must be 18 years of age or older.
- Who to designate. Anyone can be named a registered agent, including employees, friends or family members that you trust, your lawyer, etc. Just remember that whomever you choose is required to be present and available during normal business hours to accept legal documents, service of process, legal paperwork, and business mail on behalf of your company. Because of this, many business owners choose professional registered agent services.
- Laws in your state. There are specific laws about registered agents in several states, so you should look up the laws in your state to be sure you understand and follow them.
What Is the Purpose of a Registered Agent?
At this point, you’re probably wondering why you need a registered agent if all they do is receive mail and official notices. Couldn’t you just have your company’s mail delivered to a PO box and check it yourself with some degree of regularity? The short answer is that receiving mail on behalf of your business is only a portion of the duties that a registered agent performs, and you can’t actually list a PO box on your business formation documents. A physical address is mandatory. Here’s what else makes a registered agent essential to your small business:
Compliance
Another major function of a registered agent is to ensure that business owners comply with state business regulations. They do this by sending you notifications about compliance filing deadlines for things like your annual report or yearly tax filing requirements in your state.
Essentially, you can think of a registered agent as a middle man between your small business, LLC, or corporation and government agencies. It ensures that should some problem arise, you’re guaranteed to be notified about it so that you can resolve the issue.
Management of Important Documents
You can’t list a PO box on your formation documents; you must have a physical address. This is where your official correspondence from the government will be sent as well as other business mail. The great thing about a registered agent is that it will process these documents, scan them into a software system, and make them available to you digitally, at all times. The best ones do this, anyway.
What Happens if My Business Operates Without a Registered Agent?
Businesses that are registered as business entities, such as a limited liability company or corporation, are required to maintain a registered agent. This is true in all 50 states, so if you’ve registered your business as a business entity, you need a registered agent.
If your business operates in multiple states, then you’ll need to designate a registered agent or consider hiring a registered agent for multiple states.
Because a registered agent is required to be present at the physical address listed on your formation documents to accept legal documents, service of process, and official mail from government offices, such as the Secretary of State or IRS, during regular business hours on your company’s behalf, if you don’t designate a registered agent or list your registered agent’s address on your formation documents you risk missing this important correspondence.
If a process server makes several attempts to deliver service of process to the business address you’ve listed, they might try to deliver it to the Secretary of State in an attempt to contact you. This could have dire legal and financial consequences, including the Secretary of State’s office proceeding with legal action without your knowledge and a default judgment being issued against your business.
Failing to name or maintain a registered agent or meet compliance obligations (like filing an annual report or paying certain taxes) could lead to the removal of your company’s good standing status and stop you from conducting business in the state. Losing the good standing status of your business could also prevent expansion into other states and financial assistance to grow.
In the worst-case scenario, your LLC will be automatically dissolved, and an LLC that’s dissolved doesn’t have the right to use its name in the state, so other companies could theoretically scoop it up and use it. Even if you’re quick to remedy this legal snafu, you may not get your business name back—EVER.
It’s risky to run a business once the LLC has been dissolved. Business owners operating without a registered agent and state-recognized LLC status become personally liable for the business. This means that members of limited liability companies are at risk of their personal information being listed on the public record, and their personal assets are vulnerable to lawsuits as well.
Of course, the legal process and ramifications of not having a registered agent aren’t limited to LLCs. There are financial and legal risks for all business entities without a registered agent.
Can I Be My Own Registered Agent?
There aren’t any states that prevent you from being your own registered agent. So generally speaking, yes, you can be your own registered agent. But you should learn more about the pros and cons of being a registered agent before you choose to supply registered agent services.
Cons of Being Your Own Registered Agent
Liability
The biggest drawback of being your own registered agent is that if you miss important documents that are intended for your LLC or corporation it could result in legal action against your business. If you miss a service of process, a default judgment could be awarded against your business without your knowledge, which means you won’t be able to defend your business in court and you’ll simply be forced to abide by the ruling.
Lack of Privacy
Another significant drawback is that when you list a registered agent for your business, your registered agent information is listed on the public record. If you aren’t using a professional registered agent service provider, you’ll have to list your personal address. This is important to note because on top of being a major violation of privacy, it could lead to cyber attacks and identity theft. Such sabotage would be catastrophic to most small business owners.
Time
Some people consider the biggest drawback to performing registered agent services to be the amount of time it takes up. Being a registered agent is massively time consuming. As a registered agent, you must be present to receive official documents during business hours for your business. What many people don’t account for is the fact that most businesses operate during the same hours. This means that you can’t be both working AND performing your registered agent duties at the same time because you can’t be in two places at once.
Pros of Being Your Own Registered Agent
There’s only one real advantage of taking on the role of registered agent yourself: you won’t have to pay any fees for registered agent services. But many registered agent services are so inexpensive that a lot of small businesses simply hire a professional registered agent service to save themselves the hassle.
Should I Use a Registered Agent Service?
There are several advantages to hiring a registered agent service.
- Guaranteed compliance notifications will help ensure that you maintain “good standing” status with the Secretary of State and are able to continue doing business.
- Someone will be available to accept important correspondence on your behalf, minimizing the risks of lawsuits and loss of the good standing status of your business.
- You can work and manage your company during business hours without having to figure out how to be in two places at once. It’s also a good idea for business owners whose businesses operate outside of normal business hours.
- If you do business in multiple states, a registered agent service means that you aren’t required to be present in those states to receive your legal correspondence.
- If you have only a PO box for your business, hiring a registered agent service and having your mail sent to its physical location is the best bet so that you don’t have to list your personal address.
- You’ll maintain your privacy by choosing to purchase registered agent services because your personal information won’t be listed on the public record.
- You won’t get junk mail. You’d be surprised how much junk mail businesses receive, and if you list your own personal address then you’ll be left to deal with it all yourself. Choosing a registered agent service eliminates the hassle.
- You can choose to get premium or business services. Some registered agent services offer premium services, such as certain types of insurance or payment of state fees. Others offer business formation services as well as registered agent services. Some even offer promotions for a year of free registered agent service when you take advantage of their formation services!
Ultimately, it’s your decision. But I recommend that all small business owners use a registered agent service.
What Is the Best Registered Agent Service?
When it comes to choosing the best registered agent service for small businesses, several factors are paramount. Here are some of the most important elements of a registered agent service:
Service Features
If a company doesn’t provide the services you need for your business, then there’s no reason to hire them. Some agents send compliance notifications and some don’t. Some upload or forward all your mail and some only forward the most important documents.
Value
The best registered agent services provide a combination of a full range of registered agent services and low prices. But beware of so-called budget agents. They charge a low price for bare-bones service and then heaps extra for essential features, so they’re a bit of a scam.
Easy Sign-Up
Some registered agent services can waste days or weeks of your time with lengthy sign-up processes that require loads of work, so you should look for one that has a more streamlined and automated sign-up process.
User-Friendly Interface
Because you’ll need to use the system so much, you want one with a user-friendly interface that’s easy to navigate. Some companies out there have outdated systems with poorly laid-out interfaces that are confusing and full of glitches and technical problems. Avoid them.
Customer Service
No matter how good the agent is, you’ll eventually have to use its customer service. And when it comes to something that could literally mean the difference between “open for business” and “permanently closed,” good customer service is crucial.
If you’d like more registered agent information, including how to choose the best one for your business, read my guide to the best registered agent services.
Do I Need a Registered Agent? Conclusion
Starting a new business requires learning a lot of new processes, rules and regulations, and terms. And there are so many things you have to remember, such as compliance filing deadlines. Registered agent services are designed to ease some of the burden on the business owner.
Whether you’re a sole proprietor, LLC, or corporation, you can be your own registered agent, choose someone close to you that you trust with the task, assign it to an employee, or choose a registered agent service, but you must designate someone.
If you’re still taking time to decide on your business structure, then now is a good time to learn about your options. If you’d like to learn more about LLC formation, read my guide about how to start an LLC. If you think you might need help with your LLC formation, check out my article about the best LLC formation services.
Whichever business structure you decide on, a registered agent will help you stay in compliance with state authorities and manage every piece of mail and legal notice that comes your way. Since even the best ones are inexpensive, you won’t regret hiring a registered agent service.
Frequently Asked Questions
What’s the Difference Between a Commercial and a Noncommercial Registered Agent?
You’ll likely notice the words “commercial registered agent” as you do research on registered agents. The difference between a commercial registered agent and a noncommercial registered agent is simple. A commercial registered agent is a person or company that has filed a commercial registered agent listing statement and registered with the Secretary of State in that state. There are some states that require this and the distinction between the two types of agents came about with the Model Registered Agents Act, in which the American Bar Association made an attempt to standardize regulations for registered agents across the country, rather than each state abiding by different laws.
A noncommercial registered agent would be any registered agent that hasn’t registered with the Secretary of State. These could include everyday individuals who are registered agents as opposed to businesses as well as some businesses that aren’t required by their states to register as commercial registered agents.
How Do I Change the Registered Agent for My LLC?
If you’ve stumbled across this page because you’re dissatisfied with your current registered agent and you’re asking yourself “Do I need a registered agent?” in frustration, the answer is yes, you still need a registered agent.
The good news is that it’s usually pretty easy to change the registered agent for your business, regardless of whether you own an LLC, corporation, or sole proprietorship. In most states it just requires filling out the appropriate paperwork and submitting it to the Secretary of State’s office. You may be required to include a consent form that’s signed by your new registered agent depending on which state you live in and the regulations there, and there will almost certainly be a filing fee.
How Much Does a Registered Agent Cost?
The cost of your registered agent depends on not only the provider you choose, but also the services. In general, registered agent services can cost between $39–$299 per state, per year, plus state fees. If you’d like to know more about registered agent pricing, read The Best Registered Agent Services.
To learn more about the specific requirements in your state, click on your state below. Our state pages provide valuable information about registered agent laws and regulations, making it easy for you to determine what's required for your business.
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