Every business entity (LLC or corporation) must maintain a registered agent, so you definitely need a registered agent for your LLC. But a registered agent isn’t just a legal requirement, it’s a useful business service that you won’t want to go without.
You can’t even complete your formation documents without listing registered agent information (like your registered agent’s name and address). Since you need one, it’s a nice perk that registered agents are a great help when it comes to compliance, too.
Read the rest of this article to find out what a registered agent is, what it does, and why you need one for your business.
What Is a Registered Agent?
A registered agent is a person or business whose job is to accept your service of process, business mail, and important correspondence at your registered agent address during standard business hours.
You’re probably wondering why anyone would send their important documents and mail to another address—you need all that stuff, right? Well, that’s why the second half of a registered agent’s responsibilities includes document delivery, which your registered agent will accomplish with basic mail forwarding or an online document-management system.
The best registered agents will even send out compliance alerts so you won’t forget to file an annual report.
If your business operates in more than one state, you’re legally required to maintain a registered agent in each state your business operates in. You can achieve this by designating a registered agent in each of these states and accumulating a crew of registered agents, or you can hire a national registered agent to cover your legal requirements in every state at once.
You’ll sometimes see a registered agent referred to as a statutory agent or resident agent. These are all terms that describe the same business service, although the latter two are a bit more old-fashioned.
What Is the Purpose of a Registered Agent?
Maybe you’ve read the registered agent requirements and decided to set up a post office box for your business mail to meet this requirement. But that plan won’t work.
A registered agent is required to be physically present at your listed address during normal business hours, so occasionally checking the PO box for important notices won’t do. And your registered agent’s address must be a physical address, which further disqualifies PO boxes.
But there are lots of handy things your registered agent service can do for your business beyond supplying a street address and accepting your mail!
Compliance
Unless you’re good at remembering anniversaries and dates, it can be hard to keep track of compliance filing deadlines. Many of them, like annual reports, are due each year on the same day (usually the day you officially formed your business).
Of course, that’s easy to remember when you’re first starting out, but it gets harder as the years go on. The good news is that your registered agent is tasked with keeping up with these dates for you.
Your registered agent is your company’s official point of contact, and because of that it’s like a middleman between your business and various government agencies (like the IRS or the Secretary of State). So when a filing deadline approaches, you can count on your registered agent to let you know about it. Some of the best registered agent services even issue compliance alerts for worry-free compliance and added peace of mind.
Management of Important Documents
If you don’t have a physical location for your business, being required to have a physical street address can be inconvenient, but it’s not just an arbitrary requirement.
Your business address is where all of your company’s mail, legal correspondence, documents, and notices are sent, and you need them not only so that you can respond to them and deal with issues as they arise, but you also need them for your company’s records.
Some of the best registered agent services offer online document-management systems, and they’re worth looking into for two reasons.
First, these companies scan and upload your documents and notices the day they receive them, and you’re able to access them that day as well. It’s a lot faster than basic mail forwarding because you don’t have to wait to receive your documents in the mail.
Second, these document-management systems allow you to store your documents online and delete anything you don’t want. This does away with the need for physical file storage.
Service of Process
Registered agents and service of process go hand in hand, but registered agent info online makes it seem as though your business will receive a new service of process every day. That certainly shouldn’t be the case.
A service of process is a legal notice that your company is being sued, so hopefully that’s a rarity for your business. But if you do get sued, it’s your registered agent’s job to receive service of process on your company’s behalf.
Registered Agent Requirements
Thanks to the Model Registered Agents Act, most registered agent requirements are standardized regardless of your state. Here are a few requirements your registered agent will be required to meet:
- State laws. To be certain that your registered agent meets the legal requirements in your state (or states if your limited liability company does business in multiple states), you should check state registered agent laws.
- 18+. All registered agents must be at least 18 years old.
- Physical address. Your registered agent must have a physical address, which means you can’t use a post office box.
- Who you can designate. As long as the person you choose meets all the legal requirements, you’re free to designate a registered agent of your choosing. You can designate a family member, friend, dependable employee, or your lawyer. Just make sure you choose a person you can trust!
What Happens If My Business Operates Without a Registered Agent?
Hypothetically, if a process server comes to deliver a service of process to your business address during normal business hours and your listed registered agent isn’t available to receive it, the next step is for the process server to deliver the legal notice to the Secretary of State.
To put it mildly, this is bad news for your business and you could face some serious legal and financial consequences. Because you didn’t receive the notice, you won’t be aware of the legal action against your business, and it will be defenseless in court. Without you there, a judge could issue a default judgment against your business.
Just in case I haven’t made this clear enough, it’s illegal for business entities to operate without a registered agent, and the Secretary of State could revoke your business’s good standing as a result. When that happens, your company will be disqualified from business loans, expanding to other states, and conducting business in the state.
When you lose your good-standing status, your business name reservation is automatically forfeited, so it goes back into the pool of available business names where other businesses can reserve it. Unfortunately, even if you smooth things over with the Secretary of State, you could permanently lose your business name and have to go back to the drawing board.
LLC owners really feel the impact of losing good-standing status. When your company no longer has good standing, the Secretary of State can automatically dissolve your LLC using something called “administrative dissolution,” which is the removal of your company’s legal right to conduct business in the state, as well as its legal recognition by the state government.
In short, if you don’t maintain a registered agent, the state has the right to dissolve your LLC!
Can I Be My Own Registered Agent?
There’s no law in the United States that specifically states you can’t be your own registered agent. But business owners should research the pros and cons of being their own agent and see how they stack up against hiring a professional registered agent service.
Cons of Being Your Own Registered Agent
Liability
Many small business owners choose the LLC business structure to benefit from limited liability protection, which separates business finances and assets from the personal finances and assets of the owner. But when you take on the role of registered agent, your limited liability protection is in jeopardy.
If your company doesn’t meet its legal requirements (like maintaining a registered agent and meeting compliance filing deadlines), the Secretary of State can dissolve it, which automatically invalidates your limited liability protection.
The LLC owner then becomes legally and financially responsible for the company. If the company is sued, the money and assets you’ve spent years building up are fair game, which is a financial situation you don’t want to find yourself in.
You’re not in the clear if you don’t own an LLC or corporation, either. All business entities face legal and financial issues if they fail to obey the law and maintain a registered agent.
Lack of Privacy
One of the concessions you’ll make as your own registered agent is having your personal information listed on the public record. Along with your name and phone number, if your business doesn’t have a physical location or street address, you’ll have to list your home address, as well.
The unfortunate part of listing your information on public records is that sketchy characters, such as hackers and cybercriminals, can look up your information and use it to steal your identity, run up thousands of dollars in bills in your name, wreck your credit score, or commit other crimes with it.
Most unsettlingly, anyone can look up your phone number, name, and home address—even the creepy guy who was staring at you on the bus.
Time
Many business owners change their minds about being their own registered agent when they find out it’s a full-time job and prevents them from properly managing their business.
As a registered agent, you’re required to be present at your business address during normal business hours to receive legal notices on behalf of your company. It’s a pretty safe bet that your company is also open during normal working hours. So unless you can be in two places at once, it’s not feasible to be both a business owner and your own registered agent.
Pros of Being Your Own Registered Agent
There’s only one silver lining to being your own registered agent, and that’s not paying fees to a registered agent service.
But now that you’re aware of all of the risks associated with the job and the amount of time it takes up, you might agree that it’s worth it to pay fees to a professional registered agent service to lighten your workload. Luckily, many registered agent services have affordable rates that make it worthwhile.
Should I Use a Registered Agent Service?
As a business owner, there are loads of reasons you may choose to use a registered agent service.
- If you hire a registered agent provider that issues compliance alerts, you won’t forget to file annual reports or miss other important compliance filing deadlines.
- Hiring a registered agent guarantees you won’t miss a service of process or other important legal documents.
- If your business operates in multiple states, you can benefit from using a national registered agent to meet your legal needs across the country.
- If your business observes business hours that fall outside of “normal working hours,” a registered agent service could prevent you from working all night managing your business and then all day as a registered agent.
- You can hire a registered agent to keep your personal information off public records and list your agent’s information instead.
- A registered agent service can handle the enormous amount of junk mail you’ll receive.
- Some registered agent providers offer specialized solutions for businesses, like specialty insurances or paying for state fees.
- If you haven’t formally established your LLC or corporation yet, you’re in a prime position to take advantage of registered agent companies that also supply formation services. You can luck out and find offers like a year of registered agent service for free.
At the end of the day I can’t tell you that a registered agent service is the right call for your business. You’re the only one that can make that decision. With that being said, I always recommend new businesses use a registered agent service.
What Is the Best Registered Agent Service?
Choosing the best registered agent for your business requires careful consideration of several factors. Here are just a few of the factors you should keep in mind.
Service Features
Never choose a registered agent provider that doesn’t supply all the services your company needs.
Some registered agents only offer basic mail forwarding, which can be slow and only allows you to use physical copies of legal documents and correspondence. Other registered agent providers offer online document-management systems that are far faster and more convenient than mail forwarding.
Some registered agents simply provide you with a pre-filled compliance calendar to inform you of important compliance filing deadlines but you’ll toss that into a drawer and forget about it, so it’s not the most effective method to notify you about your deadlines. The top registered agent providers issue compliance alerts so you don’t have to worry about missing a deadline.
So take a pass on any registered agent provider that doesn’t have a comprehensive service list that meets all of your company’s needs.
Value
If you want to get an accurate measurement of the quality of a registered agent provider, compare its service offerings to its price. If a company has a padded service list that’s full of quality registered agent services and a low fee, then it’s probably a good value.
When you’re comparing different registered agent services to find one that provides a good value, make sure you don’t fall for the “budget agent” trap. These companies promise start-up rates around $39–$59, then charge additional fees for essential registered agent services, like document uploads or compliance alerts. You’ll want to avoid budget agents at all costs.
Easy Sign-Up
In all my years of business, I’ve never known anyone to get excited about a company that wastes their time.
Some registered agent services require tons of obscure information from you and make you fill out an inordinate amount of paperwork, only to take weeks or even months to complete the sign-up process. The business formation process is complicated enough without that noise!
User-Friendly Interface
You’ll use your registered agent system pretty frequently, so you want one with seamless navigation and a simple design.
Some registered agent companies have systems that are run on ancient servers, have complicated layouts, and are full of technical problems that frequently make it crash.
Make sure you choose a registered agent with a user-friendly interface to save yourself some hassle.
Customer Service
Since the person you designate as your registered agent is in charge of crucial tasks that could cost your business a lot of money or even put it out of business if they’re neglected, you need to make sure that your registered agent service provides good customer service.
I used all these factors and my four-stage investigative process to determine that Northwest Registered Agent is the best registered agent service. If you want to research registered agent services further or want to learn more about how to choose the best registered agent for your business, read my guide to the Best Registered Agent Services.
Conclusion
New businesses require a ton of work. Small business owners often struggle under the immense workload. But hiring a registered agent for your business can cut down on some of the work you’ll have to do.
If you’d like to learn more about starting an LLC, read my guide on How to Start an LLC. And if you’d like extra guidance from seasoned professionals to get through the formation process, check out the Best LLC Formation Services.
Registered Agent Service FAQs
What’s the Difference Between a Commercial and a Noncommercial Registered Agent?
A commercial registered agent is a business that’s registered with the Secretary of State as a commercial registered agent. In some states, every registered agent service is required to register as a commercial registered agent service.
A noncommercial registered agent is a person or business that hasn’t registered themselves as a commercial registered agent. So if you’ve designated a family member or friend as your registered agent, they’re technically a noncommercial registered agent.
How Do I Change the Registered Agent for My LLC?
Changing your registered agent is typically an easy process. Some states require you to do so on your annual report, which means you only get to do it once a year. Others allow you to fill out a form (typically called a “Change of Registered Agent or Registered Office” form), submit it to the Secretary of State, and pay a filing fee to change your registered agent.
How Much Does a Registered Agent Cost?
How much your registered agent will cost depends on which registered agent provider and features you choose. In general, registered agent services can cost anywhere from $39–$299 per state, per year (plus state fees). If you want to learn more about registered agent pricing, read my guide on the Best Registered Agent Services.
