Starting a business is always complicated. There are so many things to do! And among those tasks is choosing or hiring a registered agent.
Registered agents are important when it comes to both the formation process and legal compliance, and having one can make your life a lot easier.
You actually have several options when it comes to appointing a registered agent, some you pay, and maybe some you don’t. Stick around to learn what a registered agent is, what it does, why you need one, and whether you have to pay for one.
What Is a Registered Agent?
A registered agent is an individual or business entity that accepts your service of process, business mail, legal notices, and important documents at your business address during normal business hours.
If you own a business entity (a limited liability company, corporation, sole proprietorship, limited liability partnership, etc.), then legally you need a registered agent.
Because you need your mail and legal documents, another important aspect of registered agent services is document delivery. A registered agent will use either mail forwarding or an online document-management system to get your official government documents and mail to you.
The best registered agent services also send out compliance notifications so that you don’t miss annual report filing deadlines.
If your business operates in multiple states, you also need a registered agent in each state in which it conducts business. You can satisfy this requirement by hiring multiple registered agents (one at each location or in each state), or by hiring a national registered agent to meet your legal requirements all over the United States.
A registered agent is sometimes called a resident agent or statutory agent. But no matter which term is used, all three mean the same thing.
How Much Does a Registered Agent Cost?
Registered agent cost depends on several factors, like who your registered agent is and what specific services you need for your business. In the broadest terms, a registered agent service can cost anywhere from $39–$299 per state per year (plus state fees).
Of course, designating a friend or family member could cost you considerably less than hiring a professional service. And being your own registered agent is even more cost effective because you don’t have to pay yourself.
If you’re interested in learning more about registered agent pricing, read my guide on the Best Registered Agent Services.
Registered Agent Requirements
You can choose a business or an individual to be your registered agent. Here are some of the requirements your registered agent must fulfill:
- State laws. To make sure you choose a registered agent that meets all the legal requirements, you should brush up on the state laws where your business operates.
- 18+. All registered agents must be at least 18 years of age.
- Physical address. Your registered agent’s address must be a physical address in the state. Using a post-office box isn’t permitted.
- Who you can designate. If they meet the requirements, you’re free to designate anyone you want as your company’s registered agent. You could choose an employee, family member, friend, your lawyer, or anyone you want. Just make sure that whomever you designate is someone you can trust.
Can I Be My Own Registered Agent?
If you’re looking for a low-cost registered agent option, then you’re likely wondering if it’s a job you can simply do yourself.
No state in the country legally prohibits you from being your own registered agent. But that’s not a duty you should consider lightly. Keep reading to learn about the benefits and disadvantages of being your own agent and how they compare to hiring a registered agent service.
Cons of Being Your Own Registered Agent
Liability
Many small business owners form LLCs so they can reap the benefits of limited liability protection. This means that your personal and business finances and assets are considered separate. But if you assume the role of registered agent yourself, then this protection becomes vulnerable.
If you miss a service of process or an annual report filing deadline, the Secretary of State (or governing body of your state) can dissolve your LLC through a process called “administrative dissolution.” This is when the Secretary of State no longer recognizes your LLC, and removes your company’s legal right to operate in the state.
Once your LLC is dissolved, you no longer have limited liability protection. If your company is sued, your money and personal assets can be listed as compensation.
Owners of limited liability companies aren’t the only ones who feel the effects of not maintaining a registered agent. All business entities are legally required to have registered agents.
Lack of Privacy
One significant drawback of being your own registered agent is that your personal information will be listed on the public record. Your name and phone number will be listed, and if you don’t have a physical business location or address, then you’ll have to list your personal address, as well.
Once it’s on the public record, hackers and cybercriminals can use your information to steal your identity and your money or commit crimes in your name.
Plus, it’s just scary to think that anyone who wants your name, address, and phone number can get them, and they can use them for their own gain—no matter how sinister.
Time
If a business owner isn’t turned off by the idea of their information being listed on public records, then they’re usually scared away by the massive amount of time that being their own registered agent takes up.
You’re required to be physically present at your registered office address during normal business hours to receive official government documents, service of process, and mail on your company’s behalf.
Your business is likely also open during normal business hours. This scheduling conflict makes properly managing your business and being your own agent nearly impossible.
Pros of Being Your Own Registered Agent
The one upside of being your own agent is that you aren’t required to pay fees to a professional registered agent service.
But when you consider the liabilities and the time constraints of being your own agent, you might decide that hiring a registered agent service is worth it to lessen your workload and stress levels.
What Happens If My Business Doesn’t Have a Registered Agent?
Those looking to spend as little money as possible on registered agent services may wonder if they can get by without one, and what the worst possible outcome is without a registered agent. Here’s what you need to know.
If your company is ever sued and a process server attempts to deliver service of process but no one is there, they will instead deliver it to the Secretary of State.
This is a lose-lose situation for your company because it’s now being sued, you’re completely oblivious to the situation, and you can’t develop a defense. Without your presence, a judge could issue a default judgment against your company.
Because it’s illegal for business entities to operate without a registered agent, the Secretary of State can rescind your good standing. This will make your company ineligible for business loans, you may be prohibited from expanding to other states, and you could even be banned from legally operating in the state.
Your business name will no longer be reserved as a result of losing your good standing. This means it’s perfectly legal for other businesses to use your business name. The most agonizing aspect of this is that even if you’re quick to resolve your legal issues, if someone has reserved it, you may never get your business name back.
LLCs are particularly affected by the loss of their good-standing status. Without it, the Secretary of State could automatically dissolve your company through administrative dissolution.
Should I Use a Registered Agent Service?
Business owners use registered agent services for many different reasons.
- Choosing a registered agent service that sends out compliance alerts means that missing filing deadlines isn’t as likely.
- You won’t miss a service of process, lose your good-standing status, or have default judgments issued against your company.
- If your business operates in more than one state, you can choose a national registered agent service to meet all of your company’s legal needs.
- If you own a business that isn’t open during normal working hours, a registered agent service can prevent you from working two full-time jobs (as both a business manager and registered agent).
- Using a registered agent service can keep your personal information safe. You can list your registered agent’s information instead of your own.
- Your business will receive massive amounts of junk mail, which your registered agent can dispatch for you.
- Some registered agent services offer premium services, like specialty insurance and payment of state fees, which may be too good to pass up.
- Some registered agent services also assist with the formation process, and if you haven’t formed your business yet, you can enjoy promotions, like free registered agent services for your first year.
Ultimately, I can’t tell you whether choosing a registered agent service is the right decision for your company. Only you, the business owner, can make that decision. But I will say that I always recommend new businesses use registered agent services.
Conclusion
If you own a business entity, you absolutely need a registered agent. You can either hire a registered agent service, designate someone you trust, or be your own registered agent. But registered agent services can make life as a business owner a lot easier.
If you haven’t chosen a structure for your business already and you’d like to learn more about the LLC formation process, read my guide on How to Start an LLC. And if you want additional guidance through the red tape and hassle of the LLC formation process, read my guide on the Best LLC Formation Services.
