In most states, every business entity is required to have a registered agent, so your business likely needs a registered agent. Choosing a professional registered agent service makes more sense than being your own registered agent or hiring a family member or friend as your registered agent. Let me tell you why.
It’s all but impossible to complete the complex business formation process without a registered agent. And since you need a registered agent, you’ll be happy to know that they’re also extremely helpful when it comes to compliance.
In this article we’ll discuss how to determine if you need a registered agent service and what it can help with if you do.
Why You Should Hire a Registered Agent Service
If you’re running a business, you can definitely benefit from a registered agent service. There are several advantages to using a registered agent service as a business owner.
- A quality registered agent service will send compliance notifications to ensure your business never misses an important filing.
- You’ll receive any legal notices and papers that are sent to your business in a reliable and timely manner.
- If your company conducts business in multiple states, one national registered agent service can manage your compliance and documents in each state.
- If your company operates on nontraditional business hours, a registered agent service might save you from working all night running your business and then spending all day being its registered agent.
- A professional registered agent protects your personal info by giving you registered agent information to list on public records instead.
- You can avoid the hassle of sorting through the mountain of junk mail.
- Small businesses can get additional services from some registered agents, such as identity theft protection and payment of state fees.
- Some registered agent companies provide additional business formation services, such as LLC formation. You may even get lucky and find freebies, like a free year of registered agent service.
I can’t say for certain that hiring a registered agent service is the best move for your business. You alone have the power to make that decision. That being said, I always recommend that start-ups hire a registered agent service.
What Is a Registered Agent?
A registered agent is a person or business that will accept service of process, official mail, and legal documents on behalf of your company during normal business hours.
Consequently, another important aspect of a registered agent’s responsibilities entails document delivery, which your registered agent will handle through basic mail forwarding services or an online document-management system.
The best registered agent services will also send out compliance notifications so that you don’t neglect to file your annual report.
If your business operates in multiple states, you’re required by law to maintain a registered agent in each of those states. You can accomplish this by designating a registered agent in each of these states and amassing a team of registered agents, or by simply hiring one national registered agent service to fulfill your legal obligations in every state simultaneously.
A registered agent might also be called a statutory agent or a resident agent, depending on the jurisdiction. These are all synonyms for the same service, though the last two are a little more dated.
What Is the Purpose of a Registered Agent?
A registered agent must be physically present at your business address during normal business hours to receive mail and service of process for your business. It’s not sufficient for the registered agent to just check a mailbox from time to time. In addition, a PO box can’t serve as your registered agent’s address because your registered agent must have a physical address.
You may not want to pay someone to post up at an office all day waiting for a service of process that will hopefully never come, but there are other functions of a registered agent service beyond acting as a point of contact and supplying a physical address.
Compliance
Compliance filing deadlines might be difficult to recall if you don’t have a photographic memory for important dates and anniversaries. Many of these, like annual reports, are due on the same day every year (often the anniversary of the day your company was formally established).
That’s simple to keep in mind while you’re first starting out, but it becomes more challenging as time passes. Luckily, your registered agent is responsible for keeping track of these deadlines on your behalf.
Your company’s registered agent acts as a go-between for the company and government agencies, like the Internal Revenue Service and the Secretary of State. Because of this, your registered agent will notify you of any impending compliance filing requirements. If you’re looking for worry-free compliance and extra peace of mind, the best registered agent services also provide compliance alerts.
Management of Important Documents
Having a physical address for your business isn’t optional and might be a hassle if you don’t have a physical location. But there's a good reason for this requirement.
All mail, legal notices, and official documents are sent to your business address, and you need them for your company’s records, and to react to time-sensitive materials. Some of the best registered agent services provide online document-management systems, and there are two reasons you should hire one that does.
First, these companies will scan and upload your legal documents and notices the day they’re received, providing you with instant access to them. When compared to traditional mail forwarding, this option saves loads of time.
Second, these online document-management systems enable you to store your important documents digitally and easily remove the ones you don’t need. This eliminates the need for storing heaps of physical records.
Service of Process
It’s true that registered agents and service of process go together hand in hand, but if you look up registered agent information online, you could get the impression that you’ll receive a fresh service of process every day. You don’t want that to be the case.
Service of process is a legal notice that a lawsuit has been filed against your business, and hopefully that doesn’t happen often. But if your business is ever sued, the court will send the papers to your registered agent.
What Happens If My Business Operates Without a Registered Agent?
A service of process is a legal notification that must be delivered to a business at its registered office, and the recipient is meant to respond. If your registered agent isn’t present to receive official notices during normal business hours, the process server will send the service of process to the Secretary of State.
This is bad for your business, to put it lightly, and it might lead to significant legal and financial consequences. Your business has little chance of defending itself in court if you’re unaware of the legal action until it’s too late. A court may rule against the business in your absence and issue a default judgment.
In case I haven’t been sufficiently clear so far: in most states (except West Virginia) it’s illegal for business entities to operate without a registered agent. This could cause the Secretary of State to withdraw your good standing. Loss of good standing will prevent you from receiving business financing, expanding to other states, or even legally operating in the state.
The moment your business is no longer in good standing, the business name you reserved goes back into the pool of available names. Even if you’re able to resolve this issue with the Secretary of State, your business name may be lost to another company, and you will have to start from scratch with a new name.
Loss of good standing has serious consequences for limited liability companies. The Secretary of State may dissolve your LLC if it’s no longer in good standing — this is known as “administrative dissolution” — and terminate your company’s right to transact business in the state, as well as the legal recognition of your limited liability company.
Your LLC can be dissolved by the Secretary of State if you don’t maintain a registered agent!
Can I Be My Own Registered Agent?
There are no laws in the United States that prohibit you from being your own registered agent. However, business owners should examine the benefits and drawbacks of being their own registered agents and compare them to the advantages of hiring a registered agent service.
If you act as your own agent and miss a service of process, your good standing status could be revoked, and if you own an LLC, it could be dissolved. And once your LLC is dissolved, it no longer has limited liability protection. Without it, if your business is sued, you’ll be the one personally and financially responsible for the company.
Your personal address and info will be listed on the public record if you’re your own agent, and in addition to the possibility of identity theft and other cybercrimes, it’s scary that anyone and everyone can access your name, home address, and phone number.
Also, being a registered agent takes up a ton of your time. Because you’re required to be available during business hours, it’s a full-time job. And since your business is also likely operating during the same hours, it’s often not feasible for business owners to do both jobs.
The one benefit of being your own registered agent is that you won’t have to pay for a registered agent service. But now that you know about the disadvantages of being your own registered agent, and how risky it can be, you might just find that it’s worth it to pay for the peace of mind and lightened workload.
The good news is that most registered agent services are fairly inexpensive — especially considering the amount of work they save you and the legal risks they all but eliminate!
Conclusion
Launching a new business requires an enormous amount of work. The overwhelming amount of tasks one must perform might be challenging for owners of small businesses. However, if you hire a registered agent service, you could potentially reduce the amount of work that falls on your shoulders.
If you haven’t yet formally established your company and want to learn more about LLC formation, check out my guide on How to Start an LLC. If you’d like to take advantage of additional help and professional guidance through the complicated formation process, read the Best LLC Formation Services.
And if you’d like to learn more about registered agent services, registered agent pricing, and how to choose the best registered agent service for your company, read my guide on the Best Registered Agent Services.
