What Is a Registered Agent?
While you are working to form your business entity in a state, you may encounter many references to appointing a registered agent. Also sometimes called an agent for service of process, a registered agent is responsible for receiving all communications between your business and state or federal agencies. Virtually every state requires a registered agent to be appointed to your business before you are allowed to start operations there.
There are several things that you will need to consider when deciding on who to appoint as your business’s registered agent. In this article, we will discuss your options for a registered agent and answer all of your important questions about this essential business role. We’ll also be detailing the pros and cons of registered agent services so you have all the information you need to make the best choice for your business.
Why Your Business Needs a Registered Agent
You will need to check closely with your state’s rules and business formation regulations, but in most cases, a registered agent is required to be appointed for your business. Your business will need a registered agent to act as the contact point for all communications between the state and federal government and your business; all important notices, including notices of a lawsuit, will pass through your registered agent.
Additionally, your registered agent will be responsible for keeping your business filings up to date with the state. Most states require some type of annual report or other ongoing business filings in order for your business to stay compliant and in good standing. A quality registered agent will keep track of these deadlines and either notify you to file and pay any applicable fees or complete the filing on your behalf.
Without a registered agent, you run the risk of your business not being accepted for operations in your chosen state. You may also miss important documents and notifications that cause you to experience penalties, fines, or an involuntary dissolution of your business from the state.
Your Options for Registered Agents
There are several options available to you when it comes to appointing a registered agent. All options have their own pros and cons, so it’s important to review each choice carefully before making a final decision.
Appoint Yourself
Many individuals who are starting up a business choose to appoint themselves as their registered agent – this option costs nothing besides your own time. Most states will allow you to appoint yourself as long as you are over 18 years old and have a valid state street address. However, to act as your own registered agent, you will need to be available during all regular business hours. This can be difficult and cause issues with scheduling as you work to be available to receive notices and run your own business.
This may be a favorable choice for many who are just starting up their company, but as your business expands, it may be worth it to explore other registered agent options.
Appoint an Outside Individual
Most states will allow you to appoint an outside individual as your registered agent. This can really be anyone, including a close friend or family member. Again, as long as your registered agent has a valid state street address and is available during regular business hours, they are eligible to be your agent.
Keep in mind that appointing friends or family members to act as your registered agent can become difficult when it comes to the upkeep of both your personal and business relationship. You may receive a notice of lawsuit through your registered agent, which is something that you might not want a family member to see. The duties of acting as a registered agent can sometimes be overwhelming to close friends or family.
Depending on who you appoint, this option may cost you little to nothing, but you should be sure that the individual you select to act as your registered agent is fully informed and prepared to handle the position’s responsibilities.
Appoint a Registered Agent Service
Another highly useful option for appointing a registered agent is to use a company that specializes in providing registered agent services. These companies are mainly online but often have a presence in multiple states, allowing you to find one that is prepared to serve your business and give you future business expansion options.
Registered agent services will generally charge a yearly fee for their services. Depending on the service, this fee could range from $100 to $300 per year and include a number of benefits, such as online document management, real-time mail notifications, and compliance calendar tracking, so you never miss a deadline.
While registered agent services are often more expensive than appointing yourself or an outside individual as your business’s registered agent, the cost may often be worth it as these services can save you both time and stress.
The Benefits of a Registered Agent Service
One of the most popular options for registered agents is a registered agent service. These companies often offer nationwide options and provide a number of benefits with their registered agent duties that you would not be able to receive if you appoint yourself or a close individual as your business’s registered agent. Below, we list the benefits of selecting a registered agent service so that you can get a sense of why paying for a service may be worth it.
Availability and Flexibility
As we discussed above, appointing yourself as your business’s registered agent can significantly impact how much free time you have to actually run your business. The registered agent’s duties include being available during all regular business hours, which may mean that it becomes difficult to schedule your own free time without potentially missing an important notification.
On the other hand, a registered agent service will have employees that work during all regular business hours so you can be sure that you won’t miss any important notifications or documents.
Increased Privacy
Most of the time, when you file to establish your business with the state, you will need to provide the name and address of your registered agent. If you appoint yourself or a family member, this means that your personal address will be on file with the state and may potentially end up on public record. Many individuals choose to use a registered agent service to avoid this, as the company’s address will be listed with the state and on public business records instead.
Discretion
Occasionally, notices of lawsuits or other highly personal business documents will be delivered from the government to your business. This is generally not a problem if you will be receiving documents (unless the notice comes to your place of business while customers are around), but it may be a sensitive topic if you have a family member or close friend acting as your registered agent.
With a registered agent service, you can be sure that all notifications and important documents will be received discreetly and forwarded to you in a private manner for review.
Compliance Tracking
Keeping track of all of your business’s ongoing filing requirements can be difficult, and either you or an outside individual may become overwhelmed trying to keep up with everything. A reputable registered agent service will be able to provide you with a compliance calendar and notify you when certain filings are due or will file the necessary documents on your behalf.
Compliance tracking and notifying alone can make a registered agent service a worthwhile investment.
Opportunity to Expand
Many registered agent services feature locations across the United States, something that gives them a national presence. When acting as your own registered agent or appointing a close individual to do it for you, it becomes more difficult to establish your business in other states, as you will need a local registered agent to accept papers on your behalf. In cases like this, a dedicated registered agent service is the best option for easily expanding your business.
Document Storage
Every notice that you receive from either the state or federal government should be kept safe in a secure place. This means that if you are acting as your own registered agent, you may end up spending a significant amount of time scanning and uploading documents to save electronically or with a large stack of papers around your office.
A registered agent service will often provide you with online document storage and management, which allows you to access your important business notifications and mail when you need it. They remove the hassle of electronically converting it yourself or keeping stacks of paper around your business.
What to Consider When Looking For a Registered Agent
As you decide who to appoint as your business’s registered agent, there are several factors that you will need to keep in mind.
Professional Services
Any registered agent that you appoint should be professional in the service they offer. This may be a little more difficult to obtain when selecting a close friend or family member as your agent, so you should be sure that your appointee knows exactly what is expected of them in the position.
If you are looking into a registered agent service, you should check customer reviews and the overall reputation of the company to ensure that they can offer you professional and effective service. You may also want to look into whether or not the service will offer you additional benefits such as compliance tracking and online document management.
Cost and Value
The cost of your registered agent and how much value you are getting from your money are both major factors in selecting an agent. If you appoint yourself or a close family member as your registered agent, this will likely cost you nothing. On the other hand, a registered agent service will cost you a yearly fee, but this may end up being a great value if it saves you time and stress in running your business.
National Reputation
This item applies more to a registered agent service, but it should still be something you consider as you make your decision. A national reputation and locations across the United States can be incredibly helpful when it comes time to expand your business; a registered agent service with more service location options gives you more flexibility in growing your business.
FAQs About Registered Agents
The answers to these frequently asked questions can help solve any worries you have about finding and appointing a registered agent for your business.
Can You Form a Business Entity Without a Registered Agent?
In most states, you will not be able to form your business entity without first appointing a registered agent. Of course, this depends on your entity type and the specific state rules, but, in general, a registered agent is required for your business to be established in a state and considered in good standing.
What Are the Consequences of Not Appointing a Registered Agent?
If you don’t appoint a registered agent to your business in an area that requires it, you can face a number of unpleasant consequences that include penalties, fines, a refusal from the state to establish your business, and potential involuntary dissolution of an existing business.
It is essential to double-check state requirements as it pertains to registered agents in order to avoid any issues in starting up or running your business.
Can You Serve as Your Own Registered Agent?
You can service as your own registered agent, and many individuals do this as it costs less than hiring a registered agent service, but you may encounter issues with acting as your own agent. You will be required to keep up with ongoing compliance requirements, be available during all regular business hours, and store all important documents or notifications, something that can take away the time you need to run your actual business.
Can You Appoint an Attorney or Accountant as a Registered Agent?
It is possible to appoint an attorney or accountant as your registered agent. Many individuals choose this option if they are already working with an attorney or accountant and don’t wish to appoint themselves as the registered agent. Though, it is important to note that you may pay more to your attorney or accountant for registered agent services than you would if you purchased a yearly registered agent service through a dedicated company.
Can You Change Registered Agents?
Yes, it is possible for you to change registered agents even after you have appointed one for your business. You may find yourself needing to change agents as your business grows or as you discover a certain service doesn’t quite work for your needs.
In order to change your registered agent, you will likely need to file a document with your Secretary of State’s office and pay a filing fee. However, the exact process does depend on where your business is located and that state’s specific requirements. Make sure to double-check all of your state’s government websites for more information about this process.
Will a Registered Agent Assist With Compliance Requirements?
Depending on the registered agent you appoint, they may be able to assist you with compliance requirements. Some registered agent services will notify you about compliance deadlines, while others will file the applicable documents on your behalf. If you appoint yourself or an outside individual as your registered agent, you will most likely be responsible for keeping track of ongoing filing and compliance deadlines.
How Much Does a Registered Agent Cost?
How much a registered agent will cost depends on the type of agent you appoint. If you appoint yourself, you will not need to pay anything besides your time. Appointing a close friend or family member may also cost you little to nothing.
If you decide to use a registered agent service, you will typically have to pay a yearly fee. These fees typically range from $100 to $300 depending on the company you use and if you are purchasing other services or add-ons from the company.
Finding the Best Registered Agent for Your Business
Appointing a registered agent is a necessity for most formal business entities, and now that you understand exactly what a registered agent is, you can start your search for one. When choosing a registered agent, ensure that you keep in mind your budget and your business’s needs, as this will help you make an informed choice and appoint the best registered agent for your entity.