A registered agent is a compulsory prerequisite for business incorporation and a part and parcel of post-formation compliance. Many beginner entrepreneurs and startuppers choose to be their own registered agents. Is it a good idea? What does it offer to business? What are other alternatives? Below, we’ll give the answers to all these questions to help you figure out whether you should reserve this role for yourself.
A Registered Agent Definition
First off, this function is pertinent to more complex incorporated business forms, i.e. corporations and limited liability companies. A registered agent is your business representative responsible for receiving and handling formal correspondence on behalf of your company. It’s official legal paperwork such as:
- Lawsuit notices and services of process;
- Governmental notifications and regulatory orders;
- Official letters and statutory notes;
- Tax forms and payment requests;
- Filing requests, etc.
Usually, such documents contain some instructions and set up deadlines for taking some actions. And most of them need a response. Neglecting regulatory directives might put your business’s good standing at stake. Hence, it’s vital that you obtain those papers in time to provide timely feedback or fulfill the orders. And this is what a registered agent will take care of by serving as a point of contact between your company and government authorities.
Who Can Be a Registered Agent?
A basic requirement to this function is that a representative should be physically present in your home state, i.e. have a street and building address in the state where you’ve registered your business. No P.O. boxes are accepted. Besides, an agent should be consistently present under the specified address during normal business hours to be able to obtain mail and correspondence and sign for it if necessary.
In the US, a registered agent could be either an individual or a legal person. Speaking of the latter, an LLC or a corporation cannot serve as their own registered agents. They should delegate this role to a third-party entity legally operating in the same state. The best choice here is one of the professional services available across the states.
When it comes to individuals, any adult over 18 years of age can be appointed to carry legal correspondence for registered businesses. There are no specific requirements in terms of the education or professional background of the candidates, so you can easily entrust this role to your family member, friend, or neighbor. However, for a more professional and diligent approach, it’s better to assign this responsibility to a person with some associated expertise such as an accountant, attorney, financial specialist, tax or business consultant, and alike. This could be either a hired expert or your company’s permanent employee. On top of that, you or one of your partners can handle this responsibility for your own business.
Acting as Your Own Registered Agent: Pros and Cons
A registered agent is to be designated at the stage of establishing the company. To appoint yourself, it’s enough to mention your own data in the formation documents and file them with the state. While it seems a great idea at a glance, is this option really that good? Let’s take a look at the pluses and minuses of being your own registered agent so that you could make a weighed decision further on.
- Saving Some Funds: Choosing a third party to handle this responsibility, you’ll have to pay for their services. Though fees usually linger somewhere around $100 – $150 per year, you can still save this money by acting as your own agent. This is an especially great aspect for startuppers on a budget diving into a bigger business;
- Convenience: If you work from home or are consistently present in the office during business hours, you can receive your business mail on your own, with no added hassle to it;
- Privacy: You won’t have to give access to confidential papers and important legal documents to anyone else;
- Efficient Control: You’ll be the one responsible for crucial correspondence, its timely processing, and providing appropriate feedback. If self-organization is your natural forte, you’ll stay on top of this function for sure.
- Consistent Physical Presence: Not only do you need to have a physical address for mail deliveries but also you’ll have to be regularly available under that address from 9 a.m. to 5 p.m. to obtain documents in person. If your business activity implies out-of-the-office meetings and city commutes, it will be inconvenient, not to say impossible;
- Disclosing Personal Data to the Public: Registered agent’s data are to be made publicly available. Working from home, you’ll have to make not only your name but also your personal address a part of the public record putting your personal privacy at risk;
- Missing Important Letters: Being your own registered agent, you’ll have to handle crucial business correspondence with all other mail. And you’ll have to thoroughly review it on a regular basis not to miss important notifications. Besides, in the course of multiple daily affairs, you can simply forget about it;
- No Presence Across the States: Expanding your business to other states, you’ll need to appoint an agent in each state. Meanwhile, you can perform this function only in your home state. So, this way, you potentially limit your business growth perspectives.
Using a Registered Service Company
Closely comparing the above-mentioned pros and cons of acting as a representative agent for your own business, it’s obvious enough that this option is far from being perfect. In our opinion, the downsides outweigh the benefits, and missing lawsuit notifications or losing some important legal forms might result in severe legal issues for your business. So, delegating this role to a third party is certainly a better choice that is worth some extra expenses it incurs. And we recommend that you consider hiring a registered agent service for this purpose. Apart from saving you time and effort on performing this role, a hired service offers quite a number of other benefits including:
- Professional Approach: Exclusively specialized in providing registered agent services, these companies ensure that this role will be handled by experienced experts who, in their turn, will secure professional and well-organized approach and due diligence. Everything will be done following current legal requirements;
- Data Privacy: You won’t have to make your personal data available to the public. Meanwhile, your sensitive business documents will be handled by professionals and kept out of reach of anyone else;
- Maintaining Your Compliance Status: By keeping you duly informed on all the essential deadlines, filing dates, and legal changes, a hired service will help your good standing with the state and make sure your business complies with all current regulations;
- Nationwide Presence: Normally, a professional service has representative offices in all 50 states. So, whether you have plans to move your business to another state or open affiliates in other states, you won’t have a problem finding a registered agent there.
Leave a Reply