When planning to establish your own enterprise, you have to solve a number of crucial organizational issues. These include finding and appointing a registered agent. Since it does not require any special education or professional experience, the pool of candidates is almost unlimited. Nonetheless, one of the most common alternatives is when an owner acts as a registered agent. It is permissible in most states.
In the case you operate as your own registered agent, you can save money on hiring a specialist and have full control over the business. Does it sound tempting? However, this path has some shortcomings, which can be quite substantial.
In this article, we will briefly analyze the pros and cons of serving as your own registered agent and discuss the basic criteria for the nominee. In addition, we are going to answer the most popular questions concerning the appointment and the activities of a registered agent.
What Does a Registered Agent Stand for?
Before you apply to found a limited liability company, a corporation, or a partnership, you should designate a registered agent. In some states, this person is also called an agent for service of process, resident agent, or statutory agent.
A registered agent refers to an individual or a legal entity representing a firm in the state and receiving its official correspondence. The paperwork they handle involves the following:
- Tax forms;
- Annual reports;
- Compliance reminders;
- Service of process for lawsuits, etc.
According to the legislation, the business owner is obliged to maintain the active agent throughout the entire existence of the venture. It is vital as a registered agent is, in fact, an intermediary between the enterprise and the state. Having them ensures that if a suit is brought against the business, you will know about it on time and be able to participate in the process. Besides defending the interests of the company, a registered agent also secures the protection of public interests. Since their contact information is publicly available, potential clients or partners can learn more about the firm or contact them.
To avoid an application being rejected, you should choose a registered agent, who fully meets the state’s requirements. Naturally, the criteria may vary from state to state, but general guidelines are as follows:
- Having a physical address located in the state you intend to do business in. Please note that a mailbox is not enough to fulfill this condition;
- At least 18 years old – for individuals, and obtaining a business license – for legal entities;
- Ability to receive the company’s official correspondence in person and against signature, staying permanently in its registered office during office hours.
Hence, the law does not require special education to become a registered agent. Provided you follow the conditions listed above, you can perform these duties personally, or delegate them to a relative, acquaintance, or employee. However, hiring a professional online agency is a better scenario. Although it requires some investment, a professional agent will allow you to eliminate possible hardships and hassles. Their prices are affordable even for small businesses, and the quality of their service guarantees excellent record keeping.
What are the risks of acting as your own registered agent?
Most states allow business owners to operate as their own registered agents. With its obvious savings, however, such an approach has several flaws to consider before making a well-informed decision. Let’s take a closer look at them.
Inability to leave your workplace during normal office hours
Delivery of sensitive files can be at any time. Not to miss it, a registered agent is required to be in the company’s office from Monday through Friday from 9:00 a.m. to 5:00 p.m. This can be justified if an agent is an employee of the organization but becomes a significant limitation for those who are not related to it in any way.
Furthermore, acting as a registered agent does not go well with running a business. Sometimes, when the owner needs to attend a business meeting or go on a business trip, those who act as their registered agent have no such opportunity.
Contingencies should not prevent you from receiving official papers
Being a registered agent means you can’t take a day off, the sick day, or leave your desk for a brief break to handle your own matters. Moreover, even if you are in the registered office but step away to call, it could put the company at risk. Since only a registered agent is authorized to sign for official corporate documents, no one will be able to fulfill that responsibility for you. In addition, if you are absent from work, the person delivering the papers will not postpone delivery or wait for you to arrive. This is a responsible job requiring strict adherence to the rules.
The risk of embarrassing situations
When you operate as your own registered agent, the state representative will not wait until you have finished your business or a meeting. A notice of non-compliance with state regulations or a subpoena may be handed to you in front of your co-workers, potential customers, or investors. This will diminish the company’s credibility and adversely affect its reputation.
On the other hand, an outside registered agent can easily solve this problem. Hiring a professional provider will ensure a high level of privacy and timely receiving of all official correspondence.
Difficulties with expanding the business to another state
As your company grows, you may think about expansion into another state to take your business to the next level. However, if you perform the duties of a registered agent yourself, you will have to choose a new, reliable candidate, who meets the necessary criteria. It can take some time to find one since a registered agent should have a physical address in the state your business is located. As such, the likelihood of appointing an acquaintance or a relative is low. An accountant or a lawyer, who sometimes serves as a registered agent, may not be a good fit as well.
The best option in such a situation is to hire an online company. Most of them provide registered agent services in all states, so you can boost your business without worrying about technicalities. Thanks to the tracking tools offered by specialized services, the process of managing the entity and maintaining its image will become much easier.
Low level of privacy
Since the registered agent’s name and contact information are in the public domain, you run the risk of facing a flood of junk mail. Important documents can get lost among advertisements, marketing offers, and other spam.
The issue of confidentiality is especially relevant if the official office of the organization is registered at your home address. In this case, official government correspondence or legal documents may be given to you in front of your family members, which is not always convenient.
Who Should Be Your Registered Agent?
Would you like to avoid any risks and take some of the responsibility off your shoulders? Then pay attention to professional agencies offering registered agent services. We have prepared the list of the top 3 reputable online companies in the industry below.
- IncFile: If you plan to set up an LLC but haven’t started yet, you can take advantage of this online company’s unique offer. It is one of the few who are willing to launch your business for $0+state fee. For that money, you will also get 1 year of free registered agent service. Then, after the grace period expires, the cost of registered agent service will be $119 per year;
- ZenBusiness: This provider is very popular for its affordable prices and fast service. For example, it can establish your LLC for only $49+state fee, also providing a free registered agent service for 1 year. Along with it, you’ll also get access to a handy compliance calendar, which will make it easier to run your business. To continue using its registered agent, you’ll need to pay a $99 annual fee;
- Northwest Registered Agent: The registered agent services offered by Northwest are recognized as the best in the industry. It charges a reasonable $125 a year and does even more than any other agency. While all the other online companies only scan the legal minimum documents for you, Northwest provides a full scan.