If you’re searching for the best business structure for your company, you’ve probably read about how you need a registered agent.
What’s the purpose of a registered agent? Can you be the registered agent?
There’s a lot of confusion around this subject, so let us help clear the air.
What is a Registered Agent?
Do you want someone to obtain all legal documents for your business?
That’s what a registered agent does - and more! A registered agent is the responsible third-party person that accepts legal documents on behalf of the corporation or LLC. A registered agent can also be an entity!
The requirements are that a registered agent must be in the same state in which your business structure was established. They must be designated to receive service of process notices, correspondence from the Secretary of State, and other official government notifications, such as tax forms and notice of lawsuits.
What does a registered agent Do?
As mentioned above, a registered agent accepts legal documents and tax documents on behalf of your business. They ensure you don't miss important information regarding lawsuits, tax payments, or judgments involving your business.
A registered agent is required by states because even businesses are required to due process. This means the right to be notified when legal action is being taken against the business. For example, you cannot just mail a lawsuit to the business address because there’s no confirmation of receiving it. A registered agent is the person that acknowledges receipt, signs for it, and emails copies to the business owner.
Why You Need a registered agent
Let’s recap - having a registered agent for your business ensures that all legal documents are received and responded to in a timely manner. These documents include:
- Tax notices
- Court appearances summon
- Wage garnishments
- Corporate filing notices
Having someone available during business hours on all workdays gives you peace of mind to know that no important paperwork gets missed.
Aside from it being a requirement for businesses to have a registered agent, there are also some benefits to having the services of a registered agent, such as:
Privacy – When you have a registered agent, it’s their name and address that appears as contact information for your business. This saves you from having to list your personal information on public records. State records are permanent, and once your name and address go into the system, it stays there for decades to come.
Reduce paperwork – For a fee between $100-$300 a year, registered agents track official notices and annual reports with the state. They notify you when reports are due. This helps keep your business in compliance and also keeps all important documents in one secure place.
Physical address – If your business is based online, it’s common to not have a physical mailing address or location. Part of a registered agents service is to provide a physical address for your business – not a P.O. box.
Multiple locations – Did you know your business can operate in multiple states? However, you’ll need a registered agent with a physical address for each state. Many business owners hire agents to comply with state regulations and ensure all notices to the businesses are being kept up to date.
If your business has a storefront, keeps regular business hours, and only operates in one state, then hiring a registered agent service may not make sense for you.
The owner of the business can easily list their personal name as the registered agent and manage the annual reports. However, if any of the reasons above make you feel better about conducting legal paperwork, then hire a registered agent.
How to Choose a Registered Agent
Most states do allow for an employer to designate themselves as a registered agent. It is a cost-effective and efficient decision if you meet the conditions mentioned above. However, there are several drawbacks you can face if you choose to designate yourself as a registered agent:
- You will make your personal information public.
- Important documents are often disguised and missed among the other mail items.
- If served with a lawsuit, it may happen in front of customers and staff.
- You risk not being at the business when the documents are delivered.
To ensure you get the best business protection, it’s best to have a registered agent. When conducting your search, here are some qualities and requirements to look for:
Professional Status – You want a registered agent who has experience and knowledge in the field. A professional registered agent specializes in handling sensitive and critical documents and ensuring they get an immediate response.
Look at value – Find an agent that offers the most value. You find that through their experience and knowledge of handling sensitive information. Look at their reputation and reviews to see how others felt when working with them.
Evaluate their service level – There should be no hidden fees when you hire a registered agent. Additionally, they should provide same-day electronic uploading services.
– Are they up to date with software that ensures timely transmission of documents? What do they use for monitoring and tracking? How do they manage annual reports?
Besides yourself, a registered agent can be any person over the age of 18 or any corporation that provides these services. They must work normal business hours and reside in the same state that you formed your business entity.
What Happens If You Don’t Have a Registered Agent
As mentioned above, it’s a business requirement that you have a registered agent – whether it’s yourself or third-party.
If you fail to comply with this requirement, you will face penalties and state fines. If the situation is bad enough, you could even lose your business status and be prohibited by the state.
Another consequence of not having a registered agent is missing important notices and paperwork. This can also result in suspension or termination of your business.
Why a Business Lawyer should be your Registered Agent
By now you know what a registered agent is and the importance of hiring one, but did you know that a registered agent can also be your business lawyer?
When it’s required to fill such an important role in your business, you want someone who is responsible and knows all the details of your business. The responsibilities of a registered agent go much deeper than simply accepting your mail. In fact, they can often provide early warning signs of legal issues.
When a business lawyer acts as your registered agent, you avoid suspension and penalization of your business. And if the situation arises, you also avoid unnecessary embarrassment of being served in public.
Additionally, a lawyer helps you maintain privacy and avoid having your personal information entered into the Secretary of State’s database.