When you’re forming an LLC on your own or through an online formation service, starting a new business is exciting and challenging. You probably know all about the basics ― like registering a business name, or acquiring your licenses and permits ― but many entrepreneurs have questions about the role of a registered agent.
While the registered agent might seem like an outdated or even unnecessary aspect of the modern business, it’s actually extremely important, and you won’t be allowed to form a business without one.
You can choose to serve as your own registered agent, you can designate someone else (perhaps your spouse, one of your employees, your lawyer or accountant, or a trusted friend or family member), or you can hire a professional registered agent service.
No matter who you choose to be your company’s registered agent, their role is to be your front line of communication with the government for important document deliveries. Let’s get into specifics, and discuss everything you need to know about registered agents.
What Is a Registered Agent?
A registered agent is an individual or a business entity that has a physical address in the state you’re doing business in.
A crucial part of this role is to be present at this location during all standard business hours, because the registered agent needs to be available to receive document deliveries from your state government.
For example, if someone files a lawsuit against your business, the service of process documents would be dropped with your registered agent, who would quickly notify you of this legal action.
Do I Need a Registered Agent?
Yes, every business entity in the United States needs to have a registered agent. In fact, you will not be allowed to finish the formation process for your company until you designate your registered agent.
The role of the registered agent may seem like that of an unnecessary middleman, but when it comes to staying legally operational and compliant with your state government, it’s entirely necessary.
Is a Registered Agent Required by Law?
Every state legally requires a new LLC designate a registered agent, with no exceptions. While there are nuances to the laws depending on which state your business is based in, you cannot legally operate without one.
If you fail to comply, you may be fined or sanctioned, or the state may even dissolve your business. In addition, as we mentioned before, if you haven’t formed your business yet, you won’t be allowed to until you get a registered agent.
Can I Be My Own Registered Agent?
You are legally allowed to serve as your own registered agent, but we tend to caution against it in most cases. While you can save some money by designating yourself for the role of registered agent, you will have to follow a strict set of rules and regulations that can hamstring your company’s chances of success.
We’ll dive further into these responsibilities more in the next section, but just for a brief rundown, if you serve as your own registered agent you’ll need to do at least some of the following things:
- Only do business in your home state
- Be available at your place of business from 9am-5pm every weekday
- Get served for a lawsuit in front of your clients or employees
- Enter your home address into the public record
In short, it’s usually just not worth the small amount of money you can save by serving as your own registered agent.
Registered Agent Responsibilities
The registered agent has a lot to keep up with, as they are responsible for receiving paperwork related to service of process, compliance reminders, tax forms, and Secretary of State notices.
They must keep your corporate records up to date, meaning they must also know specifically what the state requires from your business, and keep up with any changes to these rules.
One important note is that the registered agent is only ever responsible for your business in one state. You cannot have one registered agent handling this role for multiple states, unless it’s a national registered agent service with offices in each state your business operates in.
Keeping Legal Matters Private
Another substantial reason for outsourcing this role is privacy. A lawsuit is never a desirable situation for any business, but it can be far worse if you’re operating as your own registered agent.
When the state delivers service of process for a suit, they deliver it to the registered agent who acts as your official representative.
If you ― or someone else located at your place of business ― acts in that role, you put yourself at risk of being served in front of customers, employees, or neighbors. Your reputation is one of the most important aspects of a business, and discretion regarding any legal troubles is always advised.
The Headaches of Using a Home Address
If you operate a home-based business, you may not have clients or employees around to witness a service of process delivery. However, if you work from home and serve as your own registered agent, you will need to make your personal address a matter of public record.
This raises privacy concerns and makes you susceptible to receiving tons of junk mail at your home. Finally, if you move, you have to promptly notify the state, and also likely need to file a change of registered agent address form and pay a fee.
For these reasons, it’s almost always advisable to outsource the role of registered agent for your business.
What Is a Registered Agent Service?
One of the most popular options for outsourcing this role is to hire a registered agent service, which is a company that acts as the registered agent for many different businesses.
Most major registered agent services have offices in all 50 states, meaning this option keeps the door wide open for potential business expansions into additional states. Typically, pricing for this service starts around $100 per year, although there are some companies that charge annual fees upwards of $300.
Most registered agent services will perform numerous duties, such as:
- Acting as the official point of contact for your business for correspondence regarding legal matters.
- Providing their address as the publicly available address for state agencies to send important business documents.
- Immediately forwarding important documents like tax bills or legal summons to you.
- Reminding you of important deadlines for yearly compliance-related paperwork.
What Are the Requirements for Registered Agents?
Rules and regulations regarding registered agents vary a bit by state, but there are some general guidelines that all states agree on. No matter who serves as your registered agent, they will need to be available at the address provided to the state during all standard weekday business hours.
They also must have a physical location in the same state where the business operates, and if the registered agent is an individual person rather than a business entity, that person will need to be at least 18 years old.
For more information on registered agent requirements in every state, check out our full article on the subject.
Which Is the Best Registered Agent Service?
For an in-depth answer to this question, check out our comprehensive guide to top registered agent services. As a quick overview for this question though, we’ll walk through a few of our favorite options:
- Northwest Registered Agent: Northwest charges $125 per year, and they’re the only major national registered agent service that locally scans every document they receive as your agent. They also have personalized customer support that assigns a dedicated account representative to each client. If you also need to form your business, Northwest offers a $225 formation package that includes a year of registered agent.
- Zen Business: Zen Business has a $99 base rate, with an extra focus on making the process less stressful and an easier to use website. You’ll receive their outstanding customer support, as well as access to helpful software that allows you to track and file your company’s annual reports.
- Incfile: They are one of the most well known LLC and registered agent services available, with rates that start at just $119 per year. Plus they offer an awesome free LLC formation service if you haven’t created a business yet and would like a free registered agent service in the process.
- LegalZoom: This is another very popular option that more-or-less does the same thing as the other services, but charges $299 per year. In our opinion, the affordable registered agent services above are far better deals and more than half the cost.
Conclusion
A registered agent is critical to your company’s compliance and legal standing. The role requires dealing with seemingly simple tasks, yet if they’re handled incorrectly, they could cost you a considerable amount of money in fines, and could even potentially see the state dissolve your business.
It’s essential to pick the right registered agent for your business starting at the formation phase, and keep an eye on your compliance standing to ensure nothing goes awry along the way.