A registered agent is a person or organization that is authorized to receive service of process notices, official government correspondence, and any other compliance-related documentation on behalf of the business. Every business entity, regardless if it’s an LLC, a traditional corporation, or a nonprofit organization, must appoint a registered agent in order to legally operate in any state.
Naming a registered agent is a necessary part of incorporating any business. However, it is also a part of the business formation process that many entrepreneurs are unfamiliar with.
Read ahead for info that will help you understand the role and responsibilities of a registered agent.
What are the requirements for registered agents?
There are three very specific responsibilities and requirements for registered agents:
Your registered agent must be available during normal business hours (9:00 a.m. to 5:00 p.m., Monday through Friday). The agent must be at the specific address listed on your state incorporation forms.
2. Individual person
Your company cannot serve as its own registered agent. However, the registered agent may be an individual or a company that offers registered agent services. It is important to keep in mind that your registered agent’s information (e.g. address and phone number) will become a part of the public record that is established when you are granted corporate status and easily searchable on the internet in most states.
A registered agent must be located within your chosen state of incorporation. You must also secure the services of a registered agent in any state in which your company foreign qualifies. Your registered agent’s address must be a physical address, not a P.O. box or leased mailbox service.
Can you be your own registered agent?
You are legally allowed to be your own registered agent as long as you meet the residency and address requirements; however, there are a number of reasons why you should choose another person or organization instead—see the list below:
All states require that the name and contact information of the registered agent be publicly accessible. As the business owner, you may not wish to have your contact information made public, which is what would happen if you chose to be the registered agent for your business.
Odd Work Hours
Not every business owner is a “9-5” kind of person—you may be more of a night owl who doesn’t like to start your workday before 10 a.m. and go into the evening hours. Or you may own a bakery and your day begins at 3 a.m.
Even though many businesses operate during different hours, state governments require registered agents to be available between 9 a.m. and 5 p.m. during weekdays. Trying to be the registered agent for your business may negatively impact your workflow.
Many small businesses begin at home. In fact, according to recent data by the Small Business Administration, at least 50% of small businesses incorporated in 2018 are home-based. Being the registered agent for your business not only makes your personal information public, but you may end up with process servers and other compliance officials showing up at your front door.
You may find yourself in a similar bind if you have a mobile business, like catering or pet grooming or auto detailing. Since your company is literally consistently in motion, your registered agent is a stationary point of contact for the government and the courts.
No Official Office
The state requirement for the registered agent is that the party have a physical address — a P.O. box is not acceptable. If your company does not yet have a brick-and-mortar location, the registered agent’s contact is the anchor to the government.
Honorable Mention — Not Compliance Savvy
Experienced registered agents already know a lot about state and federal regulations and red tape. If you don’t already know this information and don’t have time to research, you can end up costing your business quite a bit in unnecessary fees.
Hiring an outside professional as your registered agent
Due to the reality that a registered agent must be consistently available during business hours, it can often be difficult for a small or medium business to dedicate an in-house individual to the position. Add in the fact that this agent will be in charge of handling your most sensitive company documents, it only becomes more important that this position is approached professionally and prudently.
For many small businesses or resource-scarce businesses, the answer to the registered agent requirement is found outside of their own staff. Taking this step bypasses the stress of dedicating an in-house staff member to be responsible for handling your most sensitive company documents and procedures in addition to his or her existing job duties.
By hiring a professional registered agent service, you can rely on him or her to receive and forward important documents to you in a fast and time-efficient manner. These services also log all received documents and have experience making sure that communication between your business and the state is as streamlined as possible. Listing an outside registered agent also prevents the public disclosure of your home address (if you are operating your business at home), cuts down on junk mail delivered to your house, and may help avoid the unnerving experience of being served in your home should there ever be a lawsuit. Because it is crucial that your business pays close attention to every dollar it spends on its administrative expenses, a professional registered agent can be an extremely cost-effective solution.