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If you’re starting a business, you’ve probably stumbled on the term “registered agent.” Most businesses need to elect a registered agent before they open their doors. You can serve as your own registered agent, but it may save you a few headaches to delegate the responsibility.
What exactly is a registered agent and what does this person do? To help, we’ll explore what this role is and how to effectively select a registered agent for your business.
What is a registered agent?
A registered agent is the point of contact for your business. It’s the person people contact when there is a legal problem or when service of process documents are served. It is also the person contacted by the state, government agencies, bill collectors, or others trying to contact the business. A registered agent receives all important documents and must ensure the information is passed on to the right person in a timely manner. A registered agent is sometimes called a resident agent or a statutory agent.
What does a registered agent do?
- A registered agent is the designated person within your business entity that receives all official mail and other documents on behalf of your business.
- A registered agent can also keep you up to date on routine filings like yearly or regular registration of your business with the state, your quarterly filings with the labor department, and paying things like property taxes.
- They can also be helpful in organizing your legal paperwork for your accountant to file your yearly taxes.
Which business type needs a registered agent?
Some businesses aren’t required to have a registered agent because they are unregulated by the state. Sole proprietorships, for example, typically don’t have to register with the state so they aren’t required to have a registered agent. The owner is synonymous with the business so they are automatically responsible for all legal notices.
However, those incorporated as a limited liability company (LLC) or a C-Corp are required to list someone as a registered agent when they register the business with the state.
More specifically, the registered agent’s name is listed on the formation documents, better known as Articles of Organization or Articles of Incorporation, which are usually filed with the secretary of state. You can also expect to list the registered agent’s address and additional registered agent information on the documents.
Who can be a registered agent?
Any adult over 18 who lives in the same state as your business can be your registered agent. It can be yourself, your spouse, another family member, or a friend. It could be your company’s bookkeeper or another executive in the organization.
Some businesses select their attorney for the role. Many business attorneys will sign on for the duty for a retainer or a yearly fee.
There are many commercial registered agents too. Entities like Northwest Registered Agent, ZenBusiness, IncFile, and LegalZoom are all good options. With these companies, you pay for the yearly service. Plans and costs can vary.
Many commercial agents offer incorporation packages. The company will register your business with the state, provide a registered agent, and keep your business in good standing with the state by filing annual reports and paying state fees.
Some business starter packages include unique naming tools or some basic legal services too. Services vary, but you can find a commercial registered agent in every state.
Find the best registered agent in your state
How do you find a registered agent?
You can pick any number of people to be a registered agent but the real question is can they do the job? A family member may do it for free but that won’t serve you well if they forget to tell you about a letter or subpoena they got.
The first thing to do is list the qualities you need in a registered agent. Then, you will need to decide if someone you know is qualified and trustworthy to do the job or whether you should use a professional like an attorney or paid service.
A registered agent should be conscientious, organized, and willing to communicate with you regularly. The main quality to look for in a registered agent is having the time and ability to take care of your business the way you need them to do it.
Get an agent or do it yourself?
You can be your own registered agent and list yourself on your paperwork with the state. However, there are pros and cons to that.
Most businesses with less than 10 employees don’t hire registered agents. They feel there isn’t much legal risk, and that they can handle things like annual registration payments, tax payments, and labor department paperwork themselves.
The primary reason they don’t hire a registered agent is they feel they can’t afford to do it. Those business owners feel they can save money and handle it themselves.
However, there are valid reasons why you should hire a registered agent.
Advantages of selecting a commercial agent
Hiring a registered agent is the right choice for many businesses, especially for a busy shop owner who would rather not deal with legal documents. There are several advantages to consider.
A professional registered agent keeps you from having to deal with legal paperwork, deadlines, tracking official notifications, or worrying about fulfilling state requirements.
Your registered agent will keep you informed and also keep you in compliance with state and federal guidelines. That means you don’t have to worry about it.
A registered agent must also list their home address (not a P.O. box) on the state forms. That means you will need to list your street address if you choose to act as your own agent. This will put your privacy at risk when you have business dealings.
Having a registered agent protects your privacy so legal notices and other things won’t come to your home and worry your family.
Resolves physical address problem
Many businesses today are online businesses done out of people’s homes. The company doesn’t have a physical address where paperwork can be served. Enlisting a commercial registered agent resolves the problem of a physical business address.
The same problem exists with postal delivery. Businesses that have post office boxes or virtual mailboxes will have trouble getting things like guaranteed-signature deliveries or certified letters. A registered agent resolves that problem as he or she can accept things on your business’ behalf.
Business hour service
Some businesses operate whenever the business owner has an opening and that doesn’t allow for proper delivery of notices. Hiring a registered agent allows them to accept letters and notices as they come in and that means you remain in control of information well in advance of a problem.
A business operating in several states becomes more complicated. Having a registered agent that can handle all of the legal notices for multiple locations simplifies things.
Paperwork is in one place
Business owners are famous for messy desks, a shoebox of receipts, and other important things they don’t have time to manage. A commercial registered agent keeps all your legal paperwork in one place, organized, where you can easily get to it.
Disadvantages of selecting a commercial agent
Hiring a commercial agent has some disadvantages too. It pays to look over this list to see if they are things you can live with if you decide to go that route.
It does cost to hire a commercial registered agent. The average price of this service is between $100 and $300 a year, but it can cost more if you hire an attorney to be your registered agent. Usually, attorneys offer this service as part of the overall fee of handling all your business’ legal needs and that requires a retainer. Others may do it as a fee-based service.
Entities offering this service as part of an incorporation package want you to buy the whole package which can cost anywhere from $500 to $2,000, depending on the package you buy. That can be incredibly helpful to you because you know everything is done properly to start your business correctly but many business owners just don’t want to pay that much starting out.
Loss of Control
There is a loss of control every time you hire someone to handle part of your business. Some business owners want, or need, total control even though it reduces their privacy. Hiring a commercial registered agent removes a level of control.
How can you change a registered agent?
You can change your registered agent at any time on your registration paperwork in most states. All you need to do is file a change form. However, many states charge a filing fee for changing your registered agents outside of normal refiling times. You will need to check with your state’s Secretary of State office to see the fee schedule.
The best time to change your registered agent is when you are refiling your annual registration with the state. On this business filing, you can make any changes you want for free.
The most important thing to consider is whether your need for one is great enough to hire one. Businesses that have multiple locations, work in different states, or don’t operate during normal business hours would benefit from a commercial registered agent.
There are many sites that rank the best registered agents, so do your research. You can also save some risk by going with a one-stop-shop company that helps you with incorporation, filing the paperwork, and even printing legal documents for employees.
Each state has its own requirements, although the general requirements are to be at least 18 years old and live within the state where the business is registered. Small business owners can look on the secretary of state’s website in their home state and find information about corporations to learn more.
Those who are going to hire a registered agent should choose one that does it professionally and has done it for others for a few years. Don’t go with the cheapest but look at the value of the service. It’s best to choose a commercial provider that’s nationwide in case you grow to other states and one that has different levels of service. That way you can start with an entry-level plan and get a premium plan as you need it.
A business owner can be a registered agent but a registered agent may not be a business owner. A registered agent is someone that is designated to collect and receive legal documents on behalf of the company. It can be the owner, someone the owner designates, or a paid commercial registered agent.
Depending on your agreement for services with a registered agent, this is a person who can update your entity paperwork with the state, find a business name, logo, and slogan for you, copyright your logo and trademark, and serve legal notices to others as well as receive them.