If you’re starting a new business, you’ll undoubtedly have seen registered agent services on offer. You’re legally obligated to have a registered agent and registered office if you’re forming an LLC or corporation, but does that mean you need a professional registered agent service?
What is a registered agent?
A registered agent is a person or entity appointed to accept official mail on behalf of your business. Some registered agents offer additional services, and registered agent services are usually included with business formation services. But it may not be obvious that you can appoint yourself and even your business (in some states) to act as its own registered agent. But there are still key benefits to hiring registered agent services.
Why do states require a registered agent?
The theory behind the requirements of the listed registered agent is to ensure your business maintains a legal and reliable way to be contacted. The registered agent came about to protect due process; a lawsuit can’t move forward without your business receiving proper notification. The registered agent must provide a physical address in that state and be available during business hours, so you can be found easily if someone is suing you. Your professional registered agent can receive service of process on behalf of the business.
The requirement makes it easier for the court to find and notify you. This eliminates the risk of large corporations hiding behind thousands of employees, and the registered agent is your point of contact with the state and for service of process. Many registered agent services also offer mail management and scanning, but this isn’t a legal requirement.
Why hire a registered agent service?
Most small businesses (<10 employees) don’t hire a registered professional agent. But there are some good reasons for business owners (regardless of business size) to consider a registered agent service; they include:
Paperwork
Registered agent services can cost up to $300 a year or more, but some business owners happily pay this to avoid thinking about official notices and annual report due dates with the state. If you hire a registered agent service, your agent will have a system in place to ensure that you and your business are in legal compliance with state requirements. This removes the need for paperwork, worry, and many potential headaches. Your registered agent will also keep your important documents safe in one space.
Privacy
This one is particularly relevant for smaller business owners or those without a business office; your home address will probably be your business’s point of contact. This puts your home address on public record, leaving you vulnerable. Some people aren’t worried, but other businesses may use your address to send you junk mail and market their services to you. If this worries you, you should consider a registered agent service.
With a registered agent service, your agent’s address is used, giving you peace of mind.
Many websites and databases are dedicated to data scraping; they compile data (including addresses) and sell it to the highest bidder. State records are permanent and if it doesn’t seem like a big deal, consider if you’ll want your home address and full name on the internet in a decade or more.
No physical address
Many small, web-based organizations encounter issues when dealing with general bureaucracy if they can’t provide a proper location. You may worry about looking unprofessional in listing your home address and the safety concerns listed above. Hiring a registered agent service solves this problem, particularly if they offer additional mail forwarding services.
Odd business hours
A registered agent needs a physical location but also reliable availability to accept service of process and other official notices from the state. You might want to consider a registered agent service if you aren’t available during business hours.
Business locations in multiple states
If your business operates in multiple states, you may need to register with all of them. You will need to nominate a registered agent in each state you register. Many registered agent services can offer an office in each state, making it easier to manage and keep continuity with the same service provider.
Confidentiality
In most states, a legal notice is usually delivered by a law enforcement officer or process server. If you list your home address or even your business address, you may be served in front of neighbors, friends, or even clients. This is embarrassing and potentially costly for you; you can keep your affairs private if you have a registered agent service on hand.
Missed notifications
If you’re a small business owner and have listed your home address, you could easily miss important mail while you’re on vacation, or if you move house without changing your address, for example, you could miss your annual state filings or even a legal notice. If you miss a legal notice and fail to respond in time, you won’t be given a chance to defend yourself, and a judgment could be recorded against you in your absence.
Can I be my own registered agent?
You’re not legally obligated to hire a professional agent, but it might help. Still, you can be your own registered agent. Registered agent requirements are quite flexible, you’ll need a physical address (not a P.O. box), regular business hours, and the ability to receive mail reliably.
Conclusion
Hiring a registered agent service doesn’t seem necessary for many small businesses. If you’re running a small store that keeps normal business hours, operating out of your home state, and are not concerned about privacy, you may not choose to hire a professional agent. Business owners can make the best responsible registered agent, but if any of the reasons listed above have struck a cord, you might consider a registered agent.
Many business formation services offer registered agent services for free or at a low price, and they can ensure you remain legally compliant and up to date while protecting your home address, legal documents, and privacy.
