What is a Registered Agent

Getting a registered agent is part of the LLC formation process. But does your business really need one? Find out what a registered agent is below.

A registered agent is a requirement for all LLCs and corporations. Every business must include this information when filing its formation documents with the state.

Still, some wonder whether their business actually needs one.

What is a registered agent? What do they do? Should you hire a third-party service for this?

Let's get into it.

What does a registered agent do?

A registered agent is an individual or agency that receives mail and important documents on a company's behalf.

This includes accepting service of process documents (like subpoenas, court summons, and lawsuits) from a process server. Then forwarding them to the right person in the company.

Registered agents are also known by the following names in other states:

• Resident agent
  
• Agent for service of process
  
• Statutory agent
  
• Registered office

A registered agent also acts as a business's primary point of contact whenever the government and other institutions want to reach the company.

Aside from that, an LLC registered agent can also do the following for your business:

• Alert you about upcoming deadlines (like an LLC's annual report)
  
• Help your business comply with state regulations
  
• Assist you with organizing and safeguarding important documents
  
• File the necessary documents on behalf of your business

Why do you need a registered agent?

There are a few reasons your company needs a registered agent. Here are some of them:

1. To form an LLC or corporation
   Registered agents are a state requirement for business entities like LLCs and corporations ^[2].

   So if you want to start an LLC or corporation, you need to assign the role to someone before you can do so.

   You need a registered agent in every state where you've formed a limited liability company or corporation.

   If you don't, the state will just reject your application. And they'll continue to do so until you list a registered agent in your formation documents.

   So save yourself that valuable time, effort, and money by ensuring you already have a registered agent before filing.

2. To stay compliant
   You don't just need a registered agent when you form an LLC or corporation. You also need one to comply with annual requirements.

   Your business can encounter a lot of problems if you don't have a registered agent.

   For example, the state can impose hefty fines and other penalty fees on your company. That's money you could've used to grow your business.

   Aside from fines, you also risk losing your good standing with the government due to non-compliance. When that happens, it can negatively affect your business.

   How so? Here are some examples:

   • You can't apply for business financing because your company will be considered high-risk.
     
   • You can lose your rights over your business name. And others can claim it as their own.
     
   • You can lose your business's liability protection. Which can mean losing your personal assets.
     
   • Your company can lose its right to due process. For example, you can't file lawsuits against others when needed.
     
   • You can damage your company's reputation. Which can lead to other companies and investors refusing to work with your business.

   More importantly, the state can dissolve your LLC or corporation if you lose your good standing status. Especially if your company repeatedly fails to comply.

   The state typically notifies businesses if they have a non-compliant status. So they can fulfill the missing requirements and regain their good standing status.

3. To avoid missing important documents
   Besides compliance, a registered agent also ensures you don't miss any important documents for your company.

   That's because your registered agent can personally receive them during normal business hours. And then forward these documents to you as soon as they can.

   Your registered agent can also screen junk mail and forward only the most important ones to you.

   This is critical, particularly when it comes to legal paperwork like lawsuits or court summons. That's because you need to respond to these ASAP to avoid negative consequences for your company.

   For example, if someone sues your business, the court will inform you about the lawsuit and give you enough time to prepare a defense (i.e., service of process).

   If you don't respond before the deadline, you'll receive a default judgment from the court. (In other words, whoever sued your business will win by default.)

   Your company can end up paying thousands to hundreds of thousands of dollars to whoever sued you. Even if their claim was ridiculous.

   And the chances of this happening are higher if you don't have a registered agent. Because you're more likely to miss the deliveries, especially if you travel a lot.

   Can you change your registered agent?
   Yes, you can. But you'll need to update the listed information in your Articles of Organization/Incorporation.

   To do this, you need to file a form (usually called a "Statement of Change of Registered Agent") with your Secretary of State's office. Some professional registered agent services can file it for you.

   You might also need to pay some filing fees. Which usually range from $25 to $50.

Does an online business need a registered agent?

Any business registered as an LLC or corporation must have a registered agent - even online businesses. This is a state requirement. You need to comply with this to avoid negative legal consequences.

Just remember that while online businesses can use virtual addresses, registered agents cannot. They must be a resident of and have a physical street address in your LLC's formation state.

If you don't have a physical address in your LLC's state, using a third-party service might be a good idea. These companies usually have physical offices in every state, which they can use as their official registered business address.

Who can be a registered agent?

Most states allow anyone to be your company's registered agent. In fact, you can do it yourself or assign someone you trust (like your business partner or lawyer/law firm). Another option is hiring a professional registered agent service.

In some areas, the state acts as the default registered agent for all the companies formed in their jurisdiction. But you can still assign your own.

But regardless of who you choose, they should still meet the following criteria:

• At least 18 years old and above (if an individual)
  
• A resident in the state where the LLC/corporation was formed
  
• Has a physical street address in the said state (P.O. boxes and virtual addresses not allowed)
  
• Always available during normal business hours (9 a.m. to 5 p.m.) during weekdays (Mondays to Fridays) to receive documents and notices
  
• Authorized to do business in the state (if a professional registered agent service)

The requirements can differ in every state. So check your Secretary of State's website before assigning someone to the role.

Aside from these, business owners must also ensure that their registered agent's listed information is always accurate and updated. Doing so will prevent delivery problems in the future.

Can you be your own registered agent?

Yes, you can.

In fact, it's the more affordable option since you don't have to pay anything to be your company's registered agent. But most advise against being your LLC's registered agent.

Here's why:

• Risks to your privacy
  A registered agent's details (e.g., name and street address) are part of the public record. So anyone can access your information if you act as your own agent.

  This can be risky, especially if you used your home address for your registered address.

• More responsibilities
  You'll be responsible for handling all the legal paperwork that comes your company's way. You need to be organized and ensure the right person gets the documents.

  Otherwise, your company might encounter legal problems.

• Less freedom
  Registered agents should always be present during normal business hours to receive incoming mail and important documents.

  This leaves you with less freedom over your schedule. You also can't leave your registered address during this time because you need to personally receive all deliveries.

• Possible negative publicity
  The court also sends all service of process documents (like court orders and lawsuits) to a company's registered agent.

  So it may negatively impact your business's image and trustworthiness. Especially if your customers or investors see you being served.

That's why many companies choose to hire professional registered agent services instead. They can handle the tedious tasks of a registered agent.

And you can focus on what really matters - running your business. No need to worry about privacy risks, the lack of flexibility, and reduced freedom.

Plus, many registered agent services have a physical location in every state. So no matter where you form your limited liability company, you can enjoy their services. They can even provide you with a business address, adding another layer of protection to your privacy.

Some of them also offer additional services that make it easier to run an LLC. Some examples include filing your annual reports and reminding you of upcoming deadlines for requirements.

Registered Agent Quiz

5 best registered agent services

If you prefer someone else to be your registered agent, here are the top 5 services you can try:

ZenBusiness

ZenBusiness is an online, all-in-one formation service that helps business owners set up their LLCs with the fewest hurdles possible. They guide clients through the entire process, starting with a free business name search. They even help you get a business domain name.

They also offer registered agent service as an add-on or on its own. This costs $199/year.^[3]

You can also get their Worry-Free Compliance service which includes annual report filings and up to 2 business amendments per year.

With this, you can leave all the yearly filing requirements to their team. So you can focus on the other aspects of your business.

This costs $199/year.^[4]

Pros and Cons

Registered Agent - $199/Year

• Get a registered agent for LLCs and corporations
• Available in 50 states
• Get notifications via mail of important legal notices
• Find important documents scanned and uploaded to your dashboard

Click Here to Learn More

Northwest Registered Agent

Northwest Registered Agent is another popular option.

Initially, they only offered registered agent services but have since expanded to provide formation packages. You can hire them once for a one-time fee or subscribe to their monthly services.

At Northwest, you can start your LLC for just $39 + state fees, which includes a full year of registered agent services. You can purchase the registered agent service separately at a flat rate of $125/year.

Pros and Cons

Registered Agent Service - $125/year

• Business address included
• Free mail forwarding
• Lifetime guide service with business experts
• Never sell your data. Ever.

Click Here to Find Out More

Bizee

Bizee (formerly Incfile) is at the top of the list when it comes to convenient LLC formation packages. But what stands out is that they only charge you for the state filing fees. This can save you money, especially since some states have expensive filing fees.

They also offer free registered agent services for one year as part of their formation packages. After that, you have to pay $119 per year to continue using it.^[7]

Pros and Cons

Rocket Lawyer

Rocket Lawyer is an online firm that mainly offers legal services to business owners. This means you can turn to them for LLC formation and legal advice and documents.

They have a subscription-based service that you can try for free for 7 days. It costs $39.99 per month for Rocket Legal or $19.99 per month (billed annually) for Rocket Legal+ after that.^[8] With a premium membership, you enjoy their basic services at no additional cost and discounted prices for others.

Their registered agent service costs $249.99/year ($124.99 with Rocket Legal+). You can also get discounted rates for other services, like tax preparation, attorney services, and trademark registrations.

Pros and Cons

Inc Authority

Inc Authority is another online service that offers its LLC formation services for free. Like Bizee, you only have to pay for the state filing fees.

They have more premium packages starting at $399 per year. These have additional services like annual report notifications and tax consultations.

Their registered agent services are free for the first year and cost $179^[9] annually after that. You're automatically charged after the initial year ends. But you can cancel your plan beforehand.

Pros and Cons

How to choose a registered agent service

More than a state requirement, your registered agent can greatly impact your business. If they're inefficient or unreliable, your company will experience issues. Or worse, it can get into trouble.

That's why you must ensure you're hiring someone reliable and trustworthy. To do that, you should consider these factors if you're going for professional registered agents:

• Locations
  Registered agents are bound to the state where they live/operate. Which means you need to hire professional registered agents for every state you start an LLC in. This can make keeping track of things more challenging.

  If you're starting a business entity in multiple areas, using a national registered agent service is best. They can give you the necessary support as your company expands its operations.

  Some good examples of national registered agent services would be ZenBusiness and Bizee. They offer their services and have offices in all 50 states.

• Privacy and confidentiality
  Your registered agent will have access to your company's sensitive documents, including official communications and personal data.

  That's why it's crucial to choose a professional registered agent service that you can entrust your business's information with.

  Northwest is a good choice for this because their clients' privacy is their top priority^[10]. They'll even give you a dedicated business address you can use in all public forms.

• Customer support
  You'll be working regularly with your registered agent. So it's important that you can easily contact them when you have questions or concerns.

  Besides that, they should be able to respond to your concerns as quickly as possible. That way, your business can continue operating without delays.

Aside from this, your registered agent should be very familiar with your state's different business laws and regulations.

They should also have efficient systems in place to ensure you receive crucial documents as quickly as possible.

Bottom Line

A registered agent isn't just required to form an LLC or corporation. They can also help you stay on top of things and ensure your business complies with your state's regulations.

Not having one can cause many problems for your business. But deciding who to assign as your registered agent is not always easy.

If you're acting as your own registered agent, make sure you're ready for the responsibilities involved.

But, if you're going for a third-party service, picking a company that offers reliable services at reasonable prices is best.

References