What Is a Registered Agent and Why Does My Business Need One?

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If you’re starting a business, you may have come across the term “registered agent” while researching how to form your company. And, if you’re like many new business owners, this may be an unfamiliar concept.

Your business’s registered agent plays a vital role in forming your business and helping you stay compliant with state requirements. As a result, you should give no minor consideration to what a registered agent is, and what it can do for your business.

What Is a Registered Agent?

A registered agent is your business’s officially designated point of contact to receive legal notices, like lawsuits and other government and tax documents. When you form an LLC or other type of business entity, you must appoint a registered agent when you file with the secretary of state. Without appointing an agent, the state will reject your filing until you do.

When the registered agent receives documents on behalf of your business, it is responsible for forwarding them to you. This is extremely important since many of the documents it receives will be time-sensitive. For example, you may have a short time to respond to a lawsuit. Any delay on behalf of the agent can have damaging consequences, including fees or penalties.

Who Can Serve as My Registered Agent?

In most states, any individual or company can serve as a registered agent, as long as it maintains a physical address within the state, and is available during regular business hours. The most significant exception is that a business cannot act as its own agent. Nevertheless, this means you have plenty of options of what registered agent to choose.

By appointing an individual as a registered agent, a business potentially saves on annual service fees associated with hiring a professional company. However, this is where the advantages stop. In general, registered agent service companies offer several distinct advantages:

  • Unlike people with varying schedules, a registered agent company will always be available.
  • Their information is listed in state records, not yours, offering privacy and reducing the risk of receiving a lawsuit at home or in front of clients.
  • Many registered agents offer additional services to help your business with annual reports and other required filings.

Additionally, as your business grows, it will need a registered agent to serve in each state. Few individuals can meet this requirement. Many registered agent providers offer national service, which means convenience and efficiency.

How Do I Choose a Registered Agent?

A simple web search will turn up hundreds of registered agents, all jockeying for your business. Regardless of who or what company you designate, here are a few things to watch.

  • Price: You’ll see rates ranging from “free” to over $300. Watch out for deeply discounted services, which are usually accompanied by rate hikes and other hidden fees. And, while higher-priced services may fit the Fortune 500, they might not be suitable for a small business or nonprofit.
  • Technology: Many registered agent companies invest in systems to ensure your documents are reliably received. Others go further and provide you with entity management software, convenient payment options, and the ability to easily add and manage services. And, of course, many don’t offer technology solutions at all.
  • Customer Service: From the company’s website, you should get a good feel for pricing and service coverage. But, what happens when you call? How easy is it to speak with a knowledgeable person? As a small business owner, will they give you the attention you need? If you can’t connect before you become a client, imagine your experience after you become one.

The registered agent you select for your business has the potential to be a partner for growth. By taking a few extra moments to research your business’s needs and find the best fit, you’ll be primed for success.

Harbor Compliance does not provide tax, financial, or legal advice. Use of our services does not create an attorney-client relationship. Harbor Compliance is not acting as your attorney and does not review the information you provide to us for legal accuracy or sufficiency.

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