There are two options available when it comes to appointing a registered agent for a small business.
- Acting as your own registered agent. Yes, an entrepreneur can fill this position! However, it’s important to know that being a registered agent means meeting specific qualifications. We’ll outline more about this in a moment.
- Working with a third-party filing service. A third-party service can represent your business. They may act as the point of contact and accept documentation on your behalf.
Which registered agent option is the best for your business? Let’s define the term and the differences between each available option.
What is a Registered Agent?
What happens when you turn your business into its own, separate legal entity by forming an LLC or incorporating? You effectively give the business a right to due process. Most states require businesses to designate a registered agent (RA). This allows the business to remain in compliance with state laws.
A registered agent receives service of process. They act as the point of contact for the business. An RA accepts legal and official documents on behalf of the business. Some of these documents may include franchise tax forms, annual report notices, and state documents. Sensitive matters, such as lawsuits or summons, may also be sent to a registered agent. Sending these reminders to the registered agent ensures that the state has been able to properly notify and get in touch with the business.
Who can be a registered agent? This may be an individual, like the owner of the company. Or a third-party filing service may as your RA. Here’s what you need to know about both options.
Acting as Your Own Registered Agent
You may be your own registered agent. Entrepreneurs can save a bit of money as their own RA. However, acting in this role — whether you are an RA or use a third-party service — requires meeting certain requirements.
- Physical location. A registered agent must have a physical street address. You may not use a P.O. Box. This street address must be in the same state as the business. The RA must be a resident of the state as well.
- Business hours. Registered agents must be available to accept service of process during general business hours. Typically, this means Monday through Friday. The hours are 8 AM until 5 PM. Essentially, business hour and day availability is similar to a typical workday.
- Organization. An RA will receive a lot of paperwork from the state. They must be able to easily organize these documents. Make sure no paperwork gets lost and the paperwork is promptly delivered on time.
Should I Become a Registered Agent?
Here are the questions an entrepreneur needs to ask before acting as their own RA.
- Do I have the availability for this role? Not every entrepreneur is available between general business hours. For instance, if you travel or are out of your office, you are less likely to be available to accept service of process. Consider your availability and whether your schedule is flexible enough to receive this paperwork.
- Am I organized? If you struggle to find documents or lose paperwork consistently, you may want to work with a third-party organization. This ensures peace of mind in knowing you have not forgotten critical documents. Forgetting about deadlines or losing valuable paperwork may put your business at risk of falling out of compliance and into bad standing with the state.
- Am I comfortable receiving sensitive documents in public? This is tricky to answer. As an RA, you may be publicly served with sensitive paperwork. This may be embarrassing to receive, especially in a public space with customers. It truly depends on your comfort level. However, working with a third-party service means being able to retain a bit or privacy.
Appointing a Third-Party Service
If an individual is not ready to act as a registered agent, they may pay a nominal fee and work with a third-party service.
A third-party service fulfills the role of the RA. They act as the point of contact for a small business. Third-party RAs have a physical address in all 50 states. As such, this makes it easy for the state to reach them. They also have years of experience in the field. Third-party RAs understand the important role they play in keeping your business in compliance.
In addition, a third-party registered agent is discrete. They organize paperwork for the entrepreneur and drop it off in a confidential manner. This ensures the privacy and security of the business. The entrepreneur may then properly maintain their business records and stay in good standing with the state.
Ultimately, choosing between whether to be your own registered agent or appoint a third-party service depends on the needs of the business. Consider both options and determine which is best for your company.