Starting a business can be overwhelming and a bit scary. There are a lot of little details that need to be managed. A new business needs a federal employment identification number, workman’s compensation insurance, and a host of things from both the federal and state governments that need to be implemented as a part of LLC formation services.
Also on the list of things to do is to select a registered agent. A registered agent holds a very important role within a business entity. This guide will help explain what a registered is and provide a list of some of the best registered agent services.
What is a registered agent?
A registered agent is a third-party person who is designated to accept legal notices, tax filings, and other items on behalf of the business. They can sign for the business on federal and state documents as well as the court documents. The registered agent is listed when the small business owner registers with the state.
The registered agent can be a person, including the company owner, or a registered agent service that’s hired to fill the role. The business owner can select other individuals too, like the company attorney, human resources manager, or even a good friend.
There may be restrictions on who can serve as a registered agent depending on the state because state laws vary.
Registered agent services are also available and can be one of the most helpful business formation services you’ll find.
Why is a registered agent necessary?
Fulfill a legal requirement
Most states require small businesses to list a designated person as a registered agent. Those required to have a registered agent typically include:
- Limited liability companies (LLC)
- C Corporation
- Limited Liability Partnership (LLP)
- S Corporation
- Limited partnership (LP)
- Non-profit corporations, including those under a 501(c)(3)
- Registered agents are the ones to accept important letters from the state’s Division of Corporations and other state agencies handling LLCs and corporations.
- They also can sign for acceptance of service of process notices if your business is sued.
- They accept all official correspondence from the federal government, including IRS tax forms and requests for payment.
- They also receive requests from local governments regarding permits, company filings, or other reports required.
A registered agent service can file these important compliance documents, and even create a compliance calendar, for the business. That way, the business owner doesn’t miss a filing date, which could result in fines and even a loss of their business license.
What are the requirements for a registered agent?
It is important to understand the rules of the state where you are doing business before picking a registered agent. All states have two basic requirements:
The registered agent must be a resident of the state where the business is located.
Must have a physical address.
In the case of registered agent services, the services must be approved to do business within the state in order to serve as a receiving arm of the business. These can be domestic or foreign registered agent services, but they have to be approved by the state.
Beyond that, some states have additional requirements:
Some states require the registered agent to be an attorney or part of the company’s management team.
Other states have age restrictions where a registered agent must be 18 or 21 to serve.
What is a registered agent service?
Some businesses hire a registered agent service. These are companies whose sole business is to be registered agents for businesses.
A registered agent service typically has knowledgeable customer service representatives who can guide the business owner through business formation and other documents. They can also help file for an EIN and make sure all government agencies are notified of the business starting up. There are both small and large agencies with varying price points and add-on services like mail forwarding or legal advice.
Their primary service is to help business owners file documents and handle notices they have received. This ensures the business owner doesn’t miss an important filing or court appearance, which could result in fines or a default judgment.
What are the benefits of having a registered agent service?
The most obvious benefit is a registered agent acts as a buffer between municipalities and the business owner. A registered agent collects all legal notices and forwards them to the business owner rather than legal notices being served at the business.
Getting served with various legal forms from taxes to municipality permitting papers to court filings during business hours can be really stressful. It can distort your workday and take time away from running your business. A registered agent relieves some of that stress because they can prioritize your legal papers and keep you on track for resolving issues.
Another advantage of having a registered agent is that it keeps your private life out of the public eye. All legal correspondence goes to your registered agent rather than to your home. Having a registered agent keeps the location of your home off of public records, which can offer you more security and privacy.
A helping hand
Registered agents can, and probably should, be involved from the startup of a business as they can help set up the business under an LLC, C Corporation, S Corporation, or some other structure. Having them involved from the beginning helps the business owner move through legal services and tax areas they are unfamiliar with and ensures the business is set up properly.
Registered agent services can also do more practical tasks such as filing estimated tax payments, staying ahead of possible lawsuits or judgments, and filing annual reports. Some registered agents also help businesses with things like product logistics, crisis management, and enhancing business reputations.
Since you and your registered agent will be handling a lot of delicate issues, whoever you pick needs to be someone you trust and who can advise you on handling many types of legal situations.
Best registered agent services
To provide a look at professional registered agent services that are user-friendly with high-quality standards, here’s a list of companies to consider:
Can a business owner be the company’s registered agent?
Whether a business owner can be a company’s registered agent really depends on the state and the regulations of that state. Most states allow a business owner to be a registered agent. The exception is if the business owner lives out of state where the business is operating as most states require the registered agent to reside within the state.
While it may seem simple for a business owner to act as a registered agent, it may not be practical. Most business owners are not familiar with all the legal aspects of running a business and receiving numerous notices that you aren’t familiar with can be stressful. A registered agent can accept these mailings, simplify them, and explain them to the business owner so the situation is more manageable.
Some business owners make another family member, such as a husband or wife, the registered agent. While this could take some stress off the business owner, it still puts the family address on public record which eliminates privacy. It also doesn’t help if the third-party knows little about legal matters.
Additionally, some states require the third-party to sign a document agreeing to serve as the registered agent.
How is the registered agent submitted to the state?
The name and contact information for the registered agent is submitted when the business files Articles of Organization (to form an LLC) and again when the business sends in its annual report to the Secretary of State.
Both are fairly simple forms that can be done online with a small filing fee. Every state has its annual renewal time, so you would need to check with the Secretary of State’s office to find out when that is and the rules of changing registered agents.
Those who already have a registered agent service may find the service is renewed yearly through the company. There will be an email with renewal instructions arriving about one month from the due date and the service can be renewed online.
What happens if a registered agent isn’t updated with the state?
Failing to update a registered agent with the state could have enormous consequences. Most states require listing a registered agent when you file the annual report. Failing to file that listing on time results in penalties and additional taxes.
Usually, the first thing that happens after that is the business loses its “good standing” with the state. That leads to other problems such as hefty fines and penalties as well as the revocation of your business license.
It could also result in losing the right to enter into legal contracts and the right to gain access to the court system to sue for damages and other things. Business owners have to pay back filing fees to put their business back in good standing with the state.
Can a registered agent be changed?
As far as the state goes, yes, the registered agent can be changed although most wait to do that when the annual report is due. You can also go with a different registered agent service as you see fit, but that could cost some money as some registered agent service providers require a contract for the first year.
The best time to change registered agents is when the annual report is due, although many states do have a form (usually called a Statement of Change) that can be filed at any time during the year.
Are there other names for registered agents?
There are several names for a registered agent in the United States. Other names include statutory agent or agent for service of process (SOP). Their duties can be narrow or expanded, depending on the agent. An agent for SOP typically only receives papers when there is legal action, such as a lawsuit or summons while a statutory agent or registered agent can receive all legal paperwork, including reminders from local municipalities about filings and re-registrations.
While the names may be different from state to state, the purpose is generally the same. These are people who handle your legal business and receive your legal documents and paperwork on your behalf.