What Is a Registered Agent?
If you start a limited liability company (LLC), you will be required to designate a registered agent when you form your business. A registered agent is the individual or business entity responsible for receiving your important legal documents and forwarding them to you.
The reason registered agents are required is because the state needs to have a reliable and consistent means of reaching every company’s ownership. This is especially important if your business is sued and you need to receive service of process documents, or if you need to complete any ongoing compliance requirements.
In these situations, if you don’t have a registered agent, you’re at risk of missing important filing deadlines or failing to respond to lawsuits in a timely fashion.
Should You Serve as Your Own Registered Agent?
Legally speaking, there’s nothing stopping you from serving as your own registered agent, as long as your business was formed in your state of residence.
However, while there are a few advantages to doing so, there are also some significant disadvantages. Below are some of the pros and cons to serving as your own registered agent.
- Saving Money: While most registered agents aren’t terribly expensive, none of them are free. If you serve as your own registered agent, you can save $100 or more per year on business service provider fees.
- Convenience: If you’re already present at your place of business every day, Monday through Friday from 9am to 5pm, and you don’t mind if your employees and/or customers see you receiving important legal documents, then it may be convenient to serve as your own registered agent.
- Present During Business Hours: If you serve as your own company’s registered agent, you will need to be present at your place of business from 9am to 5pm every single weekday, with the only exceptions being federal holidays.
- Missing Deliveries: The biggest negative to serving as your own registered agent is the risk of not being present when a document delivery is attempted. Even if you’re usually around during all standard business hours, if you step out for even a moment, you risk missing a crucial delivery.
- Being Served at Work: If there is a lawsuit against your company, you will need to receive service of process documents. If you’re acting as your own registered agent, you will be served at your place of business, which means employees or even customers may see it happen. This situation is not ideal.
- Losing Lawsuits by Default: A potentially serious negative that goes along with the possibility of missed deliveries, is the chance that you may fail to receive service of process documents when you’re being sued. If you are never made aware of a lawsuit against you, you will be unable to defend yourself in court, which can have very serious consequences for your business.
- Personal Address, Public Record: If you own a small business that operates out of your home, you’ll most likely need to make your own home address a matter of public record. This can be a serious privacy issue for those concerned with keeping their home address private.
- One-State Operation: Serving as your own registered agent renders it impossible to expand your business into multiple states, since each state requires businesses to retain a registered agent with a local address.
Should You Hire a Registered Agent Service?
If you hire a professional business services company to provide your registered agent service, you can avoid most of the cons from the previous section.
This is because you’ll have the peace of mind that every document is received in a timely fashion. Since registered agent services uses their own address instead of yours, you also have increased privacy. You won’t need to be available from 9am to 5pm every single day, and you can expand your business into as many states as you choose.
In addition, registered agent services can help you keep up with the compliance requirements set forth by your state of formation. For example, if you need to file annual reports, your registered agent will often offer to keep track of your due dates and inform you when the deadline is approaching.
The only real negative to hiring a professional registered agent is cost. While prices can vary quite a bit, you should expect to spend at least $100 per year on this service.
If you do decide to hire a registered agent service and need some help deciding which one to choose, these are a few great options to consider:
- Northwest Registered Agent ($125/year): Northwest is the only major registered agent service provider that locally scans every single document they receive for you. Most scan only those documents they are legally required to, such as legal summons. They also have excellent customer support, and will include a free year of registered agent service if you use their LLC formation services.
- IncFile ($119/year): IncFile’s offerings are similar to Northwest, with a slightly lower price. They are a great options for those looking to work with a larger company, as they’ve served over 150,000 customers since they opened for business in 2004.
- Harbor Compliance ($99/year): Harbor offers the lowest rate for quality registered agent services. What’s more, they offer discounts for those doing business in more than one state or businesses willing to pay in advance for future years of service.
While it’s perfectly legal to serve as your own registered agent, it may not be the best choice for your business.
For the majority of businesses, there are more negatives than positives associated with serving as your own registered agent. It’s generally only advisable for very small businesses, and even then should be carefully considered.