Are you starting your own LLC or Corporation? If so, you may already know that your state will require your company to designate a registered agent. There are many misconceptions and misunderstandings about what a registered agent is and what role they play in a business.
These myths should be cleared up before you begin the process of selecting your registered agent and forming your business.
What Is a Registered Agent?
If you start a business, you will be required to designate a registered agent at the time of formation. 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.
7 Registered Agent Myths You Need to Know
There are quite a few common myths about registered agents and the services they provide. Below you will discover some of the most common misconceptions regarding registered agent service, and how you should go about acquiring the right agent for your business.
- My business doesn’t need a registered agent. If you operate a legal entity — whether that’s a corporation, LLC, nonprofit, etc. — you are required to designate a registered agent. It doesn’t matter what state you operate in, what type of business you run, or how much income your company generates. You absolutely must designate a registered agent, no matter what.
- I only need one registered agent, even if I conduct business in multiple states. If you operate your business in more than one state or plan to expand to an additional states at some point, you will need to designate a registered agent in every state in which your business operates. If the registered agent you select in your state of formation maintains offices in additional states, they may be able to accommodate your expansion. However, you should not assume this will automatically be the case.
- I can easily serve as my own registered agent. It’s true that many entrepreneurs do choose to serve as their company’s own registered agent, but it’s rarely an advisable option. If you want to pursue this route, you’ll need to be available during all standard business hours, and you’ll be limited to conducting business only in the state where you’re physically located. Furthermore, registered agent addresses are a matter of public record, so those who work from home will encounter privacy issues. Finally, having important documents delivered to your place of business puts you at risk not only of missing an important delivery, but also of being served a legal summons in front of your employees or customers in the event of a lawsuit against you. So, while it is legal to serve as your own registered agent, it is generally not advisable for most business owners.
- I don’t need to keep notices from the state regarding due dates. Technically speaking, you are not required to retain notices sent from your state of formation. However, keeping organized records and reminders of any filing deadlines can ensure your business remains compliant with state regulations, and thus, in operation. Your registered agent will forward these notices to you and provide reminders to make sure you get your annual reports in on time to avoid fees and penalties. They are handy reminders to have around, and often include vital information you’ll need to file your annual report.
- Annual reports don’t need to be filed in advance. Even if you operate your business in a state that allows annual reports to be filed online, you should never wait until the last minute to do your filing. Different states have different processing times. This means you should always file your annual report as far in advance as possible, in order to provide yourself and your state with as much wiggle room as you can.
- Every state has the same reporting requirements. The guidelines for annual reports vary across the 50 states, especially when it comes to requirements for LLCs. Some states only require essential details like your company address and registered agent information. Some states ask you for basic financial data, but nothing else. In fact, not all states require reports on an annual basis at all. Reporting timelines can range anywhere from every 1 to 10 years. Knowing the specifics of your state is crucial if you want your business to remain compliant.
- Professional registered agents are expensive. Many people believe hiring a professional registered agent service will not be affordable. While registered agent services provided by attorneys or accountants can be quite costly, hiring a professional registered agent is actually relatively affordable. You can find providers offering registered agent services for less than $100 per year.
How to Acquire Professional Registered Agent Service
While you can legally choose to serve as your own registered agent, or hire your attorney or accountant to provide this service for you, these options are not recommended for a number of reasons. Serving as your own registered agent comes with a host of disadvantages discussed above, and your attorney or accountant will generally charge high rates.
Hiring a professional registered agent service is often the best option. There are so many companies providing these services today that it can be difficult to choose the right one for you.
Below are some of the best options when it comes to professional registered agent services.
- 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.
There are quite a few common misconceptions about registered agent services, but by fully understanding the ins and outs of registered agents, you can easily stay on top of some important compliance requirements.
For a number of reasons, hiring a reputable registered agent service is almost always preferable to serving as your own registered agent. While you will spend some money on fees, the peace of mind alone is well worth it in many cases.