Many entrepreneurs consider serving as their own registered agent. While this can save you some money over hiring a professional service, there are a number of drawbacks to this decision.
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.
Why You Should NOT Be Your Own Registered Agent (and 1 Reason You Should)
The one major advantage to being your own registered agent is the fact that you’ll save some money by not having to pay registered agent fees. If you run a small business on a very tight budget, the $100+ per year of savings can make a real impact.
However, the modest financial savings is where the benefits end when it comes to serving as your own registered agent. The following are the three biggest reasons not to serve as your own registered agent.
- You must be available during all standard business hours - If you serve as your own registered agent, you must be present at your company’s physical address every weekday from 9am to 5pm, with the only exception being federal holidays. This is a limiting factor for busy entrepreneurs who have vital business matters to handle during the day.
- You risk missing important deliveries - If you’re unavailable at any time during standard business hours, you run the risk of missing a document delivery. If this happens, the state is not obligated to attempt another delivery, which means you may miss a crucial document like a court summons. This situation can lead to a lawsuit proceeding against your business without your knowledge.
- You may get served in front of your employees and/or customers - Even if everything else goes right, acting as your own registered agent can result in being served for a lawsuit in front of your employees or customers.
Who Should Serve As My Registered Agent?
Since serving as your own registered agent is not advisable, who should you choose?
Some entrepreneurs designate their attorney or accountant as their company’s registered agent. This option can be appealing since it allows you to maintain a tight inner circle of official business representatives. However, this can be a rather expensive option, and your attorney or accountant may not have much experience in this role.
Additionally, much like serving as your own agent, you will be limited in your ability to expand your business beyond the state or states where you attorney or accountant maintains an office.
For most businesses, the best option is to hire a professional registered agent service. These respected companies have a great deal of experience serving as registered agents in all 50 states, and they’re generally less expensive than a lawyer or accountant. Some of the best options available include:
- 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.
Final Thoughts
Although it’s perfectly legal to serve as your own registered agent, for the majority of businesses, there are more negatives than positives associated with doing so.
While some very small businesses may conclude that serving as their own agent serves them best, generally speaking retaining the services of a professional registered agent service provider offers the best and most risk free option.
