Do you operate a corporation, limited liability company, or other American business structure? Perhaps you’re just entering the formation phase for your new business?
Either way, if you own a business in the United States, you are required by law to designate a registered agent for your company. A registered agent is a crucial aspect of any American business, and one of the top questions we hear from entrepreneurs is who should serve as your company’s agent.
There are quite a few options for acquiring registered agent service, from the DIY route of acting as your own registered agent, to hiring a professional service to handle it for you. In order to help you understand your options, we’ll discuss every relevant aspect of this important role. Should you hire a registered agent? Should you choose the DIY option? Let’s dive into the details and find out what the best choice is for your company.
Before we get too far into this discussion, we should probably outline exactly what we mean when we refer to a registered agent.
This term refers to the individual person or business entity that accepts the task of receiving your company’s legal document deliveries from your state. You will need to have a registered agent in order to form your business to begin with, as you’re required to include your registered agent’s name and address in your articles of organization/incorporation.
The documents received by a registered agent typically include things like court summons, annual report deadline reminders, tax documents, and more.
To legally serve as a registered agent, the main requirement is having a street address in the same state your business was formed in ― a P.O. Box will not suffice. This street address will be used as your company’s official point of contact for legal document deliveries from the state.
When your registered agent accepts one of these document deliveries, they immediately inform you, scan the document to create a digital backup, and forward it to your business location.
Every state allows entrepreneurs to serve as their own registered agents, and there are some positives and negatives for doing so. On the positive side, you can save some money by not paying anyone to provide registered agent service for your business.
However, that’s about the only positive aspect of serving as your own agent. There are many inconveniences that come with being your own registered agent, starting with your availability ― you will need to be present and available to receive document deliveries during all standard business hours from Monday through Friday. You won’t be able to take a vacation or a sick day, and you can’t even step out to go to lunch or a doctor’s appointment.
Another issue with the DIY option for registered agents is the lack of privacy. If you get served for a lawsuit while acting as your own agent, you will run the risk of having your employees or customers see you get served, which is never a good look for any business. A different avenue in this regard is to designate one of your employees to be your company’s registered agent, but this option runs into many of the same problems that serving as your own agent does.
You don’t have to worry about that aspect as much if you operate a home-based business, but in this scenario, you’ll need to enter your personal address into the public record ― an obvious privacy issue.
One aspect that not enough entrepreneurs consider is that you are only allowed to conduct business in states where you have a registered agent. If you’re serving as your own agent, you will not be able to expand to any additional states other than the one where you are physically located.
There are a couple different things that this could mean, so let’s address them each individually. Some people like to hire their attorney or accountant to provide registered agent service.
With this option, you’re simply expanding your existing relationship with a trusted business associate, which certainly has its advantages. On the other hand, lawyers and accountants can charge very high rates to be your registered agent, and they often don’t have much experience in this role either.
Our preferred option is to hire a respected professional registered agent service. This route gives you service from a company with a primary focus on being a registered agent for many different businesses. Because of this aspect, you can trust that your registered agent is a true expert in providing this service. Furthermore, most registered agent services have offices in all 50 states, making expansion easy.
Another big advantage compared to designating a lawyer or CPA to be your agent is price. Professional registered agent services typically charge much less than lawyers and accountants, and you can actually find some registered agent services offering this service for $10 per month or less. Alternatively, some of the best LLC services offer a free year of registered agent services with every formation.
If you’ve decided to hire a professional registered agent service, oftentimes the hardest part of this decision is figuring out which one is the best fit for your business. There are so many registered agent services available online, and many of them offer services that are quite similar to each other.
To get a complete picture of the registered agent marketplace, we encourage you to check out our comprehensive guide to the top registered agent service providers. For those of you who would rather have a brief overview of our preferences, have a look at our top three picks.
Overall, ZenBusiness, LegalZoom, Northwest, and Incfile are the services that come to mind for most entrepreneurs looking for a good registered agent service.
While we will admit that each of the options discussed in this article is a viable choice for some types of businesses, in our opinion hiring a professional registered agent service is almost always the best option.
These companies have expertise regarding all the rules and regulations of being a registered agent, and they’re usually quite affordable as well.
The biggest advantages of professional registered agents though are how they protect your privacy and prevent you from missing important deliveries. Even if your business is on a tight budget, we think it’s well worth the expense to get such a reliable service for your company.
Whether you choose to hire a professional registered agent service or handle this aspect with the DIY option, we hope this article helped you make the right decision for your business!
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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