5 Risks to Being Your Own Registered Agent

Designating a registered agent is a crucial part of the formation process for state-registered entities (such as limited liability companies and corporations), as this ensures that your state government has a reliable means of contacting an official representative of your company. Quite a few entrepreneurs consider being their company’s own registered agent, but is this a good idea for your business?

We put together this article as a way of addressing some of the risks of serving as your own registered agent. While there are some advantages to doing so, in our opinion, the negatives usually far outweigh the positives. With that said, let’s get down to the details!

What exactly are the risks of being a registered agent, and how would it affect your business if you handled this role yourself?

What is a registered agent?

Before we tackle the specifics, let’s quickly discuss some general aspects of the registered agent. A registered agent (also known as a statutory agent, resident agent, or agent for service of process) is an individual or a business entity that receives important legal notices as well as official document deliveries from your state government. This role is crucial for various types of business entities, such as corporations and limited liability companies (LLCs). The agent informs the business owners of the delivery and forwards it to them.

Registered agent duties include handling legal documents, and failing to manage these documents properly can lead to significant legal and compliance risks for a business. The specific documents that your registered agent handles include service of process for lawsuits and important notices from your Secretary of State’s office.

You have several options for who can serve as your registered agent. As far as the do-it-yourself options go, you can designate yourself as your company’s registered agent, you can recruit a friend or family member to handle it for you, or you can assign the role to one of your employees.

If you’re more interested in having a professional take the reins of this position, you could designate your lawyer or accountant, or you can hire a registered agent service.

Definition and Responsibilities

A registered agent is a person or entity appointed to receive official documents on behalf of a business, including service of process, legal notices, and government documents. The registered agent’s primary responsibility is to be a point of contact between the business and authorities, ensuring that the business receives important documents and notifications in a timely manner. The registered agent must have a physical address in the state where the business is registered and be available during regular business hours to receive documents.

Risks to Being Your Own Registered Agent

While you are legally allowed to be your own registered agent, there are several significant risks to doing so. Many business owners face challenges when considering being their own registered agent. In our opinion, these factors make it so that serving as your own registered agent isn’t a good idea in most cases.

Let’s walk through these risks one by one to see if you agree!

1) You have to be available during all business hours

The most obvious drawback to serving as your own registered agent is the fact that you’ll need to be present at your place of business during all regular business hours every Monday through Friday, with no exceptions.

You would never be allowed to take a day off for any reason, and you couldn’t even step out to go to lunch or run errands.

This is because the registered agent needs to be available to receive service of process during standard business hours, and in many cases, the delivery will simply not be made if you aren’t there. That means you’re running the risk of missing a service of process delivery anytime you leave your business location during these hours, and a lawsuit could proceed against your company without your knowledge.

2) You could miss an important delivery

Even if you’re present at your place of business every weekday during standard business hours, you could still easily miss a delivery. Missing legal documents can lead to severe legal and compliance risks.

Whether you’re on the phone with a customer, helping a client in person, chatting with an employee, etc., the person who attempts delivery of your documents may determine that you’re not available to accept it, even if you’re physically present.

3) You can only conduct business in your home state

Every company needs to have a registered agent in each state it does business in, and you can’t expand to a new state if you don’t designate an agent with a physical location in that state.

Therefore, if you serve as your own registered agent, you’ll be limited to conducting business only in your home state because you obviously can’t be in two places at once.

This limitation also affects options like having a business associate, friend, or family member serve as your agent, and it even prevents you from expanding your business if you hire an attorney or accountant to be your registered agent. Only a professional registered agent service with offices in all 50 states can handle your expansion without requiring you to enlist the services of a new registered agent.

4) A registered agent’s address is a matter of public record

This one is more of a big deal if you’re operating a home-based business. In this situation, you would be required to enter your personal address into the public record, which obviously has some significant privacy issues involved with it.

If you run a business out of your own home and don’t want to make your address widely available, you shouldn’t be your own registered agent. Please note, however, that most states require the business owners’ addresses to be listed in their formation paperwork, which is public record. Having a registered agent service won’t keep the owners’ addresses private in those states.

5) Your customers or employees could see you get served

Having a lawsuit filed against your business is stressful enough to begin with. However, that level of stress could increase significantly if you serve as your own registered agent and have to receive service of process in front of your customers or employees.

If you would rather avoid this scenario, it’s in your best interests to outsource your registered agent service.

Who should be your registered agent?

If you would like to avoid all of the risks described in this article, the best way to do that is to hire a professional registered agent service. It is crucial to keep the registered agent’s information updated to avoid legal complications.

These companies are focused on being the best registered agents available, and they usually provide some sort of additional features as well ― sometimes in the form of a compliance calendar or digitally scanning, organizing, and storing your documents. You also receive access to their helpful customer support departments.

The best part of hiring a professional registered agent service is that they typically have offices in all 50 states, which means you can easily expand your company into an additional state without having to get a new registered agent for that state. Instead, you can simply add a state to your account with your registered agent service.

We think it’s a no-brainer to hire a professional registered agent service, but the trickier question is which one you should use. We have a guide to the best registered agent services available on this site. Overall, ZenBusiness, LegalZoom, Northwest, and Bizee are the services that come to mind for most entrepreneurs looking for a good registered agent service. Check out ZenBusiness customer reviews.

Conclusion

There’s nothing legally stopping you from serving as your own registered agent, but common sense might hold you back.

There are many negative aspects to being your own agent, and the only positive is saving about $15 per month instead of paying a professional registered agent service. If you do designate yourself as your company’s registered agent, you’ll likely be subject to the hassles and privacy issues discussed in this guide.

For the vast majority of our readers, we would recommend hiring a reputable professional registered agent service to handle this important aspect of business compliance.

It’s also worth noting that many LLC services can form your LLC and act as the registered agent for a small fee.