Entrepreneurs inevitably have a lot of questions as they start out. How do I incorporate? Where do I get loans? What licenses do I need?
Another common question is, “Do I need a registered agent?”
A registered agent is an important part of the American business world, as the agent serves as a go-between for your business and your state government — when the state needs to reach your business, they contact your registered agent.
In this guide, we’ll describe the role of the registered agent, and how that applies to your business. Hopefully, by the time you’re done reading, you’ll understand exactly how the registered agent operates, and whether you need one for your business.
What Is a Registered Agent?
Let’s get this important question out of the way first. The registered agent is a person or a business that maintains a physical street address (not a P.O. Box) in the same state your business operates in.
The role of the registered agent revolves around accepting important document deliveries from your state, alerting your business of the delivery, and forwarding the documents to you.
One of the most important parts of a registered agent’s job is simply being present at their place of business during all typical business hours. Because the state can deliver service of process and other important forms from 9am to 5pm each weekday, someone needs to be available to accept those deliveries.
Do I Need a Registered Agent?
Is your business incorporated? If the answer is yes, then you do need a registered agent. In fact, in most states you will not even be allowed to file your articles of incorporation with the state if you do not designate a registered agent.
If there is ever any point in the life cycle of your business when you do not have an active registered agent, your business will be noncompliant and you will lose your good standing with the state.
Why Do I Need a Registered Agent?
On the most basic level, you need a registered agent because it’s a legal requirement, but there’s more to it than that. The agent really facilitates the judicial system by accepting legal notices on behalf of the entity. Basically, a lawsuit against any entity cannot progress unless there is proof that the state made a good-faith effort to notify both parties of the lawsuit.
A registered agent makes that possible. Whenever the agent receives notice of a lawsuit, it forwards that information to the business. The agent essentially certifies that the business has received the notification.
A hired registered agent (someone external to the business) also has practical value. That’s because “legal process” isn’t the only thing the agent receives — the agent also accepts other mail for the business. So in a way, the agent helps cut down on junk mail. If you act as your own agent, you lose that advantage.
Should I Serve as My Own Registered Agent?
All 50 states allow for entrepreneurs to function as their company’s own registered agent, although this is not an option we recommend to our readers.
First off, a registered agent is required to be available at the address provided to the state during all business hours, on every weekday. This means that if you operate as your own registered agent, you can’t even go out to lunch or take a quick bathroom break, because you could theoretically miss an important delivery.
In addition, you can’t expand your business into additional states if you function as your own registered agent. Because a registered agent needs a physical presence in the state where the business operates, a company operating in two states needs two registered agents (or, they can hire a registered agent service that operates in all 50 states).
Finally, entrepreneurs who serve as their own registered agents are subject to some privacy issues. This is especially true for people who operate their businesses from home, because in this scenario, you would have to make your own personal home address a matter of public record, which has some obvious privacy concerns associated with it.
Where Can I Find a Registered Agent?
Like we’ve mentioned, you can serve as your own agent, but if you’d rather hire one, you can choose from a wide variety of services.
Several big names in the world of professional registered agents include ZenBusiness, Northwest Registered Agent, and LegalZoom. The advantage of hiring one of these companies is that they can usually act as your agent for every state.
There’s quite a few good reasons to use these services, especially if you haven’t yet incorporated your business. Several of these companies (including Northwest and Incfile) will provide you with a full year of registered agent service if you use their incorporation service.
If this sounds like an option you’d like to try, we recommend hiring one of the top services listed on our “Top-Rated & Best Online Incorporation Services” guide.
Simply put, if you operate an incorporated business entity in the United States, you absolutely do need to designate a registered agent for your company. If you do not have a registered agent, your business will be noncompliant, and you will lose your good standing with the state.
In addition to the legalities, there are also some practical considerations to take into account, like the concept of serving as your own registered agent.
While this is a legal option in all 50 states, it’s rarely a good idea, and we hardly ever recommend functioning as your own registered agent. There’s simply too many hassles, and you also won’t receive the benefits of hiring a professional registered agent service.