When you incorporate a business, there are plenty of requirements to keep track of.
You’ll need to come up with the perfect business name, decide which type of business entity you want to form, and acquire business licenses to operate in a compliant manner.
But what is a registered agent, and why do you need one?
The role of the registered agent for an American business entity is not a terribly complex one, but it is an incredibly important role that requires careful consideration.
Guru Tip: Many top-rated incorporation services offer registered agent service when using their services to create a company online. Plus, they are fast and affordable.
Select your state below to learn who can be a registered agent and how to designate them. We'll show you how it works and what is required.
What Is a Registered Agent?
A registered agent is someone who serves a business by acting as the point of contact between that business and the state government. Maintaining a registered agent is a legal requirement for any and all incorporated businesses.
Almost anyone can serve as a registered agent. In fact, you can serve as your own registered agent, you can hire a business to handle this role, or you can designate another individual, like a family member or friend, or perhaps a lawyer or accountant.
The only real restriction is that Colorado requires an individual registered agent to be at least 18 years old, although no other state has an age restriction for this role. Regardless of who the agent is, the registered agent must be available to accept service of process during all regular business hours.
A registered agent has a physical address in the state, sometimes called the registered office. The agent’s address cannot be a P.O. Box, because the state does not always deliver documents through the mail. Since process can be served at any time, it’s very important that the agent is available from 9am to 5pm, every Monday through Friday.
That’s why many professionals recommend that you hire an agent and not serve as your own.
What Does a Registered Agent Do?
A registered agent accepts all formal written communications from the state government on behalf of the business.
These communications include service of process, tax documents, notifications from the Secretary of State, and more. The agent then forwards any relevant documents to the business in a timely manner.
This might not seem like that big of a deal — and it can even seem like an antiquated and unnecessary middleman role — but it is an important function. And if you hire a registered agent service, they may also help remind you of when certain forms are due, such as the annual report or business license renewals. Furthermore, a registered agent can significantly cut down on the junk mail you receive, as your agent can filter out any spam mailers delivered to your business.
Why Is a Registered Agent So Important?
Simply put, a registered agent is important because it is a legal requirement. You’ll encounter significant legal trouble if you fail to designate or maintain a registered agent.
More specifically, the registered agent plays a vital role in facilitating the court system. Here’s how: the registered agent proves that legal process has been served. Law requires that, for a case to come to court, the plaintiff must be able to prove that there has been a good-faith effort to notify the other party of the suit.
In theory, without a registered agent, a business could deny that it ever received that communication, which could stall the lawsuit indefinitely. By having registered agent laws, there is proof that both parties are aware of the service of process — and if you’re not, it is entirely your own fault for skirting the rules.
Can You Be Your Own Registered Agent?
The short answer? Yes. As an individual, you can serve as your registered agent in all 50 states. That said, even though a member or owner of the business can operate in this role, a business entity cannot act as its own registered agent. Your registered agent can be practically anyone as long as you meet a few simple requirements.
For one thing, as we mentioned in the previous section, the agent needs to be available during all standard business hours. In Colorado, the registered agent must also be a legal adult at least 18 years of age who is a resident of the state.
As long as you also maintain a physical street address within the same state as your business operates, you are legally allowed to serve as your company’s own registered agent. However, the questions of “can you?” and “should you?” have entirely different answers.
Should You Be Your Own Agent?
Just because you can serve as your own registered agent doesn’t necessarily mean that you should. In fact, we recommend that you appoint someone else to serve as your agent. That’s because there are several drawbacks to serving as your own agent.
For one thing, the address of your registered agent is publicly available. So, let’s say that you operate a business out of your own home, and you choose to act as your own registered agent. In this situation, you list your home address as your registered agent address, because you work from home.
That means that your home address will become a matter of public record. Similarly, if you list your business address, then legal process can be served at your business — even if there are employees or clients present.
The law also requires that a registered agent be available during all regular business hours. This means that the agent is present at the registered address every Monday through Friday, from 9am until 5pm. If you serve as your own agent, this means you have to be at your address during all regular business hours. You won’t be able to go out for lunch, and you honestly probably shouldn’t even take a bathroom break, because you would risk missing a delivery.
But if you hire someone to be your agent, you eliminate all of those pitfalls. The agent’s address is what’s available to the public, so they get the junk mail, while your address remains private. A hired registered agent also allows you to come and go from your location as needed, and you’re also able to expand your business into additional states with relative ease.
Steps to Designate a Registered Agent
The process of designating a registered agent isn’t terribly complex or time-consuming. But it is important that you complete it correctly.
If you’re forming your business for the first time, incorrectly designating a registered agent will lead to the state rejecting your filing. If you’re naming a registered agent for a business that already exists, an ineligible filing will lead to your business losing its good standing with your state.
If you’re forming a new business, the process is quite simple. All you need to do is get the registered agent’s consent to serve in the role and provide proof to the state. Different states require different forms of proof. Some only require you to include the registered agent’s name and address on your formation documents, while some require the registered agent’s signature.
There are even some states that require a separate “consent of registered agent” form, and some where the agent’s consent needs to be notarized. Just make sure you follow your state’s regulations!
If you’re changing your registered agent for an existing business, the process looks a bit different. In most states, this will involve filing a “change of registered agent” form with the Secretary of State, including some basic information about your business and your chosen agent.
There are also some states that allow businesses to indicate a registered agent change on their annual reports. Again, find out what your state requires and follow their instructions to the letter to ensure a compliant registered agent designation.
What Happens if I Don’t Maintain a Registered Agent?
There are penalties if a business does not maintain a registered agent as it should. For example, in some states, the state will administratively dissolve your business if you don’t have an agent.
In fact, you won’t even be allowed to incorporate your business if you don’t designate a registered agent, because the state will consider your filing to be incomplete.
Similarly, if process is served on your business and you don’t have an agent to notify you, then you’ll be completely blindsided. How awkward would it be to not show up at your own court date? Worse than awkward — it could even spell doom for your business. Maintaining an agent eliminates that possibility.
Finally, businesses without a registered agent actually lose their good standing in the state. Businesses out of compliance could, in theory, lose their corporate veil and limited personal liability, which would open up their personal assets to lawsuits.
Should I Hire a Professional Registered Agent Service?
We strongly prefer hiring a professional service to handle your registered agent role, as opposed to serving as your own or having a friend or family member take it on. Another common option is to hire an attorney or accountant to be your company’s registered agent.
However, lawyers and accountants often charge high prices to serve as your registered agent, and they may not be experienced in the role. That’s why we think a professional registered agent service is the best option.
With a professional registered agent, you’ll never have to worry about missing an important document delivery, and you won’t have to concern yourself with being available at the same address during all standard business hours.
If you want to use a professional service, we recommend checking out our guide to the top online registered agent services.
Frequently Asked Questions
How much does it cost to designate a registered agent?
There is no fee for designating a registered agent for a new business, as you’ll indicate your agent’s name and address on your formation paperwork. However, for an existing business to change its registered agent, some states do charge a filing fee for the “change of registered agent” document. In most states, this fee is insignificant, almost always less than $100.
What are the potential penalties for failing to designate a registered agent?
If you don’t include registered agent information in your business formation documents, the state will reject your filing and your business entity simply will not exist. If you fail to properly inform the state about a change of registered agent for an existing business, the change will not become official and the state will continue contacting your previous registered agent, even if they no longer represent your business.
How long does it take for the state to accept my company’s registered agent designation?
If you’re forming a new business, the state will accept your registered agent designation as soon as it processes your formation documents. If you’re changing your registered agent for an existing business, it depends on how long it takes the state to process your “change of registered agent” form.
Should I serve as my own registered agent, hire an attorney or accountant, or use a registered agent service?
All of these are equally viable options, and legally speaking, it won’t make a difference which one you choose. However, that doesn’t mean we don’t have our preferences in this area. Serving as your own agent (or designating a trusted friend or family member) is the cheapest option, but as we discussed earlier, this involves making your address public, receiving lots of junk mail, and needing to stay at your principal business address during all standard business hours.
Hiring your attorney or accountant as your agent has the advantage of designating a registered agent that you already have a business relationship with. However, these professionals often charge very high prices for registered agent service, and they may not have much experience in the role. That’s why we prefer using a reputable online registered agent service like the ones discussed earlier in this guide. They provide an ideal mix of affordability and professionalism that these other options don’t have.
A registered agent’s job might seem insignificant, but by accepting formal communications for the business, the agent fulfills a vital task.
The registered agent ensures that the state has a means of consistently contacting an official representative of your business, which makes the legal system work much more smoothly for business matters than it otherwise would.
No matter which route you choose — whether you decide to designate yourself as your company’s registered agent, designate a friend or family member, or if you choose to hire a professional registered agent service — we hope that this guide helped you understand more about registered agents. Now you’re prepared to appoint the perfect agent for your business.