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Having a registered agent is an essential requirement in most states, but the guidelines about who this agent should be aren’t dictated nearly as strongly. Some decide to work alongside an organization. Some choose to become their own registered agent. While both are legally acceptable, the question arises which option would be best for you?
Let’s find out.
Why Registered Agents Are So Important
Registered agents are individuals or third-party organizations that receive important legal documents from country and state agencies on behalf of a company.
From corporations to limited liability companies to limited partnerships, most businesses must appoint a registered agent. You may need more than one. In fact, if you plan on expanding your business to another state, you’ll need a registered agent in that state as well.
The main reason behind this requirement is to provide the state an official contact, giving them a reliable and consistent means of reaching every company’s ownership. The state can communicate all important filings and any changes in organization requirements and notice of lawsuit with the registered agent, who will accept the messages and then forward them to the business owner.
Suppose your business is served with a lawsuit (sorry for this less than desirable scenario!). In this case, your company has to be notified before they are served. A registered agent will receive the notification because they are the designated point of contact for your business.
Being a business owner, it’s your responsibility to notify the state who your registered agent is and who they can contact at any time. You have to give the state the actual address of your registered agent (P.O. boxes don’t count). It’s why the individual has to be a resident of the state or registration.
To reiterate, registered agents are important to receive legal process, ensure seamless contact with the government, and stay in compliance.
Disclaimer: There is a common misconception that every business needs a registered agent. They don’t. After registering a business, most states require companies to have a registered agent, but the designation isn’t required by every state. Check with the state where you conduct business to see whether you need a registered agent. Only proceed forward when it’s a requirement for your business.
How to Decide Whether Being Your Own Registered Agent Is Worth It
Whether or not you should become your own registered agent is a difficult question to answer. No one can tell you your best bet, which is why you should look closely at your specific situation and business.
The best way to make a decision is by going. Read on as we detail the pros and cons of being your own registered agent.
The Upsides of Being Your Own Registered Agent
As the owner, no one is going to care about your company more than you. It’s easy to see why signing up to be your company’s registered agent seems like the obvious solution. Let’s review the advantages of being your company’s registered agent:
- Saves Money: Hiring a registered agent service isn’t all that expensive, but then again, you won’t find any free option—or rather, none of them are free beyond a specific period. Being your own registered agent will help you save $100 or more every year.
- Greater Convenience: If you’re already present at your place of business Monday through Friday without fail, from 9 AM to 5 PM, you may find being your company’s registered agent to be more convenient. Be sure you’re comfortable receiving legal documentation and correspondence—sometimes even lawsuits—in front of clients and employees.
- No Differentiation Between Mails: While a registered agent will forward important legal documentation and correspondence, they may not accept regular mail on behalf of your business. This is because forwarding standard mail isn’t a part of their job description. If they do, they’ll probably charge you additional fees. This is, of course, not an issue when you are on the job.
The Downsides of Being Your Own Registered Agent
Like two sides to a coin, there are upsides and downsides to every decision. Here are the disadvantages of being your own company’s registered agent:
- Everyday Availability: The most obvious drawback of being your own registered agent is that you need to be present at your place of business from 9 AM until 5 PM, every Monday through Friday. This is because the registered agent must be available to receive documented deliveries from the state during standard business hours. If you aren’t there, the delivery will not be made, leading to undesirable results, such as a lawsuit proceeding against your company without your knowledge.
- Home State Address Requirement: Companies must have a registered agent in every state they operate in. If you serve as your own registered agent, you have to limit your business to only your home state since you cannot be in two places at once. Besides this, you’ll have to notify the state of each address change, which is time-consuming and involves money as you have to pay a fee for every address change notification.
- Lack of Privacy: A registered agent’s address is a matter of public record. You’ll be required to enter your address into the public record, which can be a big deal if you’re operating a home-based business. Therefore, if you run a business out of your own home and don’t want to make your address publicly available, being your own registered agent isn’t the right fit for you.
- Potential Embarrassment: Getting a lawsuit served is stressful enough, but this level of stress can increase significantly if your employee and customer see you getting sued. Not only can it get very embarrassing for you, but your clients may get the wrong impression, too, leading you to lose out on deals.
- Losing Lawsuits by Default: One of the more serious negatives of being your own registered agent is that you may miss deliveries. You may fail to receive service of process documents when you’re being sued, which means you may be unaware of a lawsuit against you. As a result, you won’t be able to defend yourself in court, leading to severe consequences for your business.
As you can see, the cons outweigh the pros.
You can be your own registered agent if you can handle the above downsides. But realistically speaking, it’s better to hire a registered agent service to do the job for you.
For instance, Rocket Lawyer offers excellent registered agent service. It provides access to highly experienced professionals in all 50 states who will receive and notify you of any service of process, ensuring you never miss any critical correspondence or potential subpoenas or complaints. Moreover, all your legal notices are stored online and easily accessible.
You’ll have the peace of mind that every document is received timely, and you can retain your privacy and don’t have to be available from 9 AM to 5 PM every day. Of course, the fact that you can expand your business into as many states as you want is another advantage.
Quick Tips to Select a Registered Agent Service
Considering the importance of a registered agent for your business’s reputation and bottom line, you must make the right choice. Aside from the below consideration, another thing to look for that may seem obvious is where the registered agent service is located. You may only be operating in one location right now but have plans to expand to neighboring states or nationwide in the future. Look for registered agent services with agents available in any states you see yourself working from now and in the future.
Below is a list of factors to consider to help you pick the best registered agent service for your company. Let’s take a look.
Knowing you can trust your registered agent to do their job correctly is paramount.
A registered agent’s job may seem very simple—but only on the surface. It can be very intense, especially if you operate in multiple states. There are deadlines to be met and documents that must be filed, among other things. You have to trust your registered agent to accept and deliver these documents for you and handle sensitive or confidential information securely.
For instance, if your business has to file an important document within the next two weeks, your registered agent should notify you about the same and file the document with the relevant authorities.
Similarly, if your business is sued, and your registered agent accepts the notice of the lawsuit on behalf of your business, they should inform you about it promptly so you have enough time to consult with your legal counsel and respond appropriately.
In addition to reputation, you should also consider experience when evaluating different registered agent companies.
As mentioned, a registered agent is responsible for handling sensitive documents that must be communicated and delivered on time. An inexperienced registered agent may not know how critical some of these documents can be, which might jeopardize your business’s reputation resulting in you getting penalized or fined.
Talk to the prospective service and find out the experience level of their registered agents. It’s best to select agents who have experience in your business niche and have worked with several growing companies in their careers. Asking for client testimonials can also help you decide.
As with any other vendor, you want to feel appreciated and respected as a customer.
Although you won’t interact with your registered agent very frequently, it’s still better to choose a registered agent service that makes you feel comfortable. Be sure they are prompt and efficient when handling your correspondence.
A good tip would be to check out customer reviews on popular platforms like G2 and TrustRadius. Stick to companies with a four-star rating or higher. Go through what previous clients have to say about a prospective service, as well as their likes and dislikes.
Being an entrepreneur, you have very little time in your hands. So anything that can help you take care of your business and make tasks easier certainly becomes a benefit.
Many registered agent services offer value-adding benefits to attract clients. This can include services like electronic communication, where the agent sends automatic email alerts and reminders concerning your document deadlines. Scanning and emailing important documents so you can view them immediately before the physical copies arrive is another benefit.
Find out the benefits the different services offer and select one that best fits your requirements.
Now that we’ve discussed how you can select the right registered agent service for your company, it’s time to make a choice.
Check out our Best Online Legal Services guide for the top six services to help you form, register, and manage your company without breaking the bank. You’re assured of excellent professional guidance anytime, anywhere. These services also offer registered agents to ensure compliance and help you stay on top of your paperwork.
Whether you need help incorporating your business, issuing notices, drafting contracts, protecting your intellectual property, or really anything else, these services have got you covered.