Most states administration law for every domestic or foreign filing entity to maintain a registered agent. All LLCs, corporations, and partnerships need to designate one within the state of their primary operations, making registered agents an essential part of the American business landscape.
Many newcomers who decide to form the business in official capacity often face issues concerning this aspect, with many questions about registered agents arising along the way, particularly when it comes to discerning specific terminology as well as somewhat murky legal outlines typical of certain states.
This FAQ guide to registered agents is aimed to help you navigate the formation process and delve deeper into the operational details your LLC needs to function properly.
Let’s first clarify that a registered agent is also known as a resident agent (or statutory agent or commercial registered agents), all of which are interchangeable. The exact designation and purpose of this type of agent depend on the state of formation and local guidelines.
In short, a registered agent is a professional service or individual that handles the following:
- official documentation addressed to the company in question;
- service of process;
- filing deadlines management as well as other legal and organizational aspects.
It’s important to designate your registered agent during the general process of your entity’s formation, so the choice has to be made early on. Is there a way to make the best possible choice for your business? And which service features should be considered to produce the most effective outcome?
What Does a Registered Agent Do?
General business practices define an agent as a person with the power to represent the interests of a client and conduct contractual agreements on their behalf. Functions performed by a registered agent are somewhat different.
Registered agents mainly deal with the service of process and are in charge of receiving documents from the state. The paperwork in question typically includes:
- tax forms
- notice of a lawsuit
- service of process
- registration notices
- compliance filing reminders and other advice notes
The proper handling of this documentation is essential if you want to create your LLC following guidelines that ensure the entity’s smooth operation in the future. That being said, this isn’t the only reason why having a registered agent is so important. They will also be managing your filing deadlines and conducting other operations aimed to maintain your company’s reputability in the industry.
Designating a registered agent is therefore vital when it comes to entity creation. For one, starting your limited liability company will likely be impossible in most states without providing your registered agent’s info in the Articles of Organization upon submission. This only proves the significant influence such an agent generally exercises over the business formation process: without a registered agent, the state will simply be unable to contact you when necessary.
At the same time, a registered agent plays a clearly defined part of the formation process. As such, they do not handle:
- issue of physical addresses to retain anonymity;
- virtual office tools for processing standard documents received by the company;
- tax management.
Is a Registered Agent Required?
Yes, a registered agent is required to form an LLC in all 50 states for both domestic and foreign companies. There is a real risk of missing filing deadlines of important state documents without the registered agent’s annual report notifications and other notifications or compliance reminders. Failing to file any of the paperwork mentioned may lead to legal repercussions like:
- LLC can be dissolved for violating state guidelines
- LLC won’t get service of the process meaning that you, as a defendant, won’t be notified of potential LLC lawsuits and won’t be present at the court hearing where the ruling could be passed without your participation or ability to present an adequate defense;
All this can be easily avoided by a timely designation of a registered agent as well as annual coverage of their fees. This, in turn, will likely maintain your company’s reliability and facilitate the development of your business in general.
When Do I Designate a Registered Agent for My LLC?
Most states require you to designate a registered agent in the formation document of the company called Articles of Organization. This document contains key details about your business such as title, purpose, operational type, and other rules and regulations for the LLC formation process including the registered agent info.
If you try to file your formation documents without appointing a registered agent on your Articles of Organization, the secretary of state’s office is likely to deny you this formation. As a result, it will be impossible to start your business operation until you re-submit the Articles of Organization, this time with the identity and address of your registered agent or by having yourself declared a registered agent.
What are the Registered Agent Requirements?
If you want to avoid becoming your own registered agent, you might want to know more about how to choose your LLC registered agent lawfully without putting an invalid agent on your documents.
Registered agent requirements tend to differ based on the state of formation. But in most cases, your agent only needs to match a few basic, such as:
- be at least 18 years old (if an individual);
- be a resident of the state;
- be at the registered office of the company during normal working hours for receipt of official correspondence.
An individual who meets the requirements can be a registered agent, but they will be obligated to draft an agreement stating their concession to added responsibilities.
Can I Be My Own Registered Agent?
Yes. There are only handfuls of states that don’t allow you to act as your LLC’s own registered agent but aside from that, this is a fairly common occurrence. Appointing yourself as your registered agent is totally free which is the main aspect that draws people to it. It’s important, however, to understand the drawbacks of self-designation.
- registered agent details fall under public access information, meaning that your personal address can be accessed by anyone. This may lead to spam mail and your residence being open to unwarranted visits;
- as your company’s registered agent, you must present at your registered agent address 5 days a week during standard business hours to receive mailings from the state;
- moreover, being served a lawsuit at your address implies having to receive service of process and other legal actions in front of your family, clients, or partners which is likely to harm your reputability;
- acting as your own registered agent significantly narrows down your business opportunities such as expanding the company to other states.
Who Should Be My LLC’s Registered Agent?
Appointing yourself as your LLC’s registered agent may seem like a good idea at first, but it is not exactly an ideal option. Even though it can help you save some money, it also has a significant number of flaws:
- losing privileges to personal data protection given that a registered agent’s address is public which makes your personal information public by default;
- filing notices of your registered agent address change every time you move;
- always be available during business hours at the company’s legal address.
Plus if you plan to expand your business, you will need a separate registered agent for every state of your future operation.
A Lawyer or Accountant
Another popular option with some business owners is to designate a reputable professional who knows the inner workings of your company, usually the company’s attorney or accountant. But the desire to save money by appointing additional responsibilities of a registered agent to your lawyer’s or accountant’s workload may not end well. Unlike professional registered agent services, rates for registered agent services are often quite high with these professionals while the services they can offer are often inferior to those of specialized service providers.
Then there is the question of quality of service. If your attorney or accountant doesn’t have any experience serving as a registered agent, they might not perform well in this role.
Many lawyers and accountants tend to operate only in one state, having only one business address, which confines your business in the long run. And if you expanded elsewhere, you’d have to find a new person for this position anyway.
A Professional Registered Agent Service
Hiring a professional registered agent service is the best way to ensure your paperwork is in order and your business runs smoothly. Not only is it cheaper than hiring a lawyer or accountant, but it also means your registered agent services are experienced and better at optimizing your company’s operation.
But how do you go about choosing the right registered agent? Which aspects should you focus on? Even with the current online market being so saturated with choices, only a few registered agent service providers deliver a good quality of service.
Let’s first look at the leaders of the industry. Companies like IncFile or Northwest Registered Agent are the best in their field, offering quite a few attractive features, especially if you want to form your LLC but haven’t yet had an opportunity to do so. For such cases, both companies include up to a year of free professional registered agent service in their LLC formation packages
Northwest Registered Agent: $125/year;
*after the free year of your registered agent service subscription is up
Northwest Registered Agent: premium customer support with a personal representative appointed to you for answering your questions directly at any time;
IncFile: timely and competent support, albeit less personalized than at Northwest;
Northwest Registered Agent: the volume of feedback is relatively low, but most of them are positive;
IncFile: thousands of positive reviews giving high scores to the company’s efficiency;
Both companies could be a good choice, but it’s important to consider your individual requirements when choosing a registered agent service provider. If you want to enjoy customer support of the highest degree and have all of your documents scanned, then Northwest Registered Agent is your best choice. And if you’d rather make a choice based on customer feedback, then IncFile is likely to be your best bet.
Why We Recommend a Registered Agent Service
Preparing and planning out a new business is not a painless task. It tends to take a lot of time and effort, not to mention it’s expensive to boot which is less than desirable when many owners are already short for money. Handling registered agent obligations on top of all that can be a real nightmare.
Luckily, hiring a registered agent service is a good way to expedite as well as simplify the formation of your company. Not to mention that this service comes with other benefits detailed below.
- assigning a registered agent is necessary for conducting business operations; by drawing such an agreement, you will be adhering to state laws and gain more reputability in the eyes of local authorities;
- registered agent services will immediately scan and notify you of all important documents, so you will always be aware of the current proceedings in relation to your company;
- a professional registered agent will also provide their physical address to complete your company’s formation; this will be of particular interest to online businesses.
- by hiring a registered agent service, you will be able to use the address of the agency, and personal address won’t be publicly available;
- all notices will be delivered through the registered agent service instead of directly to you.
Peace of Mind
- acting as your own registered agent will drastically limit your working flexibility while working with a professional service will grant you operational mobility and more flexible hours;
- if you or your company maintain odd or non-standard working hours, the timely reception of documentation won’t be impacted given that your registered agent service will be available;
- professional registered agent companies usually offer their clients additional services and add-ons; copies of all received documents and notifications will be stored for future use.
Free Registered Agent Service with Purchase of LLC Formation
If you’re considering a registered agent company but haven’t yet formed your LLC, you can actually benefit from this position. Many formation companies offer additional services with their limited liability company or corporation formation packages, providing registered agent service at no extra charge for an entire year.
When considering some of the best LLC formation services, be sure to check out Northwest and IncFile, though they do ask for some fees. Both companies are considered to be the best in the field for LLC formations, the fact of which is supported by many positive customer reviews online. Both also provide the services of the registered agent for one year.
Northwest is known for its personalized customer support and high-quality client care. They will form your LLC with your state government for $225 and provide additional business services free of charge, including registered agent services. After one year, their registered agent service costs $125 per year which is average pricing in this industry.
IncFile is another good option. They stand out primarily due to their free LLC formation service which only requires you to pay the obligatory state fee without any additional charges. This $0 formation package also includes a year of free registered agent service.
IncFile’s customer support is not as extensive as that of Northwest, but they’re still fairly competent, offering timely and well-researched assistance.
After the 12 months of the free registered agent is up, IncFile will charge with this service. The annual fee is $119.
5 Important Registered Agent Myths
Even experienced entrepreneurs are sometimes far from being registered agent experts, often falling victim to old misconceptions. Some of these myths are harmless while others can lead to dangerous practices. Let’s dispel some of the most common of these misconceptions.
1) Each business only needs one registered agent
This one is only partially true. In reality, the number of registered agents required to operate a company is determined by several factors, the main being the number of states where the company will operate.
As such, when LLC operates in just one state, legally it only needs one registered agent. But if you act as your own registered agent and mean to expand your business into other states, you will need to hire another agent to get your foreign qualification.
Most formation agencies won’t face any difficulties with expansion by offering their services in all 50 states, or at least the majority of them, allowing you to expand or relocate your practice with ease.
2) It’s easy and practical to serve as your own registered agent
The duties of a registered agent are not that simple despite their relatively lax operational requirements. Not only are you faced with a huge responsibility, but you also need to possess knowledge of state guidelines, particularly relating to service of process and submission deadlines. Not everyone can do this job, especially those lacking experience or relevant degrees.
Another significant limitation is the requirement to always be present at the registered agent’s address during all business hours. This can restrict you as an entrepreneur and adds to the weight of your responsibilities.
If you’re unsure about your ability to act as an adequate registered agent, it’s best not to risk it. Hiring a service provider will not only free up your schedule but also minimize potential clerical errors.
3) Professional registered agent service is costly to acquire and maintain
An average registered agent is quite affordable even for small businesses. The pricing largely hinges on the company’s reputation and the extent of their additional services. Thankfully, the wide range of offers makes it possible to hire an agent for only $10 per month.
4) It’s not necessary to keep official notices from your state administration
While it may not be strictly necessary, it might prove useful to keep official notices from your state for resolving potential bureaucratic issues in the future. If your company works with a reputable registered agent, they will most likely retain all official administration notices or at least arrange them in a digital list.
5) Registered agent service is basically just mail sorting
Every registered agent will likely receive documentation addressed to your company on a daily basis. These will undoubtedly have to be sorted, but it’s far from the only thing an agency does. Registered agent’s primary concern is to detect and direct all vital paperwork to you, allowing your company to never miss deadlines and remain reputable.