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The Ins and Outs of Registered Agents: What You Need to Know

Whether you know what a registered agent is or not, it is possible that you have been told that you need one. Every state requires corporations and LLCs to have a registered agent for a variety of reasons. Understanding the basis for the requirement can help you better use a registered agent in the correct way.

What Are Registered Agents?

A registered agent can be either a business or an individual. Certain states have requirements, though, so you should check with your local laws to determine whether or not you should use an individual or a business. This individual or business is designated to receive any service of process notices, official government notices including any correspondence from the Secretary of State, tax forms, notices of lawsuits, and other documents for an LLC or corporation.

Why Would Your Business Need a Registered Agent?

It is a requirement by all states for businesses formed within that state to have a registered agent. The main reason for this requirement is so that the state will have an official contact. This contact will be the person with which the state communicates all important filings to as well as any changes in organization requirements, at the very least. This individual or business is also responsible for accepting a notice of lawsuit on behalf of the business. Additionally, if you plan on expanding your business to another state, you have to have a registered agent in that state according to the legal statutes. As part of this, you will need to notify the state of who your registered agent is and who they should contact at any time. The state will need to have an actual address of this individual because a P.O. Box address is not an acceptable address for registered agents.

Can You Be Your Own Registered Agent?

It is typically legal for you to serve as your own registered agent, but you should check with local laws to verify this. Even if it is legal, you may not want to do it that way. This is because most states have a requirement that in order to be a registered agent, there needs to be someone present during business hours. Some states require the agent to have an office or actual business location.

It is commonly advised that you designate a third-party individual or business to take on this role for your business. The main reason behind this is that you will know that no matter where you are, you will have someone there who can accept your tax and legal documents on behalf of the company. Even if you plan on being there most of the time, there will be occasions where you will not be in the state and able to accept these documents. By choosing to use a third party, you can do these things freely without worry and you will never miss an important delivery. There are five main reasons why you may not want to act as your own registered agent:

  • You will need to have a physical address in the state – If you do not live in the state in which you do business or have a physical address there, you will not be qualified to be your own registered agent. Additionally, you will need more than a P.O. Box or a private rented mailbox because that is not an acceptable address for registered agents. This only complicates things and does not make a lot of sense for your business.
  • You will need a registered agent in every state in which you foreign register your business – If your business is incorporated in multiple states, then you will need to have a registered agent in each of those states unless you have a physical office there. You cannot be in more than one place at one time, which means you will need to have more than one registered agent. This prevents you from being your own registered agent.
  • You will have to maintain normal business hours – The registered agent in each state you do business will need to be available during normal business hours to accept important documents at the time they are delivered. If you want to set your own hours, or simply do not want to be tied to an office all day long, then you should consider getting a third party to do this task for you since it is part of the requirement. Also, depending on your type of business, this may be a good idea in the state you are incorporated in, especially if you do not have someone who will be at an office all day long.
  • You will not be able to move easily – If your address is likely to change, this may pose a problem by adding a long and costly step to your moving process. No matter what, your current address has to remain updated at all times in the state records. When you do move, you will have to complete a formal state filing, and you usually have to pay a fee. How much you will pay depends on the state, so you should check the fee schedule within each state you are doing business. By using a third-party service, you will not have to worry about this because their address is less likely to change even if yours does every year.
  • Your address will be public record – Any registered agent's address is part of the public record, which means that anyone can access it if they wish to do so. This may not sound like a big deal until you start getting mail from unwanted mailing lists, spammers, and even marketers. As a result, you will get a lot of unsolicited junk mail for the business, and there is nothing that you can do about it. If you would prefer to keep your personal address or even your business address confidential, then using a third-party service is the best option for you. This gives you an extra layer of privacy and will prevent you from having to deal with a lot of junk mail.

What Can Happen If You Do Not Maintain a Designated Registered Agent?

At the time of formation, there must be an agent listed. You do not want to let your designation lapse since it is a state requirement to have one at all times. However, it is also important to know what can happen if you do not maintain your registered agent. One of the biggest things that can happen is that you run the risk of losing your "good standing" status with the state in which the business is registered. On its own, that may not seem so scary, but the things that can come along with it are what makes that such a big deal. When you lose your "good standing" status, you can face a variety of different penalties as a result. These penalties can include a revocation of your business license, hefty fines, losing the ability to enter into any legal contracts, losing the ability to gain access to the state court system, and more.

Avoid Extra Hassle

When you try to reinstate your status, then you will have to pay for any criminal or civil sanctions before you will be able to do so. This can be a long and drawn-out process, so you should consider getting a registered agent as soon as it is required, if not before, so you can avoid all of this extra hassle and focus on building your business instead.

In What Kinds of Situations Are They Used?

For the most part, registered agents are used to accept any legal or tax documents on behalf of the business. The main reason they are used is so that you do not miss any important mailings or information that may have to do with lawsuits, taxes, judgments, and more. However, registered agents can also play a role in the operation of your business, although this is not required. If you wish to have someone actually be a part of your business and play a more integral role, you definitely have that option and you can define how much or how little they are involved in everything.

Some other situations you can benefit from include information shielding, helping with compliance, and even developing and maintaining all important documents on your behalf. Keep in mind that at the basic level, a registered agent must perform the duty of accepting important documents for you within that state, even if they do nothing else for you.

What Are the Benefits of Having a Registered Agent?

As you can probably already tell, one of the biggest benefits of having a registered agent for your business is that you never have to worry about missing any important documents for your business no matter what is going on. There are some other benefits of registered agents, however, that you may not have thought of and that you can take advantage of.

One of the main advantages is that you will not be tied to one location forever. As the address of your registered agent will stay the same, you will be able to move your business location whenever you need to without having to go through the process of filing paperwork to change your address.

Another main benefit of using a registered agent is that you get to have an added layer of privacy for the business. Any registered agent's address is part of the public record, and if you have one for your business, this is the address they will find instead of your business address. This is a great option if you work from home or even if you simply want to receive less junk mail for your business. Of course, you will still be able to be contacted for all legal matters, but this simply gets rid of any excess junk mail that you do not want to deal with.

The last main benefit is that you will ensure that you have a professional image at all times, even when you are not at the business location in that state. All of these advantages combined strengthen your business in a variety of ways and can help you to continue to grow and prosper over time.

Why Registered Agents Make Sense

There are two specific instances where registered agents simply create the most value to your business. The first is because time-sensitive documents need immediate attention. If you are busy running your business, you may not always be available to get these documents and you may miss a deadline. A registered agent will get them for you and then notify you of the deadline that you must meet according to the document. With a reliable person doing this for you, you can stay on top of these time-sensitive items.

The second way is because your business image is important and needs to be protected. When you choose to register your business, you are choosing to legitimize it. By doing this, you need to have a registered agent who can help you maintain your professional image even while you are running around taking care of the business. This allows you to stay on top of legal matters and also provide better service to your customers at the same time. With a registered agent, you are able to do more and do it better for all of your customers and clients.

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