A registered agent is a critical component of any business entity, serving as the official point of contact for legal documents, official correspondence, and important notifications at the state level.
Whether you're running a corporation, partnership, limited liability company (LLC), or nonprofit, having a registered agent is a state-level requirement issued by the Secretary of State. There are very few exceptions to this rule. This article explores the significance of the registered agent role for LLCs and examines the decision-making process of choosing between acting as your own registered agent or hiring a professional service and the many reasons why serving as your own registered agent might not be the best choice for your business.
What is a Registered Agent?
Almost every type of business, whether you form a corporation, partnership, limited liability company, or nonprofit, must have a registered agent on its formation documents and maintain one annually, on their tax returns, for the life of the business. The only exceptions to this are some common law businesses, such as sole proprietorships and partnerships.
A registered agent, sometimes also called a resident agent or statutory agent, is an individual or organization designated by the company and acts as the point of contact for all legal documents, official correspondence, and important notifications the business may receive at the state level. They are responsible for handling the specific tasks of receiving and taking care of all required government, tax, and legal correspondence on behalf of your business, and relaying important messages, information, and reminders back to you on time.
Legal Requirements for a Registered Agent
You can appoint an individual, an entity that is a subsidiary of the company, or a third entity such as the company’s lawyer, or a registered agent service.
To be considered a viable option, the party you appoint must legally reside in the state in which you are appointing them, they must be over the age of 18, be available during regular business hours, full-time, year-round, and have a physical address in the state in which they are serving as a registered agent.
If you conduct business in more than one state, you must have a registered agent in every state in which you do business.
Please note that some states have additional, unique requirements. It’s important to refer to the state rules and regulations to ensure that your designee meets the state’s legal requirements.
Can I Be My Own Registered Agent?
Yes, some business owners choose to appoint themselves as their organization’s registered agent. In fact, as long as you meet the requirements set forth by the Secretary of State’s department, an individual is perfectly able to serve as a registered agent in their state.
To serve as your own registered agent you must meet several state requirements including:
- Being a resident of that state in which you fulfill the duty.
- Having a physical address within the state — a post office box is not acceptable.
- Being present at that physical address during regular business hours, full-time, year-round.
Additional requirements could depend on the state where you are appointing a registered agent.
This said, being a registered agent is a considerable amount of work that will impact your daily activities. So, it’s important to weigh the pros and cons of becoming your company’s own registered agent to ensure that you have the energy, time, and skills capacity to take on the obligations of the role.
Pros and Cons of Being Your Registered Agent
While becoming your LLC’s registered agent might seem like the easiest solution, as with any business decision, it’s important to weigh the benefits and drawbacks of choosing self-representation as your own registered agent.
Pros of Being Your Own Registered Agent
- Cost Savings
Employing a third party, such as your organization’s lawyer, or hiring a registered agent service comes with a service fee. These fees can vary from $100-$300 per year by hiring a service to an average of $55,000 annually for a full-time, in-house resource.
By becoming your own registered agent, you can avoid paying charges for external services. If your company’s cash flow is tight, you could consider this a cost-saving option. - Knowledge and Learning
Becoming your company’s registered agent means you’ll have the opportunity and obligation to build your knowledge base in handling your company’s legal requirements and responsibilities. Educating yourself this way can help you manage the business effectively, and keep you updated on all critical matters. - Control
You may feel that you have more control over official tax and legal processes because you will see every document as it comes through without intervening processes or middlepeople. - Convenience
While a registered agent service will accept and forward important legal documents and correspondence, they are not likely to receive your regular mail unless they offer to do so at an additional fee. Being your own registered agent means you’ll have one address for all types of mail to be delivered to. LLC Attorney offers five free pieces to all our clients!
Cons of Being Your Own Registered Agent
- Required Availability
Being a registered agent requires you to live in the state where you are taking on this role and be physically available at the registered address during regular business hours year-round. If you travel often, keep different hours, or operate out of multiple states, being your own registered agent may be inconvenient or impossible. - Loss of Privacy
Being a registered agent means that all critical legal and tax documents and notifications will be delivered in person to the registered address provided. Not only does that address become a matter of public record, it also means that anything from tax reminders to services of process and legal summons would be delivered to you, directly. If you work from home you might not wish to have law enforcement officers arrive to serve you with documents. And certainly, most businesses would prefer to avoid law enforcement presence in front of customers. - Time-Consuming
If you’ve opened a business, your expertise likely resides in the products and services you provide — and not necessarily in every aspect of the administrative backend of making a business successful. Serving as your own registered agent means you’ll have to take on the responsibility of not just learning additional tax and legal administration, but also executing it from gathering information that might be required for future needs and distributing information to the correct parties, to creating a reminder and notification system for upcoming deadlines, milestone dates, and next steps. These activities will take time away from the revenue-producing activities that make your business viable. - Risk of Awkwardness or Embarrassment
While into every business some contention may fall, receiving notice of a lawsuit against you is stressful. This stress can be compounded by the awkwardness or embarrassment you could feel if your employees or customers are present to see you getting served. In addition, your employees and clients could get the wrong impression, resulting in unnecessary heresy and potentially resulting in negative impacts on your business’s reputation or even loss of future business. - Default Legal Losses
As we mentioned above, one of the most important responsibilities of a registered agent is to receive, distribute, and remind the business owner of critical information – including legal notices and lawsuits served against the business. If you are your own registered agent and are consumed with other elements of your business, you could miss critical information like summons and subpoenas. Missing these important documents, which contain crucial dates for court appearances, could result in accidentally defaulting in legal cases and experiencing unnecessary legal problems.
Situations When You Should Not Be Your Own Registered Agent
While taking the “DIY” route of becoming your own registered agent might seem like the simplest approach, especially when you’re just starting your business, there are several situations where it may not be a viable option.
Some situations when you should not be your own registered agent include:
- You run your business from home and do not want to make your home address publicly available.
- You do not reside in the state in which you are conducting business.
- You do not have a physical address in the state in which you are conducting business (P.O. boxes do not qualify).
- You are not available consistently during business hours, year-round to receive documents and notifications.
- You travel often or are frequently off-site from the physical location you would provide as the registered address.
- Your business operates in multiple states. Even if you operate in states within driving distance of each other, you must still have distinct registered agents with physical addresses within each state.
- You do not have the required background knowledge to meet the demands of critical tax and legal processes that could be demanded of you.
You can see from the information we outlined previously, why appointing yourself as your own registered agent in these scenarios could cause unnecessary stress, or would not meet the minimum requirements of being a registered agent for your business. So when you can’t serve as your own registered agent, hiring a professional registered agent service could be the solution for your LLC.
Benefits of Hiring a Professional Registered Agent Service
Registered agent services can be a great way to take care of all of the responsibilities held by the role of a registered agent.
- Organizational Efficiency:
Registered agent services are experts in handling essential compliance and legal paperwork. By entrusting your registered agent duties to a reputable service, you can simplify and streamline your compliance processes, making them easier to manage. - Privacy Protection:
A professional registered agent service offers an address that protects your business's contact details, ensuring your actual business address remains private and of public records. - Efficient Mail Handling:
Registered agent services, equipped with established infrastructure, guarantee prompt and secure handling of your official mail. Their offerings can even include encrypted email and priority postal mail delivery, ensuring time-sensitive documents are processed swiftly and efficiently. - Timely Notifications:
Professional registered agent services offer systems to notify you of important deadlines, milestones, and next steps well in advance, allowing you to manage them effectively. - Multi-State Representation:
Many registered agent service providers operate in multiple states. This capability is advantageous for businesses incorporated or operating in several states, as a single service provider can manage your needs across different jurisdictions, consolidating all essential information. Additionally, if you anticipate expanding to more states, choosing a registered agent service with a presence in those states could be beneficial. - Customer Service Excellence:
When choosing a registered agent service, it's important to consider the quality of their customer service. Although direct interactions may be rare, feeling valued and respected is essential for a strong working relationship. Assess the service's staff, their responsiveness, professionalism, and overall customer care. - Affordable Annual Fees:
The cost of using a registered agent service usually ranges from $100 to $300 per year. We consider this fee quite reasonable, given the convenience and benefits they provide to help your business stay compliant and in good standing.
How to Choose a Registered Agent Service
The procedure for appointing a registered agent is also called a process agent.
As we have mentioned earlier, in every state the basic requirements of a qualified registered agent are that they are a legal adult of 18 years or older, they reside and have a physical address in the state in which you are appointing them, and they are available at that address during regular business hours, full-time, throughout the year.
This said, there is so much more to selecting a registered agent service than simply meeting these basic requirements.
Other elements we encourage you to consider are: the company’s reputation, cost, service offerings, and any additional or supplementary services they provide that could be useful to your business.
Finally, note that the forms and the fees associated with appointing a registered agent vary by state and by the type of registered agent you choose to appoint. Understanding the specific forms and fees could affect your appointment decision. You can confirm these details by contacting the office of the Secretary of State for each state in which you are appointing a registered agent.
To learn more about what you should consider when choosing a registered agent for your business, please refer to our article How to Choose a Registered Agent for Your LLC.
How to Change Your Registered Agent
Whether you operate an LLC or a corporation, you assigned a registered agent on your initial business formation documents with the state. And, like all elements of your business, things can change, including your choice of registered agent.
You could have any number of reasons for wanting to change your registered agent from yourself to an agency including finding the work tedious or too time-consuming, not having enough expertise or organization to feel secure that you’re complying well enough, traveling more often, growing your business beyond the state where you are registered as the agent, or even simply not being interested in completing these admin tasks yourself as your business grows.
Whatever the reason is, changing your registered agent from yourself to a registered agent service – or vice versa – is generally straightforward, but the process can vary by state. Some states require specific forms to be filled out, others need an amendment form, and some may require both. Fees and other details can also vary from state to state, so verify your state's specific filing requirements. No matter the state, it will be necessary to submit the required paperwork to the State agency responsible for business formations, often the Secretary of State's office.
For more about changing the registered agent for your business, please see our article How to Choose a Registered Agent for Your LLC.
Wrapping Up
The decision to act as your own registered agent or hire a professional service for your LLC should not be made lightly.
While being your own registered agent can offer cost savings and a greater sense of control, it also comes with added responsibilities and risks. On the other hand, hiring a professional registered agent service provides organizational efficiency, privacy protection, and expert handling of legal matters, but at an additional cost.
It is crucial to weigh these factors carefully and consider your business's specific needs and circumstances before deciding on which direction to choose. By making an informed choice, you can ensure that your LLC remains compliant and well-protected, setting a solid foundation for its success. While it is possible to change your registered agent as your business evolves, some paperwork and fees are involved. These requirements differ by state and can be confirmed by calling the office of the Secretary of State.
Carefully consider the specific situation and needs of your LLC or corporation before choosing your registered agent. And, of course, consult with trustworthy legal or business professionals if you have any questions about what the best choice is for your LLC. At LLC Attorneys, we’re here to help. Contact us today.
