Whether you’re already running your own business or just starting, compliance requirements form an integral part of your success. While most business owners will say they’re not a fan of paperwork, they know maintaining good standing with legal entity, tax, and business licensing authorities directly impacts their ability to operate and make a profit.
One area that’s often overlooked is the business’s registered agent. The registered agent is the legally designated point of contact for service of process and other legal documents. When state agencies, courts, and process servers need to reach your business, the registered agent is their point of contact.
As a result, registered agents serve an essential purpose. Your business should make careful consideration of who you designate. The right registered agent will ensure you receive these crucial documents and partner with you as you grow.
Who Can Be a Registered Agent for My Business?
Your registered agent must be an individual or entity that maintains a physical location in the state. The agent also must be available during regular business hours to greet process servers. It is then the registered agent’s job to promptly forward any received documents to the business.
Many business owners decide to list themselves as the registered agent in state records. Doing so may allow them to save on the expense of hiring a registered agent service. Or, the business owner may have designated themselves on their LLC articles of organization or articles of incorporation as a matter of convenience.
While this may work in the short term, there are a few downsides to appointing an individual registered agent.
Privacy
As a matter of public record, the registered agent’s information is available to anyone seeking to contact your business. Many business owners prefer to keep their name and address confidential, especially if they run their business from home. Additionally, most business owners would prefer not to receive legal documents in front of employees, clients, or family.
Availability
With busy professional, personal, and travel schedules, individuals may not truly be available during all business hours. This increases the risk of a missed delivery and additional consequences, such as default judgment.
In light of COVID-19, many companies that formerly operated from a physical office are now conducting business remotely. As a result, addresses listed in the state record may no longer be current, as no one is available to receive documents.
Lastly, as the business grows, individuals simply cannot meet more than one state’s physical address requirements. For example, if you live in Nevada and need to register in California to pursue an opportunity, you’ll need to appoint a California registered agent in order to meet state requirements.
Paperwork
If the registered agent’s information changes, the business must file an update with the secretary of state to keep their business current and avoid missed deliveries.
Consider Using a Registered Agent Service Company
The challenges of using an individual registered agent are eliminated when using a registered agent service company. Depending on your current situation, your company may already be using one (or more than one) in the states where you do business.
Registered agent service companies offer significant advantages for businesses of all sizes. They provide an in-state physical address, with staff always available during business hours to greet process servers. They also maintain the infrastructure to reliably forward time-sensitive documents to your business. If the registered agent company’s information changes, they file the paperwork with the state on your behalf, saving you a potentially costly misstep.
So how do you choose a registered agent service provider? A simple Google search will turn up dozens of companies, each touting similar offerings.
While there is little difference between registered agent companies on the surface, there are a few ways to find the right provider for your needs.
Pricing
As you research registered agent providers, you’ll find annual service fees ranging anywhere from “free” to more than $300 annually. How is this possible?
Like your business, registered agent companies have costs of their own: real estate, staff, technology, and taxes among others. If a company is offering free or deeply discounted service, they’re probably going to make up the difference elsewhere. Many registered agent companies raise their rates annually or charge hidden fees for things you thought were included.
On the other side of the spectrum, rates of $300 or more might be appropriate for businesses that receive extensive amounts of service of process (such as a massive corporation). But, the average small business, startup, or nonprofit may not need that level of infrastructure.
Technology
Most national registered agent companies have some type of portal for you to manage service and access documents. However, not every software platform is the same. Many companies wish to directly inform their attorney of service of process. Other companies, particularly those with multiple entities, or those that register in several states, need to see all of their data and documents in one place.
Believe it or not, there are still registered agent companies that forward your documents by mail! Since subpoenas, wage garnishments, and other documents are time-sensitive, you should inquire how (and how quickly) you receive documents from the registered agent.
Supporting Your Company as It Grows
Registered agents are a state-specific appointment. This means as your company expands into new states to engage with clients, hire employees, and conduct business, you’ll need a reliable agent in each one.
By choosing a national registered agent, you won’t have to worry about finding a different individual or company in each new place. Instead, you’ll have one vendor for all of your states and companies, which is invaluable as you scale.
Quality of Service
Sometimes the intangibles make all the difference. If you’re still unsure how to select a registered agent company, visit their websites and call them. On one hand, if you can’t seem to connect when you’re trying to become a client, think about the experience you’ll have when you actually are one! On the other hand, if you can easily speak with a representative and find the information you’re looking for, it may be a good fit.
If It’s Time for a Change…
Now is a good time to take stock of your current registered agents. Ensure that their information is up to date. If you’re using individuals or a patchwork of different registered agent companies, consider consolidating with one vendor.
Lastly, if “changing your registered agent” sounds intimidating, it’s really not. Every state has a simple filing that businesses make to update their registered agent information in state records. Most states allow online filing, though a few still require you to mail in a form and payment. If you’re not a fan of doing government filings, you can relax knowing that most registered agent companies would be happy to handle the change for you, if asked.
While registered agents are a relatively simple concept, choosing the right registered agent for your business is vital for your long-term success. In a mostly remote world, your registered agent can help protect your business and ensure continuity as you grow. Ultimately, who, or which company, should serve as your agent is a business decision. And only you can determine the best fit.
Harbor Compliance does not provide tax, financial, or legal advice. Use of our services does not create an attorney-client relationship. Harbor Compliance is not acting as your attorney and does not review information you provide to us for legal accuracy or sufficiency.
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