Launching a successful business is the dream for ambitious people around the world. Being your own boss, setting your own schedule, living your passion — the perks of being a business owner are hard to beat.
But before you get to working remotely on an island, you’ll have to complete a long list of tasks, from creating a business plan to filling out paperwork. The paperwork can be the biggest pain. To ease your efforts and get you a step closer to launching, we’re explaining a perplexing term on your paperwork that few business owners talk about, but all are affected by: registered agents.
Keep reading as we go in-depth about what a registered agent is, requirements to be one, and how you can select yours.
What Is a Registered Agent?
A registered agent is a person or organization that companies — primarily limited liability companies (LLCs) — must designate upon their business formation. This agent is responsible for receiving important documents on behalf of your LLC, and forwarding these documents to you. Specifically, your registered agent receives and forwards legal documents pertaining to lawsuits, known as service of process notices, as well as other legal notices from the state government.
As you may already understand, this is an important role that must go to a trustworthy person or organization. In addition to finding someone who is responsible and timely, your business needs someone who can be confidential. Your registered agent will be handling sensitive information, so you can’t let just anyone take on the title.
Registered Agent Requirements
All state laws have their specific guidelines regarding registered agents, but there are similarities across the United States. For one, your registered agent must consent to taking on the role, so they can adequately handle all legal correspondence. In addition, they must:
- Be at least 18 years old
- Be a resident of the state in which your LLC is formed
- Have a physical address that can act as your registered office (P.O. boxes do not qualify)
- Be present at the registered street address during normal business hours (Monday to Friday, 9 a.m. to 5 p.m.)
In the case that you’ll be using a registered agent service or enlisting another company as your registered agent, your designated company must be legally approved to do business in your state of incorporation.
Choosing Your Registered Agent
Pretty much anyone who meets the requirements can be your registered agent, but it’s important to choose wisely to prevent any repercussions. Your appointed person will be dealing with important documents, including timely communications and legal information. This means you need to select a responsible and reliable person for the best outcome.
Many business owners choose to be their own registered agent. For freelancers, startups, and small businesses, this can be a convenient option to help cut costs. If you’re working solo or leading a small team, it makes sense for you to receive official documents directly instead of adding an unnecessary layer of complexity. As the saying goes, if you want something done right, do it yourself.
However, this default judgment comes with some faults when it comes to selecting your registered agent. If you choose to appoint yourself, you risk incurring fines or other penalties if a document comes while you’re out of the office — even if just for an hour meeting. Even if you’re not planning on being sued anytime soon, you may find that your vacations and work locations will be limited, since missing even a notice can leave a red mark on your LLC.
Designating Someone You Trust
If you don’t qualify to be your own registered agent, or you simply wish to pass on the responsibility, another great option is selecting an employee, friend, or family member.
Of these, designating an employee would be the most reliable option, as being available for deliveries can be an expected part of their day-to-day — an important role they are paid to perform. Friends and family members can be the most trustworthy registered agents.
In all these cases, keep in mind that you must keep up the expectation that your selected agent will perform the simple duties, forwarding items to you in a timely manner and being available during business hours. The latter may be harder than it seems. Employees may have other pressing duties. Family members can be forgetful. Friends cannot easily be held to this duty over other priorities.
Using a Registered Agent Service
Working with a registered agent service is the best alternative for business owners who manage fully remote teams or simply want peace of mind. While you’ll definitely save a decent amount of money appointing yourself or someone you trust, hiring on a professional registered agent comes with many perks.
These services are fully dedicated to receiving and forwarding you important deliveries during normal business hours. This means you can rest assured that your LLC will always be in good standing with its state, and you’ll never have to work around vacations or other changes in availability.
For a service that costs just $100 to $300 per year, a commercial registered agent will ensure you won’t have to worry about taking off-site meetings or off-duty trips again.
Changing Your Registered Agent
Change is inevitable in every company. As teams shift and organizational charts change, you may find that your current registered agent can no longer feasibly act as your company’s point of contact. State governments understand this, which is why they have a structured process to help you update your agent information. All you need to do is:
- Fill out your state’s Change of Registered Agent form for LLCs. This form is commonly found on your local Department of State or Secretary of State website, as is the case in Texas and in New York.
- Pay the associated fee. In most states, updating your registered agent costs $25 max — and is often free — but a few states may charge significantly more or offer higher-cost expedited services.
- Submit your form. Most state governments request that you mail or fax your form, and will review your completed form within a few weeks.
This is the same process you’ll follow if your agent address changes.
Frequently Asked Questions
Nailing down the perfect registered agent isn’t always the easiest task, but now that you know your options, you can get started on finding the one you can trust. Here are our answers to a few common questions to help you out:
1. Can I designate my company as its own registered agent?
No, your registered agent must be a company outside your own. However, you can still designate an individual member of your company to act as your agent.
2. Can my registered agent reject a service of process notice?
There is no running away from lawsuits or other legal documents. If your registered agent attempts to reject a service of process notice, or is not available to receive a delivery, the person delivering is allowed to set it down and leave. Penalties may ensue, and lawsuits and due dates will still apply. That said, the best route to take is accepting service of process notices with grace.
3. Who will know who my registered agent is?
Once you have submitted your registered agent information, it becomes a public record. This means anyone can access your registered agent’s name and your registered address. It’s recommended to inform your designated point of contact about this, especially if you will be using their personal street address as your registered office.
4. How often can I change my registered agent?
There is no specified limit for changing your agent, but because of the standard processing period for the Change of Registered Agent form, you’ll likely only be able to make an update one month at a time. Monthly changes aren’t recommended, of course. The cost will add up in most states, and no matter where you are, it’s simply a hassle.
Launch Your Business Toward Success
Understanding a registered agent’s purpose and qualifications can help you decide who will be the best person to handle your legal documents. Weigh the pros and cons of each of your options using our tips, and you’ll quickly narrow down your search and move forward on your path to forming an LLC.
Interested in business entities you can establish beyond an LLC? Check out our guide to your options as a freelancer or small business owner.