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When forming an LLC you will be asked to designate a registered agent. Intention of this post is to provide a description of what a registered agent is, why you need one, and who can be one.
In most states, a registered agent must be named in the document forming a Corporation or LLC. A registered agent is an authorized, person or business, who receives service of process in the event of a lawsuit and other important documents on behalf of the business. This agent also serves as a compliance manager for any filings required by your respective state to stay in good standing. A registered agent must be available during normal business hours at a street address in the state in which a business is formed or foreign qualified.
Why do people choose a registered agent service and how much do they pay?
People choose a registered agent service for a couple of main reasons:
- Compliance: Your registered agent will typically maintain a compliance calendar and will remind you when annual reports or other filings are due, and help you file them. This can help avoid fines and keeps your business in good standing with the state, which is important in limited liability protection. Another reason can be related to retaining privacy.
- Privacy: If you work from home, or a private office, and act as your own registered agent, your address may be published publicly. If you don’t want this information on record, a registered agent service will use their own address in place of yours.
- Discretion: Receiving service of process for a lawsuit at your business can be a sensitive situation to happen before employees or clients. To avoid receiving such information, a designated agent will receive any correspondence and can forward to you as you see fit (mail, email, in-person, etc.).
Fees for a registered agent service can vary. I have seen them as low as $99 and as high as almost $400, annually.
Can you be my own registered agent?
Yes, generally any owner or employee of a business can be a registered agent, as long as they meet the respective state requirements which are generally (a) located in the state the company is doing business and (b) and open during normal business hours.
Conclusion
Choosing a registered agent is required, who it is will generally be up to you as the business owner. If you want things like hands-off compliance, privacy, and discretion, choosing a service provider may be for you. If business is still slow and you are looking to save a couple hundred dollars, being your own registered agent may be for you.
Disclaimer: The information provided herein is intended solely for informational purposes and no person(s) or other third-party may rely upon it as financial, tax, or legal advice or use it for any other purposes. As a result, Royal Financial, and any affiliates, assume no responsibility whatsoever to readers, or any other persons for that matter, as a result of the information contained herein.