Yes, all LLCs are legally required to have a Registered Agent. Now you may be wondering whether to take on this role yourself or employ a Registered Agent service.
This article covers everything about what a Registered Agent is, their responsibilities, and evaluates the pros and cons of serving as your own Registered Agent for your LLC versus hiring a professional so you choose the path that best suits your business needs.
LLC Basics
Here’s a quick summary of the LLC structure.
- The LLC is the most popular option for entrepreneurs seeking to establish a small business.
- LLCs constitute whole new legal entities; in other words, there is a separation between the business and the business owner as opposed to sole proprietorships where the business and business owner are one and the same entity.
- Since the LLC is its own distinct entity, when business assets and liabilities are kept separate from personal assets and liabilities, an LLC provides protection against creditors and litigation.
- LLCs also come with other benefits, including tax flexibility, managerial flexibility, and more.
Registered Agents, Explained
So where do Registered Agents come into all this?
Simply put, a Registered Agent is an individual or a company that is legally appointed to receive business, legal, and tax documents on behalf of the LLC. The Registered Agent then has a legal imperative to relay the information in these documents to the business owner, in as timely a manner as possible.
Registered Agents may also provide a service by maintaining these documents in a secure, well-organized way.
Why do LLCs Have Registered Agents?
While different states have varying requirements for what constitutes a Registered Agent, the simple truth is that every LLC must have a Registered Agent. In fact, most states will require you to list your Registered Agent before you can formally register your LLC.
But even beyond legal requirements, having a Registered Agent is simply a prudent thing to do. Consider: If someone serves your company with a lawsuit, they’ll send the subpoena to whichever party is listed in the public records as a point of contact. That should be your Registered Agent. If you don’t have someone in place who can report the details of that correspondence in a prompt manner, it could have outsized legal implications for your entire business.
Also note that many LLCs actually find it advantageous to have someone in charge of organizing their legal and tax documents. By not having to fret about this time-consuming administrative task, business owners can spend more time strategizing, leading their team, and providing direct value to their customers.
So, for more reasons than one, every LLC should have a Registered Agent in place. Now we come to another important question: What qualities should you look for when choosing your Registered Agent?
Legal Requirements for Registered Agents
While the legal requirements for Registered Agents can vary a bit from one state to the next, there are a few general requirements that can be noted.
First, Registered Agents must have a physical mailing address that’s in the same state where your LLC is registered. Crucially, this address must correspond to an actual physical location; a P.O. Box is insufficient.
Also note that, while you can list yourself (or an employee) as your Registered Agent, you could run into issues if you’re ever out of town or unable to receive mail for some reason. For this reason, many LLCs choose to hire professional services to act as their Registered Agents.
Again, there are some state-specific requirements that are worth reviewing, but these are the basic stipulations for appointing a Registered Agent.
Being a Registered Agent
When you start an LLC, one of the biggest decisions you’ll need to make is whether to serve as your own Registered Agent, or to hire a Registered Agent service. (Of course, you are not stuck with this initial decision; you can change your mind later on, though doing so will require you to update your legal documents.)
Serving as your own agent can allow you to save money, but it also requires you to work from one of your physical locations, and to be there pretty regularly. It also means you’ll be faced with the tedious job of receiving and organizing a bunch of correspondence all on your own.
A Registered Agent service means you don’t have to be as present at your physical location, nor do you need to worry about missing correspondence just because you take an extended vacation. The downside, of course, is that Registered Agent services come at a cost.
It might surprise you to learn just how affordable hiring a service can be. Industry benchmarks put the annual Registered Agent fee anywhere between $50 and $300. For the popular service Northwest Registered Agent, $39 is the going rate.
One additional note to consider is that, if you register your LLC in multiple states, you’ll need a Registered Agent in each one. Many of the professional services operate in all 50 states, meaning they can handle each of your business locations, no matter how far and wide you expand.
Choose a Service as Your Registered Agent
There are plenty of other reasons to consider hiring a third party service, as opposed to choosing yourself to be your own Registered Agent. Some of these benefits include:
- Outsourcing your mail duties. How much mail does your business receive every day? And how long does it take to sort through it and respond appropriately? If you’re looking for a way to cut out this tedium, outsourcing official mail duties can be a no-brainer.
- Maintaining your privacy. Something to note about LLCs is that, in most states, they are required to submit their Registered Agent’s address and contact information to the state government. If you’d rather avoid this, a third-party service may be the way to go.
- Ensuring confidentiality. Imagine that your business becomes embroiled in a legal dispute. If you’re serving as your own Registered Agent, you could be served with legal papers in front of your employees or customers. To avoid that, consider outsourcing. A Registered Agent can receive summons and subpoenas and convey them to you quietly.
- You think you’ll expand into other states some day. Again, most professional services can handle your Registered Agent needs across all 50 states. If you think you might need that kind of network one day, it may make the most sense to simply start with a third-party service today.
Reporting Your Registered Agent to the State
When you register your LLC with the state, you’ll need to furnish a document called the Articles of Organization. The requirements for this document can fluctuate by state, but across the board, you’re required to list the name and contact information for your Registered Agent. In short, you can’t establish your LLC without naming a Registered Agent.
Along the same lines, if your Registered Agent moves or changes address, it’s imperative that you report that change to the state. Again, this is both for legal reasons as well as practical reasons: You don’t want any important correspondence to get lost in the mail.
Additional LLC Requirements
Naming a Registered Agent is one important step toward launching your LLC, but there are also a few other things you’ll need to do. In brief:
- Make sure you have a business name that isn’t already in use by another LLC in the state
- Pay your state’s LLC registration fee
- Consider creating a constitution for your business, known as the Operating Agreement
- (This isn’t a legal requirement, but it’s certainly wise)
- Get an employer identification number, or EIN
- Open a business bank account
Of course, a business coach or attorney can assist with any additional questions you might have about forming an LLC, or about choosing the right person to serve as your Registered Agent.
Establishing Your LLC
There are plenty of benefits to the LLC structure, not least the ease with which LLCs can be formed. One minor wrinkle is that LLCs do require a Registered Agent, and in many cases, it’s better to choose a third-party service.
Before registering your own LLC, be sure you have the right person or organization in mind to help you with all your official mail duties.
