If you’ve registered your small business as a limited liability company (LLC), limited partnership or corporation, you’re required by every state to have a registered agent.
The registered agent plays a vital role in official and legal communications that can significantly impact your business, like lawsuits or business filings.
But what does a registered agent do? And are you allowed to be your own? Here’s what you need to know as a small business owner.
What is a registered agent?
A registered agent (also called a statutory agent) is an individual or a firm whose job is to represent your business and accept papers notifying you of legal action — a procedure called “service of process.” (That’s why a registered agent is sometimes called an “agent for service of process.”) A registered agent also accepts other official mail and important documents such as taxes and notices of license renewals.
Because many of these documents are highly consequential and have strict deadlines, it’s crucial to have a dependable agent who can get them to you in a timely manner.
Which businesses need to have a registered agent?
If your small business is set up as a legal business entity distinct from its owners (in legal speak, a “statutory entity”), such as an LLC, limited partnership or corporation — then you’re required to have a registered agent in every state that you do business in.
If you don’t designate one, the state won’t approve your Articles of Organization or Articles of Incorporation.
You don’t need a registered agent if your business is set up as a sole proprietorship or general partnership because these entities are not legally separate from their owners.
Who can be a registered agent?
The rules vary by state, but in general, you can name any individual or business — other than your own business — as your registered agent.
There are a couple of important registered agent requirements to keep in mind. They must:
- Be at least 18 years old
- Have a physical address (this can’t be a PO Box) in the state where your business is registered
- Be physically present at the address during normal business hours every day
These requirements may seem simple, but that doesn’t mean you should just pick anyone to be your agent.
Keep in mind, the name and the physical street address of the agent become part of the public record, meaning that anyone can access it if they wish. It’s best to list a business address instead of a home address.
Can I be my own registered agent? Can I name an employee as one?
As a small business owner, it can be tempting to save money to name yourself, an employee or even someone like your spouse to be your registered agent.
But there are a few big downsides to this approach.
If your agent is away, unavailable, mishandles or forgets about a sensitive official document, the consequences for your business could be dire.
Imagine if your business was served with a hefty lawsuit, and you never heard about it because the registered agent failed to pass the message on to you. It’s possible a court hearing could proceed anyway, in which a default judgment could be issued against your company.
Also, if you name yourself, an employee or a loved one as your registered agent, your business could get served legal documents in front of clients, customers, friends or family — which could be embarrassing for your business.
Should I hire an agent?
You may think it’s unlikely your business will get sued, but studies show the majority of small businesses get hit with at least one lawsuit at some point. That’s why it’s so important to have a reliable commercial registered agent. (And also why you should always carry the right business insurance, which could protect you from big legal fees.)
One of the best ways to ensure your business has a dependable agent is to hire a service. A quick search online should turn up services in your area. You can also contact your secretary of state’s office and ask for a recommendation.
You may also want to try a large company specializing in professional registered agent services, like CT Corporation, the Corporation Service Company, InCorp Services, and National Registered Agents.
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