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What is a Registered Agent? (Explained)

Should you hire one for your business entity or act on your own?
What is a Registered Agent(Explained)

When setting up a limited liability company (LLC), you need to figure out how to structure your company. Apart from selecting a business name, deciding which state to register in, and writing your operating agreement, you’ll need to choose a registered agent for your new business entity.

But what is a registered agent? And what do they do?

Get the answers to these questions and more in this post.

What is a registered agent?

A registered agent is a person or business designated to receive service of process and other official documents by mail or in-person on behalf of a company. Depending on the state, a registered agent may also be called a statutory agent or resident agent. While the name differs, the role remains the same.

Each state requires that LLCs appoint a registered agent when filing business formation documents known as Articles of Organization (or Articles of Incorporation). And registered agent information must be updated each year when you submit your annual report.

Is a registered agent the same as the owner?

In short, no. But it can be the same person.

The registered agent is the person or business that accepts tax, legal, and other official documents for your business. As a business owner, you can be your own registered agent. Or you can assign an employer or another manager.

Finally, you can also hire a registered agent service.

What happens if I don’t designate a registered agent?

If you don’t designate a registered agent, you won’t be able to register your LLC with the state.

What happens if I don’t designate a registered agent

Most officials will reject new business registration applications that fail to specify a registered agent. Also, if you fail to maintain a registered agent for your business, you risk your LLC losing its good standing with the state. That means your company will no longer be allowed to conduct business within it.

To return the LLC to good standing, you’ll likely have to pay fines and penalties.

What does a registered agent do?

A registered agent receives official correspondence on behalf of your business. They will forward the information to you, which can include:

  • Official letters and correspondence from your Secretary of State or other governmental body responsible for LLCs
  • Service of process notices (lawsuits, subpoenas, etc.) if you’re being sued or need to appear in court
  • Official correspondence from federal government agencies like the IRS
  • Tax notices from the federal or state government (e.g., franchise tax)
  • Company filing notices and renewals

In essence, the purpose of a registered agent is to receive notices of lawsuits, taxes, or other important documents on your behalf. That way, you won’t lose sleep over them being mishandled.

What is a service of process for an LLC?

When you are notified that your LLC is being sued, the delivery of these legal notices and documents is known as “service of process.” Legally, any plaintiff is required to notify the defendant (your business) about a lawsuit they have filed against you.

Each state has its requirements for how you need to be informed. These methods can include:

  • Personally delivered documents to your registered agent
  • Mailed copies from the court clerk’s office
  • Certified mail documents from the attorney

When the registered agent receives the legal documents, they will provide them to you to respond by the due date.

Who can be a registered agent?

Any person or business that meets your state’s requirements can serve as a registered agent.

Common examples of registered agents include:

  • You (the business owner)
  • Another private person such as an employee or manager
  • A registered agent service

Requirements for registered agents

To become a registered agent in Wyoming, which are similar to other states, you must meet the following requirements:

  • Be at least 18 years old
  • Have a physical location and address in the state where your business is registered
  • Be available in person during regular business hours, year-round.

Examples of who can be a registered agent include:

  • The business owner
  • An employee
  • A trusted family member or friend
  • Your corporate attorney
  • A registered agent service

These requirements vary from state to state, so be sure to check with the Secretary of State for any other details.

Can I be the registered agent for my LLC?

Yes, you or someone else at your company can be the LLC’s registered agent. And it might make sense for your small business.

Pros:

  • More affordable than hiring someone else
  • It keeps outsiders from knowing private details of your business

Cons:

  • You will personally need to deal with legal paperwork
  • If your business address is also your home address, your home address becomes public information
  • Must be available during regular business hours, 52 weeks a year

Why choose a registered agent service for LLC?

Instead of appointing an individual as your registered agent, you can use a professional registered agent service. These businesses act as registered agents for LLCs in your state.

What does a registered agent service do?

When a registered agent service is listed on your LLC’s formation documents, all essential legal and tax correspondence will be sent to their registered office. And they will forward the information to you.

What does a registered agent service do

Some services will mail the documents to you, but most will scan and deliver them electronically to you for immediate access.

How much does it cost to use a registered agent service?

Fees vary, but you can expect to pay between $100 and $300 per year to use a registered agent service for your LLC.

As per usual, there are different service packages and tiers, which can include some nice add-ons such as cloud storage for documents, compliance calendar, accounting, bookkeeping help, and so on.

How to choose a registered agent service?

You should conduct your research and find a registered agent for your LLC to meet your needs and budget.

As you compare service providers, keep the following criteria in mind:

  • Coverage: Can they be your agent in different states? This can provide a single point of contact if your business operates as a foreign LLC in another state.
  • Convenience: Are they providing flexible remote services? Can everything be done electronically?
  • Reputation: Do they have good reviews online? Are they registered with your state as a registered agent service? Again, be sure to stick with experienced professionals.
  • Costs: Rates can vary, and some services provide add-on services you may need for an additional fee. So look for the best price-to-value ratio.

To Conclude

Choosing a registered agent for your LLC is an important decision. You will trust this person or business to communicate with you promptly about time-sensitive information.

Key takeaways

  • Registered agents can be individuals or registered agent service providers and are responsible for receiving legal, tax, and regulatory documents for your business
  • Agents must be available during regular business hours all year round
  • Keep registered agent information current with your Secretary of State to avoid fines and penalties

FAQs about registered agents

Here you’ll find answers to some of the most frequently asked questions (FAQs).

Do all states require a registered agent?

Yes. All states require your LLC to have a registered agent. As long as the person selected to be a registered agent meets your state’s requirements for age, location, and availability, you can appoint anyone to be your registered agent. This role, however, comes with some responsibilities and assumes dealing with sensitive data. So be sure to choose someone you trust.

Why have a registered agent?

Besides being required by law to form your LLC, having a registered agent ensures that your business receives important tax and legal correspondence on time. Also, having a registered agent service makes sense if you travel a lot or don’t want to make your personal physical address public.

Is a registered agent service worth it?

While you will incur a cost of up to a few hundred dollars a year for a registered agent service, it comes with peace of mind knowing you’ll not miss or overlook a vital legal document. And a registered agent service can support your operations in different states, plus assist with other business documents. In addition, since you’ll use the agent’s address, your address never becomes part of the public record. Finally, it can shield you from receiving unsolicited mail at your home.

Can a registered agent be held liable?

In some instances, the registered agent can be held liable. An example is when the registered agent fails to notify the company about legal actions or that they are being sued, resulting in a default judgment against the company. In this instance, failing to perform their agent responsibilities exposes them to liability.

How do I choose a registered agent for my LLC?

Be sure to choose someone who meets your state’s requirements for age, residency, and availability. In addition, look for experienced professionals who have legal knowledge and can act calm and collected when dealing with service events. If you’re planning to use a registered agent service, consider the cost compared to the value you receive. And stick to working with established professionals with solid reputations.

Article by:

Melissa Pedigo

CPA

Melissa Pedigo is a US CPA with more than 20 years of experience. She’s worked at Big 4 firms, for the government, and internationally. Now a full-time writer, she enjoys translating complex financial and tax topics into plain English. When she’s not keeping current reading IRS rules or tax legislation, you’ll find her studying foreign languages or playing tennis.

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