6 Reasons You Shouldn't Be Your Own Registered Agent

6 Reasons You Shouldn't Be Your Own Registered Agent

by Brette Sember, Esq., September 2016

While it's tempting to act as your own registered agent for LLC or corporation issues, it's generally not a good idea to do so. The answer to "Can you be your own registered agent?" is yes, but you probably shouldn't.

You may be wondering, "What is a registered agent?" A registered agent is a person or agency your company appoints to receive official notices on your LLC's or corporation's behalf. This includes service of process, correspondence with the state, and notifications about state and federal taxes.

The agent for service of process can be anyone—the business owner, an employee, or an outside person or service hired to fulfill the role.

Registered agents are particularly important for companies that are not based in a state in which they are doing business (for example, you're located in New York, but also sell things or provide services in New Jersey). There must a way to contact the company for legal purposes and a designated registered agent is the way to do so.

Many companies hire a registered agent service, a company that is set up to accept notices and service of process for other businesses. These firms have thorough procedures in place so that they can track anything they receive on your behalf and ensure it comes to your attention quickly.

It might seem as if it would be less expensive and simpler to just be your own registered agent, but there are several reasons why this is not good business practice.

1. The agent needs to have a physical address.

A corporation or LLC registered agent must have a physical address within the state in which the company is doing business, and a post office box does not suffice. A private mail service or mailbox also does not fulfill the requirement.

There has to be a brick and mortar place where someone can go to deliver service of process or deliver mail. If you're doing business outside your home state, you may not have a physical location in that state.

2. You may not want to use your home address.

If you plan on being your own registered agent, you may end up having to use your home address (particularly if you have a home-based or web-based business), which will make the address public. This raises privacy concerns, and also means the address will be available to marketers and may increase the amount of junk mail you receive at your home.

Additionally, it could mean a process server or angry litigant could come to your home to serve you with notice of a lawsuit, something you may not want to deal with at home.

3. Address change notices must be made promptly.

One thing to consider as you wonder "Can I be my own registered agent?" is that if you're planning on moving or relocating your business location, you would need to notify the state of each address change, which can be time-consuming. You will likely also need to pay a fee for each notification of change in address.

When you add up those fees and consider the time involved in handling changes of address with the state, it is simpler and possibly less expensive to hire a registered agent service.

4. Agents are required to keep regular business hours.

Registered agents need to have regular business hours in order to accept service of process. This can be difficult for small business owners who often are not able to stay in an office all day and who cannot afford to hire full-time employees to work out of a specific location.

5. You must have an agent in every state.

You need to designate a registered agent in every state your company does business in. It would be very expensive to maintain a brick and mortar location for your company in each state.

If you hire a registered agent service, you can easily maintain an agent in every state without having to hire employees or maintain a physical location in each state where you are conducting business.

6. You never want to miss an important notice.

Paying a small fee each year for registered agent services so that you have an agent for service of process and other notices can be well worth the time you will save in trying to keep track of official notices yourself and making sure you're sorting and reading your mail.

This type of service ensures you won't miss or forget about an important notice, which could be hugely expensive for your company if you don't respond to pending litigation or if you fail to pay taxes by their deadlines.

What would you like to do next?

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