A registered agent is a person or company that is designated to accept legal notices, such as mail from the Internal Revenue Service or a summons in a lawsuit for your limited liability company (LLC). This is an essential role you must fill to ensure your LLC operates smoothly.
Find out more about what a registered agent does and how to find one for your LLC.
Why a Registered Agent Is Important
A registered agent is a hard requirement for opening an LLC. You can't file the formation papers without one. If you don't have a registered agent who accepts documents and gives them to you, you will completely miss essential notices your business needs.
Without a current registered agent, your LLC faces the following problems:
- Fines from the state
- Not being permitted to file a lawsuit
- Being blocked from expanding your business into other states
- Denial of financing
- Dissolution of your business
The registered agent can perform a lot of other activities on your behalf in addition to accepting notice and service.
“The essential duty of a registered agent is to accept service of process on behalf of your business. They are also the primary point of contact for your business with the state. Dependent on whether you hire a professional registered agent, your agent may also provide compliance monitoring such as for annual reports," explains Cynthia Flynn, Esq. of Hackler Flynn & Associates APC in Pasadena, Calif.
Who Can Be a Registered Agent?
Any person over 18 years old or business can be a registered agent, but there are some specific requirements they have to meet:
- They must be present in the state your LLC is registered in
- They must have a physical address, not just a post office box
- They must be available in person during business hours at that address
You can name a single person or you can hire a registered agent company to fill this role for you.
Can You Be Your Own Registered Agent?
You don't necessarily have to hire someone to be your registered agent. Flynn explains, "An LLC can decide to be their own registered agent by appointing a member, owner or manager."
There are some caveats to doing this yourself, though. If the designated person is not physically located at the office and legal service is attempted, in some states, "substituted service" is allowed. This means the notice will be considered delivered by sending it to the state's Secretary of State or by posting or publishing the notice. You may never receive the notice and a default judgment could be entered against your LLC.
Another drawback, according to Flynn, is that "If your designated registered agent is a person located at your business, then legal papers may be served in front of your clients and employees, which can be embarrassing." Imagine being served with notice that you're being sued right in the middle of closing a big deal. Another concern to be aware of is that the name and address of the registered agent is public record, so you'll get more junk mail.
How to Find a Registered Agent Company
If you are not actually in the state where your LLC is registered, aren't comfortable naming someone in your company, or simply don't want to have to manage this in-house, you can hire a registered agency company. This is a business that takes on the registered agent role for a fee. Start by searching for a registered agent in your LLC's state or checking to see if your state's business department has a list of them. Moore says, "Beyond searching online and asking for recommendations from others, it's important to find an agent that suits your company's circumstances and longer-term ambitions."
Consider the following factors when choosing one:
- If your LLC will do business in several states, look for a company that services all the states you will work in
- Make sure the agency is reputable and has been in business for several years
- Confirm they have a physical address and are open during business hours
Aaron Luther of New Orleans, Louisiana, needed a registered agent for his LLC, AlltimePower. "My company was just two members at the time and neither of us were located in the state of Delaware, where we were registering. My main criteria was a company that would handle basically everything for a Delaware LLC and at a relatively low price." He pays about $300 a year for the service and is pleased with it.
A registered agent is an important part of your LLC. Choose one wisely and carefully so that you can focus on doing business.