When you set up your business entity, the law will require you to designate a registered agent. A registered agent can vary considerably, but it is not a major expense.
Standard registered agent fees
If your business meets the legal requirements to designate an owner or employee as the registered agent, doing so costs the business nothing. If you want to designate yourself or an employee as a registered agent, you have to meet the following requirements:
- Must be 18 or older
- Available during regular business hours
- Have a physical address in the state where you are doing business
A business must designate a state agency as its registered agent in a few states, although nothing prohibits using another agent.
For example, New York requires a business to designate the New York Secretary of State as the registered agent in their original business formation documents. You can later switch to another registered agent, although there is a $30 fee for the change.
Using a state agency as your company's registered agent does not cost anything. Still, the only service the agency provides is forwarding any legal papers to your business at your mailing address.
While the cost of registered agent services can vary, an RA can cost anywhere from $150-$300 per year. The difference in cost will depend on if you decide to purchase any of the other services your registered agent provides.
For example, if a business is organized in Nevada and conducts business in California, it is a domestic entity in Nevada and a foreign entity in California. The business must file formation documents in Nevada and then file documents in California to register as a foreign entity. It must also have registered agents in both states.
If a company has a business office in the state where it is formed or registered, it may designate an owner or employee of the business as the registered agent. However, the agent and office must meet the state requirements for a registered agent, such as being properly staffed during regular business hours. The company must hire an outside registered agent if no company office meets the requirements.
Registered agent requirements
The requirements for a registered agent are determined by the law of the state where your business is organized or registered. Determining whether you need a registered agent is how your business is structured.
Depending on the state, you may need a registered agent for a general partnership, limited partnership (LP), limited liability partnership (LLP), or limited liability limited partnership (LLLP).
A business entity is known as a domestic entity in the state where it is formed, or organized. A business that is formed in one state and engages in business activities in another state is known as a foreign entity in the other state.
For example, if a business is organized in Nevada and conducts business in California, it is a domestic entity in Nevada and a foreign entity in California. The business must file formation documents in Nevada and then file documents in California to register as a foreign entity. It must also have registered agents in both states.
Registered agent services
The basic, essential registered agent service is to receive legal documents on behalf of the business. A registered agent is required by law so that the public and the government have an official place to serve lawsuits and other legal documents on the business entity. To fulfill this purpose, there are generally two requirements for a registered agent:
- To have a street address in the state
- To have a responsible adult at that street address during regular business hours
If legal documents are received, the obligations of the registered agent are to promptly notify the business and forward the documents to the appropriate person.
Registered agent companies typically also offer additional services, including:
- Preparing and filing registration documents
- Sending reminders when annual reports or license renewals are due
- Storing documents, such as registration papers and annual reports
Such supplemental services may be included in the registered agent's basic fee, or they may be offered for an additional charge.
Registered agent fees and tax deductions
The fees paid to a registered agent are tax-deductible expenses. This includes the fees paid for the basic services of the registered agent as well as any additional fees for supplemental services. Even if your company is not legally required to have an outside registered agent but chooses to have one, the fees are still tax-deductible.
What happens if you have more than one business or have a business in more than one state needing registered agent?
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