Business entities like limited liability companies (LLCs) and corporations must name a registered agent to receive legal communications and other documents on behalf of the business. Some small businesses name an owner or employee as the registered agent. But in many cases, a company that provides registered agent services is a better choice.
What Is a Registered Agent?
A registered agent is a person who will receive legal and other documents on behalf of your business, such as subpoenas, regulatory and tax notices, and correspondence.
In many states, lawsuits must be served in person. Registered agents make this a more clear and orderly process.
Your registered agent's name and address are publicly available, so outsiders know who to deliver papers to. And you can feel confident that there's just one contact point for any legal notices your business might receive.
Who Needs a Registered Agent?
You need a registered agent for an LLC, corporation, or other formal business entity. Sole proprietorships and general partnerships don't need a registered agent.
You must name a registered agent when you file business formation paperwork with your state. If your agent's name or address changes in the future, you must file an additional form to update the state's records. You must have a registered agent in every state where your company is registered to do business.
What Does a Registered Agent Do?
A registered agent has just one job—to receive documents on behalf of the business and pass them on to the appropriate person at the business. Once you've chosen a registered agent, you can tell the agent who to notify if they receive lawsuits or other documents.
The agent's role sounds simple, but lawsuits, subpoenas, and notices tend to have strict deadlines. Missed deadlines can have both legal and financial consequences. As a result, it's critical to have an agent who is responsible and can be trusted to pass along information promptly.
Who Can Be a Registered Agent for an LLC or Corporation?
There are only a few restrictions on who can be a registered agent, and the laws can vary slightly from one state to another. In general, your agent can be any person who:
- Is at least 18 years old
- Has street address within the state
- Is physically present at that address during business hours
Your agent can also be a company that's registered with your state to provide registered agent services. Your business cannot act as its own agent.
You can name yourself, your spouse, or an employee as the registered agent for your business, but keep in mind that your agent must be someone who is at the listed address during business hours all day, every day.
Someone who travels, telecommutes, works part-time, or has off-site meetings isn't a good choice for a registered agent.
When to Use a Registered Agent Service
Many small business owners act as their own registered agent or name a friend, family member, or employee. It saves money, but it's not always a good idea. When choosing a registered agent, there are several reasons to pay for a registered agent service instead:
- Privacy. If you or an employee is the registered agent, you risk the embarrassment of having a legal action served in front of customers, clients, or co-workers. Also, the agent's address is public record, a potential concern if you have a home-based business or are planning to name your spouse as your agent.
- Consistency. If you list an individual as the registered agent, you'll need to update your registered agent information if there are any changes to the person's identity or address. Few small business owners remember to do this, but if you fail to maintain a registered agent, your business can lose its good standing with the state.
- Knowing the job will be done right. Registered agent services are experienced and professional, making it more likely that important documents will quickly get into the right hands.
- Multiple states. If you do business in more than one state, multiple registered agents can be a hassle. A service can act as your agent in multiple locations.
Choosing a registered agent may seem like a minor issue when you're starting a new business. But an agent serves an important role. Be sure your agent meets your needs and can do the job promptly and professionally.