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What Is A Registered Agent?

If you have a small business and have decided a limited liability company or corporation is right for you, you'll need a registered agent. An LLC’s registered agent is an individual or entity which the LLC has designated to receive service of process notices, compliance-related documents, and government correspondence on behalf of the LLC. Basically, the registered agent for an LLC will have one primary function; to be an agent for the service of process. They also must forward important correspondence to the LLC in a timely manner. 

A service of process is the action of informing an individual or entity that there is a pending lawsuit against their company. A registered agent accepts service of process.

The Purpose

Besides just receiving official mail on behalf of your business, the primary purpose of a registered agent is to help your business maintain an effective corporate compliance by informing you of any legal notices or sending annual report filing reminders. 

Your designated registered agent will receive all of the following on behalf of your LLC’s business information:

  1. Legal documents
  2. Tax forms
  3. Summons
  4. Official government correspondence

Registered Agent Requirements

There are requirements that must be met to be eligible to be a registered agent for your LLC. The agent must be a resident of your state. They also must have a physical address to which documents can be delivered; a P.O. mailbox cannot be used. 

Designating Yourself or Another Member

Yes, you can be your own registered agent for your business. Or you could also choose an officer or member of your company as long as they meet the following requirements:

  1. 18 years or older
  2. Physical address in the state where business is formed
  3. Available in person during regular business hours 

While this may seem like a good idea, there are some things you should keep in mind if you choose this path for your registered agent. First, your agent must always be available to receive important documents. If the registered agent can’t be found due to vacations, off-site meetings, or sick days, consequences may be severe. For example, you could automatically lose a lawsuit if not answered within the provided amount of days.

Another aspect to consider is a worst-case scenario type of situation. Your business gets sued, and your registered agent's address is at your business. Getting served at your place of business in front of customers or clients can be pretty embarrassing. 

Third-Party Registered Agent Services

It has its benefits if you designate someone else to serve as a registered agent for your LLC. There are many options out there for a third-party registered agent service officer. Some significant advantages include:

  1. Compliance with the law- Registered agents help businesses stay up to date on state requirements by sending regular reminders and filing official government notifications. 
  2. Flexibility- As mentioned above, an agent needs to be available during regular business hours. Having a third-party registered agent allows you to work on your own hours. You can also form an LLC in another state since the agent will have to be in the same state the business was formed. 
  3. Peace of mind- A third-party agent gives you more time to focus on running your small business. It helps maintain a work-life balance, offers personal guidance, and allows you to prioritize growing your business. 
  4. Privacy- Since the agent's physical address will be listed on public record, this gives you more privacy. This is even more important for businesses that operate out of their own home.

How To Choose a Registered Agent Service

Luckily, you can find many registered agents with a quick search on the internet. However, we have a few tips on choosing the right one for your business. You'll want to look for an agent that offers the following features:

  1. Compliance management- Reminders for filing annual reports and other deadlines. BetterLegal does this for free and offers a State Complaince subscription to file these reports on your behalf.
  2. Document management- Local scanning of all official documents so you can access them quickly and easily from an online account.
  3. Availability- Find a reliable agent that can answer any questions you may have and be there for the paperwork.
  4. Throughout coverage- the availability to provide registered agent services across all 50 states.

What Happens if You Don’t Have a Registered Agent?

You will be required to designate a registered agent at the time you register your LLC. If you decide not to have one for whatever reason, you may face serious consequences. 

Your LLC will not be in good standing with the state you registered in. This means you could be subjecting your company to penalties and fines. Your LLC can also lose its ability to enter into contracts or bring out a lawsuit. For the case of compliance-related government correspondence, if you fail to respond, it will result in fines, penalties, and other sanctions 

There is also the risk of not receiving important correspondence and service of process which requires a response. Let's say you don't receive service of process regarding a lawsuit. This means you won't be aware that you are being sued, impacting the response time, and if you don't show up at court, you could get in major trouble. 

So, it's clear you will need a registered agent for your LLC, and without one, you're just setting up your business for failure.

Set Up Your Business with BetterLegal

If you don't know which path is right for you, whether choosing yourself or hiring a third-service registered agent, we can help. BetterLegal was created to help business owners faster, easier, and with cheaper/more transparent fees. The process of starting an LLC can be complex, and perhaps you didn't even know you had to do this part of it. That's why we are here! Reach out to us today to find out how we can help start your business and find you a registered agent.

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