What Is A Registered Agent?
As an attorney and advisor, I’m frequently asked about registered agents and registered agent services. I put together this guide as a resource so entrepreneurs and founders can understand what registered agents do and why businesses need a registered agent.
Stated simply, a registered agent is tasked with receiving vital communications, such as service of process, statutory notices, and tax records. Using a registered agent also ensures these documents go to the agent, not to a business address which is critically important when the business address is the same as a home address. A registered agent specializes in the tasks above and is a low-cost solution to a compliance problem that can distract an entrepreneur from the job of running and scaling their business.
WHAT IS A REGISTERED AGENT?
A registered agent service is an entity that provides organizations with the necessary means to receive and take action on official documents from government entities. This includes such items as tax returns, summons, and other important legal documents. The registered agent also serves as a contact point for government agencies, providing a reliable way for them to contact businesses about legal matters, including service of process. When choosing a registered agent service, it is important to ensure it meets all of your organization’s specific requirements.
A registered agent is required by law in most states. For example, California requires “an agent for service of process”.
WHO CAN SERVE AS A REGISTERED AGENT?
A registered agent can be any business or individual who is legally authorized to receive and process official documents on behalf of a company. The registered agent must have a physical address, which is typically their place of business. They are also responsible for maintaining records pertaining to the organization, such as tax documents and court filings. In some cases, a business can serve as its own registered agent; however, using an outside firm helps ensure consistency and accuracy of all government correspondence.
Typically the minimum requirements to be a registered agent are:
- Registration with the state
- At least 18 years of age
- A physical address in the state in which your business operates
- Consistent and regular availability during business hours at the address provided
But note a DIY approach has significant risks. Beyond compliance, an outside firm can also protect the privacy of your company and its personnel. Consider what California says on the Secretary of State website: “Many times, a small corporation will designate an officer or director as the agent for service of process. The individual agent should be aware that the name and the physical street address of the agent for service of process is a public record, open to all (as are all the addresses of the corporation provided in filings made with the California Secretary of State.)”
CAN I SERVE AS MY OWN REGISTERED AGENT?
Yes, but why would you? As an experienced entrepreneur, I can tell you, you should focus on things that help scale your business and outsource low-skill, low-value tasks, and a registered agent service is one of those. So yes, serving as your own registered agent may be feasible for sole proprietors or small business owners who have the time and resources to manage important documents effectively. It allows you to save on costs associated with hiring an outside service, but you should consider whether or not it’s worth the time investment. It is advisable to use an outside service if you lack the time and resources necessary to track down and respond to any documents that are sent. Additionally, an experienced and reliable registered agent can help protect your organization from various legal issues, such as missed deadlines or incorrect information on documentation — missing deadlines could result in a loss of a business license, LLC status, corporate status, or other consequences. Smart entrepreneurs outsource this work.
SHOULD I USE A REGISTERED AGENT SERVICE?
As discussed above, experienced entrepreneurs know that using a registered agent service is a smart move. A competent registered agent service will keep accurate records of all relevant documents, ensure that any necessary forms are promptly and properly filed with the state, promptly alert you if an action needs to be taken in response to a legal document, provide advice on how to respond to various legal issues, and protect your organization from liability resulting from missed deadlines or incorrect information. In comparison to going the DIY route, using a reputable registered agent service that provides helpful resources – such as filing services, tax advice, and legal counsel – can save your business time and money in the long run.
WHAT ARE THE ADVANTAGES AND DISADVANTAGES OF USING A REGISTERED AGENT SERVICE?
ADVANTAGES:
- Accurate and organized record-keeping and tracking of documents.
- Promptly alerting you if an action needs to be taken in response to a legal document.
- Professional advice on how to address various legal issues.
- Protection from liability resulting from missed deadlines or incorrect information.
- Easy access/referrals to filing services, tax advice, and legal counsel.
DISADVANTAGES:
- Cost associated with hiring an outside service.
- Must work through an intermediary to access documents which may result in a delay.
- Must review the agreement with the registered agent service to understand who is liable if a mistake is made.
WHAT IS THE BEST REGISTERED AGENT SERVICE?
When choosing a registered agent service, it is important to consider the type of business you have and the services that the provider offers. You should also look for a service with a good reputation, excellent customer service, and quick response time.
Some of the top recommended registered agent services include
Gregory S. McNeal
Along with being a successful entrepreneur, I am a tenured Professor of Law and Public Policy at Pepperdine University. I teach courses related to technology, law, and policy, and serve as a faculty member with the Palmer Center for Entrepreneurship.
Disclosure
Material Connection: Some of the links in posts on this site are “affiliate links.” This means if you click on the link and purchase the item, my company will receive an affiliate commission. This disclosure is required by the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”
