Why do I need a registered agent?

Business entities like limited liability companies (LLCs), S corporations, C corporations, and some other types of business entity must name a registered agent to receive legal communications and other documents on behalf of the business.

What is a registered agent?

A registered agent is a person or business that will receive legal documents on behalf of your business, such as subpoenas, regulatory and tax notices, and correspondence.

In many states, lawsuits must be served in person. Having a registered agent makes this a clear and orderly process.

Your registered agent's name and address are publicly available, so outsiders know who should receive legal and business documents. 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?

All formal business entities, such as an LLC or Corporation, must have a registered agent. Sole proprietorships and general partnerships are considered common law business entities. Because you don't have to file formal paperwork with the state to form a common law business, these entities 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 few restrictions on who can be a registered agent, and the laws can vary slightly from state to state. 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 registered agent can also be a company 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.

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 consider 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 a 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. 
• 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. Multiple registered agents can be a hassle if you do business in more than one state. A service can act as your agent in multiple locations.

When starting a new business, choosing a registered agent may seem like a minor issue. But an agent serves an important role. Be sure your agent meets your needs and can do the job promptly and professionally.