LLC Registered Agent: Everything You Need to Know
An LLC registered agent is an individual who receives documentation on your business’s behalf. 7 min read
What is an LLC Registered Agent
An LLC registered agent is an individual who receives documentation on your business’s behalf. These documents include legal, and tax ones and they help to ensure important information is not overlooked that involves tax payments, legal judgements, torts, and lawsuits. The registered agent is someone who does or does not have an operational role in the organization.
Registered agents go by a variety of different names that include:
- Agent for Service of Process
- Statutory Agent
- Resident Agent
The agent name will vary based on the state in which you live, and this person is needed if you want to develop an LLC business. You must find the registered agent and nominate this person before you file your articles of organization paperwork.
Before you start looking for your registered agent, you should understand that an LLC is a limited liability company that allows for pass-through taxation (the main benefit of a partnership) while retaining the limited liability of a corporation. Keep reading to learn about LLCs, registered agents, and how these professionals can assist your business.
Why Do I Need a Registered Agent?
You need a registered agent for your business because the vast majority of states require you to have one. If you happen to live in a state that does not legally require one, you still should think about appointing one.
If your business does not have its own physical location in the registered state, then an agent is required to accept documents. In general, the state government must have an individual who can be contacted at any time. An actual person with a phone number and address is required. Since a direct contact is needed, P.O. Boxes are not acceptable when providing contact information.
If your business decides to start doing business in other states where your business is registered, then you will need to appoint a registered agent in each state where you do business. However, this may not be necessary if you operate a physical business in each state. This depends on the state.
One of the major benefits of developing an LLC over another type of business is the fact that business and personal finances are separated legally. Also, an LLC creates a distinction between yourself and the business entity, unlike a proprietorship where you and the business are one in the same. This separation allows for more of a freedom from losses, but you will need to still deal with the legal issues of the business, and accepting important documents is one important aspect of this.
Business owners are rarely at their establishments every day. If a legal document comes in while you are away, then the document cannot be signed over to just anyone. This is where the registered agent comes in. They can accept the documents for you, so you do not miss any important paperwork.
What are the Benefits of Having a Registered Agent?
As previously mentioned, the main benefit to having a registered agent is the fact that a designated individual will be available to accept important papers and documents on behalf of the business. Also, it can simplify business moves if you intend on expanding and potentially changing locations multiple times. In this case, there will always be an individual on file who can be reached for legal reasons. This is especially true since your agent, and his or her address will be part of the public record.
If you do not want to pick a specific person as a registered agent, then you can choose to work with a registered agent service. This allows you to retain privacy and the service will inform you if there are any tax papers or other documents that need to be filed so you can stay on top of all legal requirements.
Missing important dates, like filing deadlines, can be extremely problematic, especially when you first set up your LLC and are unfamiliar with requirements. If a service is used, then the headache of remembering these things can be reduced significantly.
An individual who is a professional registered agent or a business that offers agent services can retain your business credibility, integrity, and standing.
Of course, with an LLC registered agent, you can stop worrying about regulations, tax papers, and legal documents and concentrate on your LLC.
Can You Be Your Own Registered Agent?
When it comes to state law, you can usually become your own registered agent. Many states, like Colorado, have passed laws within the last 10 to 15 years allowing for this. While states may allow it, it is often a good idea to pick a third-party person to become the agent.
One of the reasons that the agent is designated in the first place is to ensure that there is someone to accept important documents on behalf of the business. If you are your own registered agent and you are away from the business, then this leaves nobody to handle the paperwork.
If you have recently become an LLC or if you are working to become one, then you may have recently found out that appointing a registered agent is one of the qualifications of forming an LLC. This must be stated in the state of incorporation paperwork. If you are in a rush or have been blindsided by this requirement, then you can appoint yourself.
To become your own registered agent, you must live or have a residence in the state where you are forming the business. Also, you should work during normal business hours and complete business transactions in the state where your LLC has been set up. In other words, you need to be available to receive documentation at all times.
How to Choose a Registered Agent
Now that you know that a registered agent must be appointed as you file your initial LLC paperwork, you may be wondering exactly what the agent is responsible for. While you may understand that the person or service receives documents, you may be questioning what that means.
Well, say that a lawsuit was filed against your company. While the paperwork could be sent to your business, you may not receive it for some reason. Also, if an address or contact number for the business has been changed, then you may be difficult to find. This is also true if you do not have a physical business, like if you own an online one.
To ensure that a lawsuit can be filed against your company and that the business can be made aware of the lawsuit, the LLC registered agent requirement was put into place.
While you can choose someone who you deem as reliable and credible as your registered agent, services are ideal for many business owners. Keep in mind that the address and phone number of the registered agent will be part of the public record. In other words, everyone will have access to the information. This can be troublesome for certain individuals who are worried about spammers and scammers. Working with a service reduces these risks.
If you pick a qualified and experienced registered agent or a service, you can expect to be alerted to state paperwork and legal filing deadlines. Also, the agent can help you with additional legal issues, like finding an appropriate lawyer to handle lawsuits.
While you may not give the registered agent determination a great deal of thought, the appointment is important, especially when it comes to keeping your business running without any financial or legal issues.
Do I Need a Registered Agent?
If you do not choose a registered agent, there is a chance that your business will no longer be able to be run in good standing. There are a variety of things that can happen If you decide not to pick the individual. For example:
- Business fines
- Inability to enter into legal contracts
- License revocation
- Limited access to the legal system
If you need to reinstate your business due to a failure to pick a registered agent, you will need to pay a good deal of money to do this legally. There may even be some criminal and civil sanctions placed against your business.
The benefits do obviously outweigh the negatives when it comes to registered agents. Privacy retention is one of them, even if you are not as concerned about the legal matters surrounding the issue.
Level of Services: Legitimate Working Office
For an individual or service to become the LLC registered agent for your business, they must keep regular business hours so contact can be made during these hours. Basically, lawsuit documents and other papers can be served between the hours of 8 a.m. and 5 p.m., when most offices are open.
You should understand that if you do ask a single individual to become your registered agent, there is a chance that there may be nobody present to accept documents if they leave the office for lunch or an emergency. This is one reason why a service is often best. If for some reason the lawsuit cannot be served to the LLC registered agent, then you can lose the lawsuit by default.
When you start your business and continue as an LLC, you will need to file documents with a number of governmental agencies. It can be difficult to keep track of them. The registered agent will receive all of the documents, including ones from the IRS, so you do not have to deal with them.
If a registered agent is an experienced one, then he or she will understand which documents they should be receiving and also how they need to be handled. This knowledge can be instrumental in keeping your business compliant.
There are a few other things that the professional will do. They will keep copies of important documents so you can acquire them easily. Document scanning services where the paperwork is placed into a database may be something offered as well, and this will allow for documentation that can be downloaded when there is a need. This sort of thing can be invaluable if you are away from the office and need documents.
When You Transact Business in More Than One State
Many businesses have more than one location, and some may have dozens all over the country. If your business transactions are widespread or if you plan to expand, then you will need a registered agent who meets your specific business needs.
Some registered agents and larger service companies operate in every state throughout the United States. If your business needs are vast, then one of these agent services is a good choice. This way, a single entity can organize and receive documents, even if there are different people and offices that physically can accept correspondence on your business’s behalf.
If this type of service is chosen, then this can streamline accounting as well, since the service itself will be paid monthly, not each individual registered agent.
If you need assistance with your LLC and locating the right registered agent for you, then make sure to post a job on the UpCounsel marketplace. We offer legal assistance through the expertise of out vast pool of legal professionals. We accept only the best, meaning you will be served by the top 5 percent of the lawyers in the country who have worked with businesses like Google, Stripe, and Twilio.