Should You Hire a Registered Agent?

A registered agent or statutory agent is a point person or entity that accepts important documents, legal processes, and subpoenas on a business's behalf, particularly if a business is being sued.

When forming a limited liability company, you must have a registered agent with a physical address in your state. However, this doesn't mean you're required to hire a registered agent service, although many business owners choose to. The registered agent is simply an individual or business that has agreed to accept documents and official mail on your LLC's behalf.

In most states, you can appoint yourself or your LLC as registered agent. If it's that easy why hire a registered agent in the first place?

States require LLCs to have registered agents because lawsuits against your LLC cannot move forward unless your business is properly notified. Since the registered agent has a physical address in the state and is available to accept documents during normal business hours, it's much easier to issue legal documents if someone sues your company. Basically, registered agents are an easy means for the court system to notify you.

Having a registered agent eliminates big corporations the ability to hide behind thousands of employees. The state can always issue documents through your registered agent and know you will receive them in a timely manner. The theory behind registered agent requirements is that there's always a reliable way to contact your business no matter the circumstances.

Why Hire a Registered Agent?

There are several reasons you might want to hire a registered agent instead of serving as your own. For starters, you don't have to deal with extra paperwork. Most registered agent services start at around $100 per year but can exceed $300 depending on your location and the level of services offered. For some business owners, this cost is well worth the freedom of not having to track down annual report due dates and official state notices.

When you hire a registered agent, you can be confident that all your company documents are kept in one place and you don't have to keep track of important notices. You're also entitled to privacy because you don't have to list your home address as your LLCs point of contact. Hiring an agent keeps your home address off public record and helps you avoid all the junk mail that comes with it.

It's worth noting that state records are permanent, and any personal information you have on file with the state in relation to your business will stay there. If you don't want your name and address out there for anyone to see, hiring a registered agent makes sense.

Another problem some small businesses have, especially if they're web-based, is not having a physical address. This can make it extremely difficult to deal with state bureaucracy unless you hire a registered agent.

Other benefits of hiring a registered agent include:

  • Not having to keep normal business hours – registered agents must always be available to accept documents and official notices
  • Being able to have businesses in multiple states – you'll need a registered agent in each state you register a business
  • Convenience – it's often easier to hire someone else to perform menial tasks that might otherwise distract you from the business
  • Additional services – some registered agent services provide additional perks, so make sure you know upfront what the service offers before choosing a registered agent

On the other hand, hiring a registered agent doesn't make sense for a lot of businesses. If you operate a regular storefront that keeps normal business hours and you aren't concerned about privacy, you can act as your own registered agent and save the annual cost. Many business owners do just fine without a third-party registered agent, so it's up to you to decide whether the reasons for hiring someone make sense.

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