(Newswire.net — April 17, 2020) — Whether you’re starting a business for the first time or an experienced owner, it’s easy to overlook the basic legal requirements for forming and operating. After all, state regulations and procedures can be complex and distracting to your main objective: serving your customers and making money.
One seemingly simple requirement, if not adhered to, can have broad implications for your business: your business’s registered agent.
If you’re not familiar with the concept, a registered agent is a physical office that receives service of process (SOP) on behalf of your business and forwards it to you. Appointing a registered agent is required in the state where you first incorporate and in any other states where you plan to do business.
Your registered agent (aka resident agent, service of process agent, or commercial registered office provider) can be an individual or a company that provides registered agent services. It just can’t be your business itself.
A registered agent has a few key responsibilities, including:
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Consenting to serve as your registered agent
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Being publicly listed on state records, including name and physical address
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Being available to receive documents during all regular business hours
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Forwarding SOP and other documents they receive to you in a timely manner
Easy enough, right? Well, think about who or what truly meets those requirements. If you appoint an individual as your registered agent, think about what your business will do when it expands to another state. If you appoint yourself as your registered agent, your name and address will be in publicly searchable databases. Even more, what if you’re on vacation or run out to the grocery store, and as a result, not available during all business hours?
If you hire a company to be your registered agent, you generally have a more reliable option. Registered agent companies maintain fully staffed locations and the infrastructure to forward your documents in a timely fashion.
However, there are still pitfalls to avoid. The biggest thing to note is the price. Usually, registered agent companies bill you annually for representation services. Some companies play games and entice you with free or deeply discounted service, then raise your rate massively in subsequent years. Others charge you for each document your business receives – in other words, they bill you extra for what they’re legally required to do.
If your business is already registered in multiple states, or you plan to have a large presence, find one registered agent that has offices in those states, if not nationwide. After all, what’s the point of forming a Wyoming LLC with one registered agent and having to find a new company to serve as your Colorado registered agent?
Again, while appointing individual registered agents may serve short term needs and save you money, it can complicate your accounts payable and records down the road. While changing your registered agent with a state agency isn’t necessarily difficult, it’s easy to forget with the litany of other responsibilities you have as a business owner.
Every company must review its budget, plans for growth, and level of risk. Ultimately, choosing a registered agent with reliable pricing and a nationwide footprint will support your business as it grows. At the same time, you reduce the risk of missed SOP, which can result in default judgement and adverse legal consequences. With a few extra minutes of up-front research, you’ll set your business up for success.
Harbor Compliance does not provide tax, financial, or legal advice. Use of our services does not create an attorney-client relationship. Harbor Compliance is not acting as your attorney and does not review information you provide to us for legal accuracy or sufficiency.