This guest post was written by Deborah Sweeney, CEO of MyCorporation.com. Follow her on Google+ and on Twitter @deborahsweeney and @mycorporation.
Every corporation and limited liability company, regardless of where they were created, is required to designate a registered agent or list a registered address. Corporations and limited liability companies are, legally, their own, separate entity, and can thus be sued and served with legal papers. In order to facilitate the legal service of process, each state requires corporations and LLCs to give the name and address of someone to whom these papers can be delivered. Oftentimes, the state also sends important business compliance and tax information to the designated registered agent. Registered agents fill a very important role for companies, so any business owner in the process of choosing one should carefully consider their options. For most businesses, this means deciding between acting as your own registered agent, choosing someone outside the company, or hiring a third-party service.
Acting as Your Own
It is entirely possible to act as your business’s registered agent. Every state allows corporate officers to be named as registered agents and, as long as you live in the state you do business in, you can typically just list yourself as the business’s RA. There are also a handful of states that allow a business entity to act as its own registered agent – Minnesota, for example, only requires that LLC’s and corporations give them an in-state address where someone representing the company can be found. Now, while this is the cheapest option, there are a few reasons why you wouldn’t want to act as your own registered agent. First, you have to be available to receive paperwork during normal business hours. Chances are that, during normal business hours, you’ll be at work and it really isn’t a good idea to open up the possibility of being served with legal paperwork at your place of business. Knowing that the company is being sued can really rattle your employees and kill office morale. The address of a registered agent is also publicly listed, meaning you could get all sorts of junk mail sent to your business or, if you chose to list your home instead, to your house. A better option is to ask someone else to be your business’s registered agent.
Choosing Another Person
In most cases, any resident of the state you do business in can be a registered agent – they just can’t list a P.O Box as their address. It can be difficult, though, to find a private resident outside of the company who you can trust to handle services of process discretely – you wind up placing a lot of faith in their ability to keep quiet. However, your company’s accountant, lawyer, or any of its corporate officers can also act as the registered agent for your business. Choosing someone very close to the business isn’t a bad idea, especially if the state regularly delivers important paperwork to the registered agent. You’ll always immediately know when something comes in and, if the registered agent is directly involved with the company, they could just fill out the paperwork themselves. However, if you choose a corporate director, you will run into the same problems that designating yourself would cause – your corporate officers are probably at the office when this type of paperwork needs to be delivered, and if they aren’t, probably do not want their home address in the public record. Attorneys and CPAs are a good option as they have their own office, but their registered agent services might be prohibitively expensive. A good middle-ground is to go with an outside agency.
Hiring an Outside Agency
Every, single state has third-party agencies operating within it that can provide your business with registered agent services. Typically, all you need to do to get a list of these services is visit your secretary of state’s website and do a quick search. A few businesses, like MyCorporation, actually provide registered agent services in all fifty states – if you run businesses in multiple states, or if your business was formed in a state you aren’t a resident of, having an agency qualified to serve as an RA in every, single state can really simplify matters. Outside agencies are also usually cheaper than hiring an attorney or CPA, allowing you to get the privacy and protection that an outside registered agent provides, without having to break the bank to do so.
Each option does have its merits, so it is up to you to weigh the pros and cons and decide which one to choose. If saving money is a major concern, then staying within the company might not be a bad idea. But, if you want to keep matters involving the company private, then it will probably be worth paying someone outside the company, whether it’s an attorney, a CPA, or a third-party agency, to act as your registered agent. Of course this is not an irreversible decision and you can change who is listed as your RA, but because your registered agent will play such an important role in your company, it is usually best to find a person or agency you like, and stick with them. The more thought you put into choosing your initial RA; the less likely you’ll have to jump to a new one.
About MyCorporation
MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best.
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