When you start a business, you’ll have a checklist loaded with items to cross off. Before opening up shop, you’ll need to choose a business name, potentially file for a “doing business as” (DBA) name, register a trademark, apply for the correct business licenses, and find a registered agent (RA).
If you’re unfamiliar with the term “registered agent,” it’s time to get up to speed with an RA’s role in your business and learn why you need one.
A registered agent acts as a state’s means of communicating with a corporation or limited liability company (LLC). Your registered agent accepts legal and official documents on behalf of your business, including franchise tax forms, annual reports, renewal reminders, and legal notices ranging from court summons to lawsuit paperwork.
Any business that’s registered with the state needs a registered agent. Those businesses include corporations, LLCs, limited partnerships, and limited liability partnerships. Sole proprietorships and general partnerships aren’t required to have a registered agent because they are considered “common law” entity types.
A registered agent is a valuable business resource. Here are some of the benefits a registered agent provides:
When you’re handling a business lawsuit, don’t discuss the case with anyone outside of legal counsel, and never post anything about it on social media.
Typically, registered agents are either individuals (usually corporate officers, directors, lawyers, or certified public accountants) or third-party organizations.
A registered agent must:
Some business owners opt to become their own registered agents in an effort to save money. However, when you serve as your own RA, uncertainties can arise, including the following:
Experts advise that entrepreneurs work alongside a third-party business RA. A third-party RA is reliable, understands what they’re doing, and helps keep track of legislative changes and requirements in the state. Note that different states have various regulations on who can be a registered agent. Check with your state’s filing agency to ensure you’re meeting all requirements.
If you open another business location in a different state, you’ll be required to name a registered agent in that state.
If your business has registered as an LLC or a corporation, it must have a designated RA to remain compliant with state law. Failing to maintain a registered agent can lead to a domino effect of trouble for your company, including penalties and revocation of your business’s legal status.
Instead of risking it all, be sure to add “designating a registered agent” to your entrepreneurial checklist early on. The peace of mind, extra privacy and added security will take you and your small business a long way.
Kimberlee Leonard contributed to the reporting and writing in this article.