Why Does my Small Business Need a Registered Agent?

November 20, 2019

Regardless of how large your business has grown, or if you’re just starting out, everyone needs a few talented human resources. A bookkeeper, someone familiar with taxes in your state, and a registered agent.

What is a Registered Agent?

A registered agent is an individual (or a company) that’s your official point of contact with the state to receive service of process, legal and state documents, and transmit these communications to your business.

They’re tax experts and accept tax and legal documents on behalf of your business, making sure you don’t miss important information regarding tax payments, lawsuits, or judgments. 

Why do Small Businesses Need a Registered Agent?

For those small businesses interested in protecting their assets with an LLC, you’ll need a registered agent to make that happen. All states require the LLC or corporation to identify a registered agent and registered office before filing articles of organization with the state filing authority. Additionally, a Limited Liability Company or a Corporation must always have a registered agent in each state in which it is conducting business.

For those who aren’t financially ready to commit to a real human bookkeeper and registered agent, choosing instead to use software and do as much as they can themselves. Yes, it is legally possible that you serve as your own registered agent and save a bit of money, but you need to be aware of some common issues that come with doing it yourself: 

  • Trying to figure out which physical address to designate (do you work out of your own home?).
  • Determining whether or not you’ll be available during general business hours to receive documents.
  • The insecurity in knowing that unexpected visitors can come by your place of residence or business location (you thought personal solicitors were bad!).

Benefits of Having a Registered Agent for Your Business:

  1. One of the biggest benefits of working with a registered agent is getting an extra layer of privacy. We all make mistakes, but it’s less likely that you’ll have to accept potentially embarrassing legal and tax documents in front of your clients. 
  2. If you do business in multiple states, you can use the registered agent service in all those states (A lifesaver when filing your taxes) and if you don’t have a physical location in the state in which your business is registered, you must select a registered agent to accept documents on your behalf. (Government notices can’t be sent to a PO Box in many cases!)
  3. Your registered agent address will remain the same, but you can easily change your business location without necessarily having to file more paperwork to change your address with the state for each and every move.
  4. You won’t be in danger of falling out of good standing with your state. Losing good standing can have a serious impact on your business. It can prevent you from bringing a lawsuit in the state, expanding into other states, or obtaining financing that you need to expand your business. A registered agent will ensure that all time-sensitive documents are taken care of and organized to keep your business compliant with regulatory requirements.
  5. And finally, your business, and you personally, might be hit with fines and penalties for noncompliance! Without a registered agent, you may be unaware of the situation which can cause the amounts and sanctions to continue to increase.

Having a registered agent by your side is a huge asset to every small business. They provide critical professionalism, privacy, and a safety net by catching small mistakes before they become larger mistakes. Researching the costs of retaining a registered agent should be an entrepreneur’s first step on their small business journey.

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