You have your business checklist of everything you need to hit the ground running. Business name? Check. Website? Check. Address, documents, contracts? Check, check, and check. But, you’re not done there. When forming you LLC, you’ll be required to have a registered agent in the state where you have established your business to receive legal documents and proceed with the completion of forming your business in accordance with government regulations.
A registered agent is your official contact with the state. Any compliance information or official correspondence regarding your business will be received through your registered agent. As an LLC, failure to designate a registered agent can result in serious consequences, including the dissolution of your business, as well as damage the “good standing” of your company.
In short, if you want your business to be successful and remain in good standing with the law (who doesn’t?), then you need to have a registered agent for your business. Before you dive headfirst into choosing your registered agent, this article has listed - and debunked - the most common registered agent myths for you.
Myth 1: If You Run a Single-Member or Home-Based Business, You Don’t Need a Registered Agent
Many of you who run a single-member LLC or a business out of your home (often one and the same) think that you have no need for a registered agent. This is FALSE.
It doesn’t matter whether you are running your business as a one-man/woman show or you have 1,000 employees. You need a registered agent to operate your business. Any and all types of LLCs, corporations, and partnerships are required by law to have a registered agent. The only type of business that this rule does not apply to is a sole proprietorship.
Myth 2: You Should Be Your Own Registered Agent Because It’s the Cheapest Option
While you are allowed to be your own registered agent (check your state regulations before you do this because it’s limited in option) and use your personal home address (more on this below) as your designated registered agent address, think before jumping into this decision.
Yes, becoming your own registered agent will provide short-term convenience and save money when you are first starting out. However, there are many implications for you to consider.
First of all, you will be required to operate under normal business hours, which are typically Monday through Friday. If you wanted to take a break on Fridays, too bad. If you become your own registered agent, you will need to be prepared to operate during typical business hours. That also means no vacations or client meetings across town for half or all of a day because you could run the risk of missing service of process (i.e. lawsuit) or other state communications.
If you are not well-versed in compliance issues or legal documentation, you run the risk of getting fined, closing your business, or losing your “good standing” to misinterpretations or late handling of time-sensitive material.
Last of all, if you become your own registered agent, your personal information, such as your name and private address, will be open to public records. Lots of issues to cover here.
If you want to avoid putting your home address out there for all to see and the embarrassment you will face if your company is ever sued, then you should consider an alternative registered agent.
If your home address is the registered agent address, the summons will be served at your house. And no one likes to give neighbors a reason to speculate and gossip!
Another way using a home address can cause privacy issues is when it’s used on a business’ website and in other marketing materials. With the address out there online, it’s available to everyone everywhere. It might result in unwanted junk mail and unexpected home visits (such as from salespeople, unhappy customers, or individuals with ill intentions). This means that angry customers could access your information and show up at your door. You don’t want that kind of privacy breach to interrupt your life.
Plus, another big problem that many small, web-based businesses encounter when dealing with the bureaucracy of maintaining a business entity is that their business has no physical location. If you don’t want to list your home address, hiring a registered agent service solves this problem, as service of process and official mail from the state can be delivered to the registered agent and the home address stays off public records.
There are a couple of options for you to consider when it comes to choosing your registered agent. If you are still keen on becoming your own registered agent, keep in mind the above considerations. You can also have a friend or family member become your registered agent and use their address to receive official and legal notices. However, you may run into similar issues as listed above. Unless your friend or family member is comfortable with managing compliance issues, you may want to consider another option. In addition to that, whoever is your registered agent must stay on top of processing the documents they receive for you to avoid missing important deadlines or business-related notifications.
VirtualPostMail’s (VPM) recommendation is to hire a registered agent service. While this may be more expensive than doing it yourself or asking a friend/family member, a registered agent service will provide you with real-time notifications so that you won't miss a deadline. Additionally, these services will automatically be set to operate during normal business hours, so you can be free to take your day off without feeling any guilt.
Myth 3: The Role of a Registered Agent is Similar to a Mail-Sorting Service
Although a registered agent receives a very specific type of mail on your behalf, namely compliance-related notices and legal or tax documents, this does not make it your run-of-the-mill mail-sorting service. A registered agent is responsible for maintaining a compliance calendar, client support, assisting with annual report filings, and alerting the LLC owner to pending lawsuits.
If you want a mail sorting service, you will have to find a separate mailing service from your registered agent service.
Lucky for you, there are many mail sorting services available. VPM offers services that cover both your registered agent AND mail sorting needs. VPM is the only virtual mailbox service that owns all locations that can act as your registered agent and alert you of documents upon arrival. VPM can also sort your mail and packages, forward them to your current location, and digitally scan them so you have real-time access to your mail. The best part? VPM’s registered agent service is FREE.
Myth 4: Registered Agent Services are Expensive
One thing to consider as you wonder, "Can I be my own registered agent?" is that if you're planning on moving or relocating your business location, you would need to notify the state of each address change, which can be time-consuming. You will also need to pay a fee for each notification of an address change.
When you add up those fees and consider the time involved in handling address changes with the state, it is simpler and less expensive to hire a registered agent service. While registered agent services can be more pricey than being your own registered agent, there are many services that are affordable. VPM’s service, in particular, falls into this category, as it offers registered agent services for FREE. This package deal that VPM offers, combining registered agent services with mail-handling services, is well worth the value.
Ready For a Registered Agent Service?
There you have it! The most common registered agent myths debunked. Even if you run a single-person LLC out of your home, you must have a registered agent for your business. However, don’t jump straight into becoming your own registered agent unless you have considered all of the implications of being your own registered agent.
Remember that registered agent services are not the same as a mail sorting service, but if you want both, there are affordable options for you to choose from.