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If you plan to form a corporation or a limited liability company (LLC), you will almost certainly need a registered agent. But what is a registered agent for an LLC, and how can it benefit your new business formation? Also, what considerations must you make when choosing a registered agent?
Table of Contents
- What Is a Registered Agent?
- Who can be a Registered Agent?
- How Much Does a Registered Agent Cost?
- Northwest Registered Agent
- What to Consider When Choosing a Registered Agent
- Appointing yourself as a registered agent has limitations
- Registered agents must use a physical address
- Large organizations may be better off with an attorney
- What are the Penalties for Failing to Maintain a Registered Agent?
- FAQs
- Final Thoughts
What Is a Registered Agent?
Simply put, a registered agent is a person or company designated by an organization to receive legal correspondence for a business entity. This can include legal or government-related documents, including notices of corporate status, significant tax documents, or even the servicing of a summons or notice of legal action by a third party. The registered agent typically forwards documents to managing company officials when they are received.
The registered agent is appointed when the company is formed, and their status is included in the documentation filed with the state on behalf of the organization.
The registered agent also serves as the organization’s official legal representative. As such, when documents are received by the registered agent, they are presumed to have been officially received by the organization.
Who can be a Registered Agent?
A registered agent can be any responsible party named by the individual or individuals forming the corporation or LLC. It can even be the business owner or one of the company’s officers. However, often the company’s registered agent is the attorney through whom the company applies for corporate or LLC status. This arrangement is convenient since the attorney is familiar with the organization’s formation and may serve as legal counsel.
The registered agent will likely change periodically for no reason other than because people die, move away, or eventually leave the corporation or LLC. Whatever the reason, a new registered agent must be appointed when that happens.
✨ Related: How to Start a Business
How Much Does a Registered Agent Cost?
The cost to appoint and maintain a registered agent varies, depending on the method you use to establish your corporation or LLC. For example, did you use an attorney, file the paperwork yourself, or hire an independent service?
The most expensive way to file for LLC status is to use an attorney. In addition to the various charges associated with the process, they will charge you a legal fee. The cost for an attorney can range from several hundred to several thousand dollars, depending on your location, the complexity of the state filing requirements, and the size of your business organization.
Accepting registered agent status may be included in the attorney’s fee, but they will undoubtedly charge you an annual fee to maintain that status. That could be anywhere from $100 to $200 per year.
The least expensive method will be for you or another company officer to act as the registered agent. You can file the paperwork and act as a registered agent at no additional cost.
Fortunately, there’s a third option.
Northwest Registered Agent
Northwest Registered Agent offers an affordable way to file and maintain your registered agent status.
The registered agent service is dedicated to helping individuals set up business formations. If you take advantage of their $39 Business Formation Service, you’ll not only set up your LLC but also get the benefit of a fully formed business, registered agent services, a business address and email, a web domain name, and a custom website.
Northwest also provides mail forwarding service from the registered agent, complete privacy, and access to trained specialists through their Corporate Guide Service. It’s a small price to pay for an experienced business formation service and one that can save you a lot of time and effort in attempting the do-it-yourself route.
Learn More About Northwest Registered Agent
What to Consider When Choosing a Registered Agent
If you are a small business, like a one-man/woman operation, and your primary goal in setting up an LLC is legal protection, you may want to serve as a registered agent or appoint your spouse or other trusted person. Here are some things to consider when choosing a registered agent.
Appointing yourself as a registered agent has limitations
One purpose of a registered agent is to be available if papers are served by a court or government agency. If no one is available at your home or business address, you may not receive critically important documents in a timely manner. Be aware that serving as a registered agent for your business will make it more difficult to separate your personal life from your business life if that is one of the main reasons for forming an LLC or corporation.
Registered agents must use a physical address
For registered agent purposes, you can’t use a post office box or a virtual address. The registered office address must be physical and likely to have a live person available regularly.
Large organizations may be better off with an attorney
If you own a larger organization with multiple owners or are engaged in a business likely to have significant legal dealings, including lawsuits, it may be best to hire an attorney to file the paperwork for your LLC or corporate formation.
Since you will likely need significant ongoing legal counsel, and the possibility of dealing with legal action is a reasonable expectation, it may be convenient to have your attorney also serve as the registered agent and be the first to receive any related correspondence.
For all other business types, especially those operating in multiple states, the best choice is likely to be a business formation service such as Northwest Registered Agent. It’s a fully automated service that can handle multiple state filings at a very reasonable cost level.
✨ Related: How to Pay Yourself as a Business Owner
What are the Penalties for Failing to Maintain a Registered Agent?
Since you are legally required to appoint a registered agent, you can expect penalties if you fail to maintain a party in that capacity. Exactly what those penalties will be will vary by state, but some are common.
Fines
The state may have a schedule of fines for organizations that fail to maintain registered agents. (This can also extend to failing to update the address of the registered agent of record.)
Administrative dissolution
Your corporation may face administrative dissolution if you fail to appoint or maintain a registered agent. This occurs when the state legally dissolves the corporation or LLC. Before that becomes necessary, a series of attempts to contact the company to remedy the situation will usually be made. But if those attempts are not responded to promptly, the state can proceed with dissolution.
Dissolution will include revoking the company’s corporate or LLC status. Once that happens, the business owner or owners will no longer enjoy the legal protection provided by either business formation. They will then be exposed to liability for company debts and obligations and personal liability in lawsuits against the company.
The Legal and Reputation Fallout from Dissolution
Speaking of lawsuits, since the registered agent is the point of contact for serving legal papers, the absence of a registered agent could mean its principles are unaware of pending legal action against the company. Should that happen, a court can issue a default judgment in favor of the plaintiff(s).
The company owners – suddenly lacking in the legal protection a corporation or LLC provides – would then be personally liable for damages listed in the suit.
Last but not least is the potential loss of company reputation. When individuals or other businesses are going to transact with a company, they will often verify the company’s standing with appropriate state agencies. If a company that advertises itself as an LLC or corporation has had that status revoked, it could result in losing prospective clients and customers.
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FAQs
Corporations and LLCs must appoint a registered agent in all 50 states and the District of Columbia. It is not optional.
The following requirements of registered agents apply across all 50 states: You must be at least 18 years of age, have a physical (street) address, and be available to receive and provide notification of correspondence during normal business hours.
Registered agents are required in numerous situations in Canada. This includes Extra-Provincial registrations. Three provinces in particular – Manitoba, Nova Scotia, and Saskatchewan – require registered agents in the province if no company directors are provincial residents.
Final Thoughts
A registered agent receives and forwards legal correspondence on behalf of a corporation. They are required to maintain a physical address, and individuals must be over 18 years of age to act as a registered agent.
When setting up a corporation or LLC, you must decide how to appoint a registered agent. You can hire an attorney (costly), appoint yourself (cost-effective, but can be a hassle), or hire a business formation service such as Northwest Registered Agent.
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