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In post 2.2.3 (step 3), we introduced the concept of a registered agent, if you haven’t read post 2.2.3 start there. In this post, we’ll go into more detail on what a registered agent is, what the requirements are, pros & cons of hiring a registered agent, and the steps to appoint one. If you are not setting up a partnership or sole proprietorship skip this post as registered agents are not needed.
What is a Registered Agent?
Simply put, a registered agent is an individual appointed to receive legal documents (e.g., subpoenas, regulatory & tax notices, correspondence, etc.), government correspondence, and other important notices on behalf of your LLC or corporation. A registered agent has just one job - to receive documents on behalf of the business and pass them on to the appropriate person within the business.
The registered agent's role sounds simple, but lawsuits, subpoenas, and notices tend to have strict deadlines. Missed deadlines can have both legal and financial consequences. As a result, it's critical to have an agent who is responsible and can be trusted to pass along information promptly. Below are a few examples of documents they may receive:
Legal summons, complaints, or subpoenas
Tax assessments/discrepancies, tax documents that require attention
Compliance communication from the city, county, state, or federal government
Annual report reminders
Renewal notices for business licenses, registrations, or permits
Official notices of changes in business law or legal obligations updates
What are the Requirements of a Registered Agent?
Physical street address within the state (not a P.O. Box) where the business is registered
Availability during business hours to receive and accept legal documents and official correspondence on behalf of the business
Legal age (18 years or older) and the legal authority to represent the business
Depending on the state's requirements, the registered agent may need to be a resident of the state where the business is registered or be authorized to conduct business within that state
Given consent to serve in this role and formally accepted the responsibilities associated with it
No conflicts of interest that could impair their ability to fulfill their duties impartially and effectively
Pros & Cons of Hiring a Registered Agent
If you can, we recommending becoming your own registered agent as it will save you money, but below are the pros & cons of hiring a registered agent
Pros:
Professional registered agents provide expertise and experience as they have experience handling legal documents and correspondence for businesses
Offer reliability since they are available during business hours to accept documents on behalf of your business, reducing the risk of missed deliveries or deadlines
Knowing that a qualified and reliable person is managing your correspondence can provide peace of mind and allow you to focus on other aspects of your business
Offers a level of privacy, if you get served a lawsuit, the registered agent is listed rather than your personal name
Cons:Â
Hiring a professional registered agent entails recurring fees, which can be impactful to those with limited budgets
Need to relinquish some control over the handling of legal documents and correspondence, which may not align with your preferences
Dependent on a third party, which could pose challenges if they're unavailable or unresponsive when important documents are received
We personally, didn’t hire a registered agent as we felt like the cost didn’t justify the responsibility. If you want to hire a registered agent, below are three options to consider:
Bizee - $119/year (as of April 2024)
Automatic forwarding tool
Tailored email & SMS notifications
Personalized dashboard
Free for the first year if you form your LLC with them
Northwest Registered Agent - $125/year (as of April 2024)
Same day scans, instant notifications
Privacy by Default
Business address & free mail forwarding
Free domain, website, email, and business phone
Main focus is on registered agent service (so they do it well)
LegalZoom - $249/year (as of April 2024)
Alerts when important mail is received
Emails about critical tax & annual report deadlines
Unlimited cloud storage for business documents
Covers fees if you’re switching registered agents
We recommend LegalZoom for other LLC setup services so if you plan to getting additional help it might be good to stick to one business
After selecting a registered agent, you’ll need to provide them with your business information and update your business records (Articles of Organization or Certificate of Formation).
4 Steps to Appointing a Registered Agent
Like I mentioned above, we didn’t hire a registered agent and appointed Nick to be our registered agent as we felt that the added expense wasn’t worth it. Below are the steps to appoint yourself as a registered agent:
Step 1: Determine eligibility (see above for list of requirements), but to be safe, check your state’s legal requirements
Step 2: File required forms with your state (if needed), this may involve filing online or mailing forms in. In some states this will be done when completing your Articles of Organization (covered in post 2.2.5) so complete that and determine if anything further is needed
Step 3: Update Articles of Organization (this step is only needed if you’ve already submitted these and are changing the registered agent)
Step 4: Add any documentation to your Google Drive (or location where you store business documents)Â
Download Our Project Plan Tool
In our next post 2.2.5, we’ll be covering how to set up your Articles of Organization. Don’t forget to subscribe to get access to our project plan tool for free:
The project plan will help you stay organized and on track - the file contains detailed steps with duration estimates, resource links, and contextual information in a single location.Â
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