If you’re planning to start a business, you’ll need to select a registered agent. It’s one of the first decisions you’ll make as a new small business owner. The registered agent is your company’s point of contact with the state. Let’s say the state has legal documents to deliver to your company. Those documents are sent to the company’s registered agent.
Selecting a registered agent is done in the infant stages of a business and must be regularly updated with the state. We’ll explain what a registered agent is and the responsibilities of this role.
What is a registered agent?
A registered agent is a person or an entity that accepts mail or official documents, like service of process paperwork or tax notices, on behalf of your business. All 50 states require businesses to keep a registered agent on file with the state government.
In a handful of states, a registered agent is called a resident agent or a statutory agent.
Why is this role so important?
A registered agent not only handles sensitive and confidential business information, but the person of business in this role can also provide assistance with additional chores like filing annual reports or filing other state-mandated paperwork that’s needed to remain in good standing.
Who can be a registered agent?
As a business owner, you can be your own registered agent. The owner can also appoint another employee, friend, spouse, or attorney. Most states have three basic requirements for a registered agent. Registered agent requirements are:
- Be 18 years old or older
- Have availability during normal business hours
- Have a physical street address or business address in the state (not a post office box)
You, as a business owner, can pay to use a commercial registered agent too. There are registered agent companies in every state. Their sole job is to serve as a company’s point person. You can also hire a registered agent service.
What is a registered agent service?
A professional registered agent service is a company you pay to be your official registered agent listed on the Articles of Organization.
The company will accept official mail on your behalf, which can include sensitive documents like legal notices or tax forms, for example. When these arrive, the company will scan them immediately and notify the owner immediately. Hard copies are then mailed to the owner.
Wondering about cost? Registered agent services range between $50-$500 per year. The price all depends on the number of services you utilize.
Here’s a brief look at additional services offered:
- Monitor and remind you of important dates for state filings like annual reports
- Update information kept on file with the state
- Assist you in registering with the state labor department so you can hire employees and maintaining tax compliance
- Get your federal employment identification number and your state tax identification number
Why do some people use a registered agent service?
There are many good reasons why choosing a registered agent service is the right choice for a business entity. Here’s a look at why some people opt to pay a service as opposed to holding the position themselves:
Using a professional registered agent service keeps everything running smoothly without the business owner needing to keep track of every official notice and filing deadlines. It makes it easier for the business owner to concentrate on the business itself.
A registered agent service will make sure you are in full compliance of state and federal laws. New entrepreneurs of startups may not know all of the rules and regulations while a professional registered agent would.
Since the registered agent’s physical address is public knowledge, having a professional registered agent keeps your home address private. For home-based businesses especially, this is an added safety factor.
It also provides a layer of privacy in the event the company is sued. If someone does levy a lawsuit against your company, those documents are served off-site to the registered agent service – not at your office in front of employees and customers.
A job done correctly
With a professional registered agent company, you know the job will be handled correctly and documents will be given to the right person within the company.
If you decide to appoint someone else, like a secretary, for example, there’s a chance documents could be missed or misplaced.
Those listing a person as their registered agent will need to make changes on the Articles of Organization if that person leaves the company. Using a professional registered agent company ensures that you always meet state compliance and that you won’t need to update your paperwork with the state.
Keeps compliance in multiple states
Having locations in multiple states can be complicated. Most states require a registered agent to live within the state though each state has different rules and regulations. Many registered agent services have multiple locations, so you can work with one service even if you have businesses in several different states.
Who is a registered agent service right for?
Business owners who are highly involved in running the company hands-on and don’t have time to think about paperwork or who travel a lot and can’t be served on a timely basis with forms and letters
New owners unfamiliar with state rules
Business owners who are unfamiliar with state rules for businesses or who are incapable of keeping track of all of it. It’s the registered agent’s job to make sure the company remains in good standing with the state, so an understanding of state-required forms and deadlines is a must.
Owners with multi-state businesses
Getting a registered agent service is also a solid choice for those opening up in several states to ensure everything remains consistent within the company across the country.
What additional services does a registered agent service offer?
We mentioned a quick list of additional services earlier, but registered agent services do provide a wealth of additional business-related services that your company could grow into. Here’s a look at additional services provided:
Providing ideas for a business name
Many registered agent services have business name generators so your business can have a unique name no matter what states it’s located in. All states require a distinguishable business name and a business name generator can help you pick one.
Providing access to a brand name generator
You need to start setting your brand from the beginning so your company is remembered. Registered agent companies sometimes have a brand name generator that you assist with naming and building your brand.
Quick setup of your company
A registered agent service company can set up your business for you and can get it done faster than you. Essentially, that means the registered agent service will file your business formation documents; either Articles of Organization or Articles of Incorporation, depending on the type of business you plan to start.
To do so, a business owner answers a set of questions online and the company takes the responses, populates the state-mandated documents online, and sends them in for you. Many registered agent services offer this service for free, with the exception of the filing fee, if you decide to use them as your registered agent.
Help through start-up
Many business owners have no idea what it takes to start a business. A registered agent service can navigate you through the process. They’re there to answer questions and provide direction forms that do and don’t need to be sent to the state.
What’s the average cost of a registered agent service?
The cost of using a registered agent service varies from company to company and depends on the extent of features you use. Using one to start your business or to have agents in several states will cost more. The general cost ranges from $50 to $500 yearly.
Minimal services, which is simply to accept important documents and notify owners of their arrival, is the cheapest option.
If a registered agent changes, how do you update the state?
Those who need to make changes during the year need to file an amendment to your Articles of Organization. There is an additional fee to file this. Typically, the fee is small from $50 to $200. Some states may require a larger fee as fees are set by the state and can vary.
You can also update changes when your annual report is due, in most states. Usually, there isn’t any additional cost when you make changes this way.
The state you are doing business in should always have the correct name and contact information for your registered agent. This not only keeps your communication with official entities current, which makes sure you are made aware of all notices but also keeps you in good legal standing with the state government.
Find the best registered agents in your state
FAQs about starting a business
What type of business is best?
Owners can select a business structure. There are several to choose from, but sole proprietorship and LLC are two common choices. A sole prop is easy to set up. In fact, there aren’t any official documents that you need to file with the state to establish this type of business.
With an LLC, owners must file paperwork with the state and comply with annual reports. However, this form of business also provides limited liability protection, so business assets and personal assets are separate.
Does your LLC need state licenses or permits?
States require different types of licenses and permits, which can also vary by industry. You’ll need to conduct state-specific research to find out which permits are applicable to your business.
Does an LLC need state and federal tax ID numbers?
Most businesses, including a limited liability company, are required to have state and federal tax identification numbers to hire employees and pay taxes.
You can obtain these identification numbers by filing forms with the Secretary of State in your state and the IRS.
The state government issues the state identification number. The IRS issues the EIN, or federal employment identification number, so your business can pay taxes.
Do states often require an operating agreement from a new business?
Businesses should create an operating agreement even though no state requires a business to submit it during the registration process.
An operating agreement outlines the business’ rules, regulations, and provisions that make up its financial and functional decisions. It is considered to be key in forming an LLC. All members of the company sign it and it becomes an official binding contract.
An operating agreement can be drafted by an attorney or you can use a basic template found online and customize it.
What should an operating agreement include?
Good LLC operating agreements are usually short and address five key points. These include the percentage of the ownership and how profits will be distributed, how your company management structures operations and each member’s roles and responsibilities, the process for making decisions, and how a member can exit the company if they choose.
The final key area of the agreement is the creation of an exit plan in case you want to close the business.
What’s an annual report?
An annual report is a way for businesses to keep up with or make changes to their Articles of Organization filed with the state. Filing it is required in most states and it almost always has a fee attached to it. Fees vary by state.
When are annual reports due?
Some states have different filing times. Some are annual while others are filed every two or three years. Some are filed at the end of a quarter the business was formed and others have one set time for all businesses to file.
What happens if you don’t file an annual report?
Your compliance is listed publicly on the Secretary of State webpage. Failure to file a timely annual report, and pay the filing fee, will result in the state listing your business as non-compliant and could lead to the state administratively dissolving your business.
What are the best features to look for in a registered agent service?
The best quality of a registered agent service is the ability to provide immediate document delivery and electronic notifications that are customizable in a foolproof way. This means the agent has both state-of-art software as well as hands-on service.
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