Registered Agent: The Pros and Cons of Being Your Own

Any business that registers with their state, e.g. limited liability companies (LLCs), limited liability partnerships (LLPs), or corporations, must appoint a registered agent, sometimes called an agent of process or a statutory agent.

In this article, we explain what registered agents are, what they do, the pros and cons of being your own, and the pros and cons of hiring a company to serve as your registered agent.

What Is a Registered Agent?

A registered agent is an individual or entity that is responsible for accepting mail and official business documents on behalf of your company. This can include legal, tax, and service documents that are important to maintaining your company’s overall compliance.

Moreover, a registered agent must be available during regular business hours, every business day of the year, and is responsible for ensuring that confidential paperwork is organized efficiently.

Do I Need a Registered Agent?

For sole proprietorships, a registered agent is not required. However, any company registered with the state is required to appoint a registered agent when filing original formation paperwork, like the Articles of Organization or Articles of Incorporation.

Can You Be Your Own Registered Agent?

When considering to be your own registered agent, it’s important to keep in mind that this added responsibility can have an impact on your privacy and your flexibility in how you manage your business on a day-to-day basis.

Pros of Being Your Own Registered Agent

• Only you see confidential paperwork. Being your own registered agent means that all the important compliance documents will go straight to you. No one else will see any confidential paperwork for your business.
• It’s a simple process. Businesses that operate out of one location may be available to receive important documents without any issue. It may seem unnecessary to pay another person or company to handle documents that you could otherwise tackle on your own. Being a registered agent does not require any special training.
• Saves money. The average cost for a registered agent ranges from $50-$500 per year. Though this may seem like a small sum for some business owners, others may feel that they can make better use of those funds elsewhere.

Cons of Being Your Own Registered Agent

• Must be available every day. Likely the biggest reason that many people choose not to be their own registered agent is that you must be available every business day of the year — every single one. Meaning, you can’t take a vacation without the risk of missing a legal service
• Must report address changes. If you ever move, you have to file additional paperwork notifying the secretary of state of this change, and pay any applicable fees.
• Your information is no longer private. Another major concern for business owners is that the address of registered agents is public information — and it can’t be the same as your business office. That means unless you have another business location, your home will be the address on file as the registered agent.

Should You Hire a Registered Agent Service?

Some businesses prefer to hire a service to operate as their registered agent. These companies exist solely to handle and organize your documents. Prices may vary based on their offerings and services and how "hands-on" they are with your legal documents and reminders.

Pros of Hiring a Registered Agent

• Available every business day. Registered agent services are available every business day of the year to receive notices and forward notices to your business, e.g. legal notices, annual reports, etc.
• Offsite storage of sensitive documents. Hiring a registered agent service creates a secure, offsite location for documentation storage. Registered agents normally send copies of your notices and hold onto the original. This serves as a document backup for your company and can help you feel more secure in your day-to-day operations.
• Frees up your time. Registered agent services send reminders to help business owners stay on track with documentation, such as filing annual reports. Also, since they receive notices on your behalf, you don't have to ensure someone is around to receive a possible service.
• Provides privacy for the business owner. As previously mentioned, the address of registered agents is public information. By hiring someone else to be your registered agent, your address and phone numbers remain protected.

Cons of Hiring a Registered Agent

• Can be costly. Hiring a registered agent service can have a lasting impact on your budget. Though the cost generally isn’t too steep compared to other business expenses, some businesses may not have the hundreds of dollars that some registered agents charge.
• Removes a layer of control from the business owner. Some business owners prefer to manage their own paperwork and are comfortable with being served legal documents in a less private manner. If you feel you can better run your company with fewer people or agencies involved, then you may not like having documents delivered and managed by an outside party.

Which One is Best for Your Business?

You need to determine what works best for you and your company because there is no one size fits all solution. Hiring a registered agent removes some of the hassles while providing more flexibility for personal and business-related scheduling. It offers you peace of mind of knowing that your business paperwork is being stored safely and you won't miss a legal service.

Conversely, hiring a registered agent does mean that you will have to account for it in your budget. It also means that someone other than yourself will be handling sensitive business information.

Ultimately, there is no wrong answer. Being informed, and doing what suits your business — and your lifestyle — is the best way to manage this important decision. If you do opt for hiring a registered agent service, remember to do your due diligence — research company reviews and policies to ensure you’re finding the best opportunity possible.

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