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How To Choose A Registered Agent For Your Business

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by James Gilmer, Compliance Specialist at Harbor Compliance

Choosing a registered agent for your business can create some confusion. With so many options available, how do you pick the “right” one? In the bustle of other startup considerations, it can be tempting to appoint the first registered agent that comes to mind. But, your business’s registered agent performs a vital role — now and into the future – so don’t overlook its importance.

This article will help you understand what a registered agent is and how having one can improve efficiency. We’ll provide information on choosing a reliable registered agent for your business. We’ll also give you tips for researching – and changing – your existing registered agent, as needed.

What is a registered agent?

A registered agent is your business’s officially designated point of contact to receive critical legal notices, such as lawsuits. The registered agent is listed in public records when you form or register your business entity in any state. When courts, state agencies, and process servers want to contact your business, they usually do so via the registered agent.

In any state, the registered agent has several essential responsibilities. First, it must maintain a physical address in the state and be available during all regular business hours. The registered agent must also consent to serve on behalf of the business. Finally, the agent must be able to forward time-sensitive documents it receives, with sufficient time for you to respond.

When do I need a registered agent?

Registered agents are a state-specific appointment. In any state in which you form or register your business entity, you will need to appoint a registered agent before your business filing is approved.

You’ll need a registered agent both when starting out and growing your business. For this reason alone, it’s important not to make a hasty decision, as you’ll need a registered agent that meets each state’s requirements and can help you as you grow.

Individuals vs. registered agent service companies.

Typically, registered agent service companies offer more security and convenience than individuals. Most national agent providers offer a fully-staffed physical address to receive your documents in any state. That means their address is listed in state records (not yours) and that you generally receive your documents reliably and privately.

Because your business’s registered agent simply needs a physical address in the state, there’s a natural tendency to list the business address in state records. Often, the individual designated at that address is the owner, an officer, or an employee.

Designating an individual as your registered agent may save the expense of hiring a registered agent company, but there are some notable downsides:

Privacy.

All business filings are open to public inspection. As a result, anyone seeking to get in touch with your business (for any reason) will contact you via your name and business address. We imagine most business owners would prefer not to receive service of process or legal correspondence in front of employees or clients.

Availability.

Individuals, especially business owners, maintain busy professional and personal schedules. As a result, they may not be able to meet state requirements fully. The consequences of missing a registered agent delivery are costly, up to and including default judgment.

Additionally, individuals may be able to serve as your registered agent in one state, but you’ll need an agent with an address in each state as you expand. For example, if you live in Colorado but cross into Wyoming to bid on an opportunity, you’ll need to identify a Wyoming registered agent who can meet those state-specific requirements.

Paperwork.

Registered agent appointments are legal appointments maintained with the secretary of state. Each time the agent’s information changes, a filing is needed to make the public update. This means an extra filing and fee each time an individual moves, retires, or no longer wishes to serve as your agent. Most registered agent companies don’t move nearly as often, and when they do, they handle the filings on your behalf so that you don’t forget or miss a document delivery.

Taking Action.

By now, you may realize you need to investigate who serves as your company’s registered agent. It’s easy to find and make changes once you do.

How do I look up my entity’s registered agent?

To find your company’s registered agent, all you have to do is visit your state’s corporations division website. There, you’ll be able to look up your company by name or state-issued ID number. Once you click on your company, you’ll see the current registered agent’s name and address. Repeat this process for each state in which your company is registered.

The results may surprise you. You might find an individual who is no longer with your organization, a vendor you’re no longer working with, or an address that is no longer in use. In light of COVID-19, also note if the listed address is your physical company address. If you’re working remotely like many businesses, you may need to file a change to ensure you still receive documents.

How do I file a change?

Every state requires your business to make a separate filing to change the registered agent. This change of agent filing is usually accompanied by a small fee. Most states let you file the change of registered agent form online, but a few states still require a paper form to be mailed.

The beginning of the year is also a busy time for annual report deadlines. Depending on your state, you may be able to update your registered agent on your annual report, saving you time and a second filing.

Regardless of how your state permits you to update your registered agent, you’ll need to have the new registered agent’s details available when you file. If you’re changing to a registered agent company, you’ll need to hire them first.

How do I pick a registered agent service company?

There are many registered agent service companies available. A simple web search returns dozens of results. But, while each company’s offerings may appear similar, there are a few big things to watch out for.

The biggest consideration is the annual service fee. Some companies offer free or deeply discounted service to win your business. Like any other business, registered agents have their own expenses to cover. Watch out for annual rate hikes and additional hidden fees that ultimately accompany the initial “low rate.”

On the other side of the scale are service fees exceeding $300 per year. This may be an acceptable rate for a large public corporation but may be unnecessarily high for the average small business, nonprofit, or professional service firm.

It’s also important to look at what type of technology platform the registered agent offers. Some companies still forward service of process by mail, leading to potentially costly delays. Others will have a modern portal to ensure you receive documents electronically across your states and entities. Often, the technology platform alone provides enough information for you to decide whether the company will be a reliable vendor as you grow.

As with any business relationship, personality matters. Visit the company’s website and if you’re interested in their services, give them a call. Gauge the company’s responsiveness, professionalism, and level of knowledge. Chances are, you’ll have enough information to decide within minutes.

Your company’s registered agent is more than just an address to receive documents. The right registered agent will protect your business from missed lawsuits and service of process, and will stand alongside you as you grow. By taking steps to identify your current registered agents and to make any necessary changes, you minimize risk and position your company for success.

 

*Harbor Compliance does not provide tax, financial, or legal advice. Use of our services does not create an attorney-client relationship. Harbor Compliance is not acting as your attorney and does not review information you provide to us for legal accuracy or sufficiency.

 

James Gilmer is a Compliance Specialist at Harbor Compliance, a leading provider of compliance solutions for companies of all types and sizes. James is passionate about helping nonprofit organizations leverage compliance to enhance their fundraising and program activities and educating the sector on compliance.