Deciding whether to act as your own registered agent for your LLC can be a complex decision. As experienced financial advisors, we’ve guided numerous small business owners through this process.
We’ve seen the impact of this choice on businesses, and we’re here to help you navigate the options available.
There are important considerations to weigh, such as the nature of legal documents, the need for regular business hours, and the value of a professional registered agent service.
In this article, we’ll delve into these factors to assist you in making an informed decision.
- Deciding whether to be your own LLC registered agent involves considering factors like document handling, privacy, and cost savings.
- Being your own registered agent has advantages, such as cost savings and more control, but it also means managing increased mail and compliance responsibilities.
- Hiring a commercial registered agent service can reduce paperwork, maintain privacy, ensure a consistent address, and manage activities across multiple states, but comes with an annual cost.
Should You Act as Your Own Registered Agent?
Acting as your own registered agent means handling legal and official documents for your business. While cost-effective, it demands availability during business hours, offers less privacy, and might lead to missed deadlines.
So, What is a Registered Agent Exactly?
In the world of limited liability companies, the role of a registered agent is often misunderstood. A registered agent, sometimes referred to as a statutory agent, is a key player in your business entity’s legal structure.
They serve as the official point of contact between your company and the state, ensuring the timely receipt and response to important notices, such as annual reports and service of process.
However, our hands-on exploration with advising LLCs illuminates the complexities involved in this role. A registered agent must maintain normal business hours at a physical address within the state where your business is conducting business.
This physical location, also known as the registered agent address, is where all official notices are sent. It is also listed on public records, meaning it could attract junk mail. However, the agent’s primary function is to accept service of legal notices on your business’s behalf.
What are the Advantages of Acting as Your Own Registered Agent?
As business owners ourselves, we’re constantly seeking ways to streamline processes and cut costs. One area to consider is whether to act as your own registered agent for your limited liability company.
Here, we discuss two significant advantages of serving as your own registered agent:
- Cost Savings: When we acted as our own registered agents, we found significant cost savings. Hiring a registered agent service can add extra expenses, which according to this study by the U.S. Chamber of Commerce, can slow down your business’s development during the first years. By acting as your own registered agent, these funds can be reallocated towards other aspects of your business. However, there are LLC formation companies that offer 1 free year of registered agent with their LLC filing packages.
- Greater Control Over Responsibilities: As our own registered agents, we had more control over our responsibilities. This meant direct receipt of important documents such as service of process and franchise tax forms, ensuring they were timely addressed.
Disadvantages of Serving as Your Own Registered Agent?
While there can be tempting cost savings in acting as your own registered agent for your LLC, we must warn you, based on our comprehensive understanding, that it can also present certain challenges.
- Dealing with Higher Mail Influx: As a registered agent, you will be responsible for receiving and managing all the legal mail for your LLC. This can lead to a significant increase in mail volume, which can be overwhelming and time-consuming if you’re not naturally organized.
- Responsibilities for Address Changes: Should you decide to move to a different office address, or even just change your home address, all your business entities must be notified, and you might need to file an address change with the state. This can be burdensome and could lead to compliance issues if not handled timely.
- Complying with Standard Business Hours: As your company’s registered agent, you are required by law to be available at the registered address during standard working hours. This might interfere with other business activities or personal commitments you may have.
- Requirement for Agents in Various States: If your LLC operates in multiple states, you need a registered agent in each of those states. This can pose a challenge if you are operating from one location.
What are the Benefits of Using a Third-Party Registered Agent?
While some business owners may opt to save money by taking on the role themselves, there are numerous benefits to hiring a registered agent service that can help streamline your business operations and offer peace of mind.
1. Minimizes Additional Paperwork
Owning a business inevitably means dealing with paperwork. However, from our in-depth research, a professional registered agent can significantly reduce this administrative burden.
They can receive service of process, and handle important legal document delivery, renewal reminders, and correspondence with state law entities, freeing up your time to focus on the core operations of your business.
2. Guarantees Privacy and Security
Privacy is a prime concern for many business owners. A registered agent’s address becomes a public record, which could mean exposing your personal address if you take on this role.
Hiring a professional can provide a buffer, protecting your privacy and ensuring the security of sensitive information. This way, your home address doesn’t have to be listed as your business location on public record.
3. Sustains a Steady Physical Address
A registered agent must have a physical street address in the same state where the business entity is registered. However, if you’re planning to move your business or work remotely, keeping a steady address can be challenging.
By hiring a commercial registered agent, you maintain a consistent address, ensuring timely receipt and handling of documents.
4. Efficiently Oversees Business Hours
A registered agent must be available during regular business hours to accept notices and other legal service documents. If you, as the business owner, travel frequently or have inconsistent office hours, you might risk missing important documents.
Professional registered agent services offer the convenience of maintaining consistent opening and closing hours to ensure prompt receipt of crucial correspondence.
5. Manages Activities across Numerous States
If your LLC operates in many states, it might be challenging to keep track of all the state laws and requirements. A professional registered agent service can help manage this, ensuring your business stays in good standing across all states.
Related Article: How to Change an LLC Registered Agent
How Much Does It Cost to Hire a Registered Agent Service?
The cost of registered agent services can vary widely, depending largely on the state and the complexity of your business needs. However, our thorough investigation into the matter shows that most small businesses can expect to pay between $100 and $300 annually for these services.
So, Is Acting as Your Own Registered Agent a Good Idea?
We’ve successfully guided many businesses in making this decision, and it’s clear that the answer depends on various factors. If you’re on a tight budget and operate in one state only, acting as your own registered agent can be a great option.
However, in our experience, hiring a listed registered agent provides a sense of security, relieving you from the hassle of always being on alert for important notifications.
We hope this article has provided you with valuable insights to make an informed decision. If you opt to appoint a professional registered agent, our article “Best Registered Agent Services” is a helpful resource. It provides an in-depth analysis of various options, reviewed by our expert team.
Ultimately, the choice is yours. Whether you decide to be your own registered agent or hire a registered agent service, make sure it aligns with your business goals, budget, and capacity to handle the responsibilities.