Starting a new business is both exciting and stressful — you are stepping out into something new and unknown, and you also have what may seem like an endless list of legal regulations and requirements to check off.
While every state may have some different rules for businesses, there is a short list of absolute requirements that any business in any state must adhere to:
- File the Articles of Incorporation (C-corp)/Articles of Operation (LLC)
- Register for an EIN (Employer Identification Number)
- Appoint a Registered Agent
Every business entity, regardless if it's an LLC, a traditional corporation, or a non-profit organization, must appoint a registered agent in order to legally operate in any state.
What is a registered agent?
A registered agent is a person or organization that is authorized to receive service of process notices, official government correspondence, and any other compliance-related documentation on behalf of the business.
What are the requirements be registered agent?
A registered agent must physically live in the state where the business is registered and have a physical address. States do not allow a P.O. Box to be submitted as the agent's address.
Additionally, the registered agent must be available during normal business hours — this may vary from state to state, but is generally between 9am and 5pm.
Why is a registered agent necessary?
Aside from being required by all state governments, a registered agent is necessary because your business needs a consistent point of contact. Think of the registered agent as a specific type of personal assistant to keep your business up-to-date on any compliance requirements and legal issues.
Can you be your own registered agent?
You are legally allowed to be your own registered agent as long as you meet the residency and address requirements; however, there are a number of reasons why you should choose another person or organization instead — see the list below:
All states require that the name and contact information of the registered agent be publicly accessible. As the business owner, you may not wish to have your contact information made public, which is what would happen if you chose to be the registered agent for your business.
Suppose your business has grown to the point that you are branching out into other states or you live in one state and have incorporated through another (like Delaware or Nevada) — you must be a legal resident with a physical address in said state in order to be the registered agent.
Please Note: If you choose to open businesses in other states, you must have a registered agent for each state.
Odd Work Hours
Not every business owner is a “9-5” kind of person — you may be more of a night owl who doesn't like to start your work day before 10am and go into the evening hours. Or you may own a bakery and your day begins at 3am.
Even though many businesses function on different hours, state governments require registered agents to be available between 9am and 5pm during weekdays. Trying to be the registered agent for your business may negatively impact your workflow.
Many small businesses begin at home. In fact, according to recent data by the Small Business Administration, at least 50% of small businesses incorporated in 2018 for home-based. Being the registered agent for your business not only makes your personal information public, but you may end up with process servers and other compliance officials showing up at your front door.
You may find yourself in a similar bind if you have a mobile business, like catering or pet grooming or auto detailing. Since your company is literally consistently in motion, Your registered agent is a stationary point of contact for the government and the courts.
No Official Office
The state requirement for the registered agent is that the party have a physical address — a P.O. Box is not acceptable. If your company does not yet have a brick-and-mortar location, the registered agent’s contact is the anchor to the government. Especially if your business does not have a stationary location, being the registered agent means giving out your personal contact information.
Honorable Mention — Not Compliance Savvy
Experienced registered agents already know a lot about state and federal regulations and red tape. if you don't already know this information and don't have time to research, you can end up costing your business quite a bit.
The position of the registered agent is both necessary and vital for your business. Consider choosing a person with prior experience or an organization authorized to be a registered agent in your state. Either way, not taking on the responsibilities of the registered agent for yourself means that you are free to focus on making your business successful.