Starting a new company is an exciting step for any new entrepreneur. One of the critical decisions in the early stages is deciding where to save money on optional services that may not be completely necessary in your early years.
Whether starting a limited liability company (LLC), corporation, or other entity type, you need to designate a registered agent when filing the Certificate of Formation or Articles of Organization.
A registered agent (RA) is the person or entity physically located within the state of registration who is ultimately responsible for accepting service of process, notices, demands, and other governmental communications on behalf of your LLC or corporation.
Naming a Registered Agent
Many companies provide registered agent services for a small annual fee, ranging from $50 to $150 per year. It is generally recommended that a business hire a third-party service provider to act as the RA for the reasons outlined below.
Some of the more popular RA providers include Northwest Registered Agent, Registered Agents, Inc., and Bizee.
However, if you need to save money and keep your operating costs low, you can personally serve as your company’s registered agent if you meet a few criteria.
Can You Serve as Your Company’s Registered Agent?
To serve as your company’s registered agent, you must physically live in or have an office in the same state where the entity is registered. If you have an out-of-state entity, you can’t appoint yourself as your company’s registered agent.
For example, assume you live in Orlando, FL, and want to open a Florida LLC. You work from your home office and don’t have a separate business location. You can appoint yourself as the registered agent and list your home address as the location because you are physically in Florida.
Alternatively, assume you live in Orlando, FL, and want to open a Wyoming LLC. You work from your home office in Florida and don’t have a separate business location in Wyoming. In this case, you cannot appoint yourself as the RA for a Wyoming LLC because you are not physically located inside the state of Wyoming. At a minimum, you must hire a third-party registered agent service provider to be the entity’s agent in Wyoming.
Drawbacks of Being A Registered Agent
Although you may be able to serve as a registered agent for your company, there are some drawbacks to accepting the role.
Limited Privacy for Personal Addresses. Being a registered agent means your address becomes part of the public record and is easily searchable online. If you’re an entrepreneur working from home, this could mean using a home address as the registered address. Note that you cannot use a P.O. Box or other virtual address as the registered agent address.
Availability Requirements. A registered agent must generally be available at the registered address during regular business hours (i.e., 9am to 5pm, Monday through Friday). If you travel frequently for work or are often on vacation, you may not be home to receive important documents. Missing important notifications, especially legal documents, could have costly repercussions for your business.
If you have a physical office location with staff available during regular business hours, you can serve as a registered agent and authorize a staff person to accept documents on your behalf.
Final Thoughts
Ultimately, the decision to use a third-party registered agent service or serve as your company’s registered agent will depend upon several factors. However, the recommendation is always to use a third-party service provider even if circumstances still allow you to serve as your company’s agent. Using a third-party company provides added privacy and greater peace of mind that documents are received.