Last Updated on August 13, 2020
When starting a new business, looking for ways to save money should always be considered carefully. In some situations, saving money upfront is not always worth it. And bootstrapping today could cost you hundreds of thousands of dollars down the road.
Yes, acting as your LLC’s registered agent (called a statutory agent or resident agent in some states) is cheaper than hiring a professional service provider today. But it may not be feasible or as budget-friendly as you might think.
If you’re wondering if you can and should act as your own registered agent, you’re in the right place. Keep reading to learn more about what a registered agent is, an agent’s responsibilities, who can be one, and why you shouldn’t do it alone.
Let’s dive in!
What Is an LLC Registered Agent?
When creating a new Limited Liability Company with the Secretary of State (or similarly named governmental agency), one question you will come across in the Articles of Organization (the LLC business formation document) is who will the registered agent be and the physical street address of the registered office. The registered office can be, but isn’t required to be the same address as the address of the business.
The appointment of the registered agent is important because when someone files a legal action against your LLC, that person or entity must serve you proper notice in a timely manner. While it isn’t a problem to find the appropriate contact in a single-member LLC, having a single point of contact makes it easier to get important legal documents (officially known as the service of process (SOP)) to the correct person in larger organizations.
A registered agent, or an agent for service of process, receives delivery of legal documents from third parties (commonly known as a process server) and other types of communication from your state government. But those aren’t the only duties of a registered agent.
They also accept various forms of important notices and official notices on behalf of the business such as:
- Annual reporting and tax forms
- Subpoenas or court summons
- Wage garnishment issuances
- Other important documents and legal notices
Who Can Be Your Registered Agent?
You can appoint either an individual or a business entity to act as your registered agent. With that said, there are several requirements this person or entity has to meet to qualify as your registered agent. These requirements include:
- A physical address in the state of formation (no PO boxes or rented mailboxes)
- Availability at the registered office address during normal business hours to accept service of process
- The ability to accept these communications and forward them on to you
- 18+ years of age (if you appoint an individual)
By law, you have to have a registered agent in the state you register your LLC. This position is appointed in your Articles of Organization when you register your business. Furthermore, if you incorporate your business in multiple states, you have to have a registered agent (with a physical address in that state) in every state you file.
Note: If you’ve already incorporated your LLC, you can change your registered agent by filing the necessary forms required by the state(s) you filed in.
Can I Act as My Own Registered Agent?
By law, your LLC cannot act as your registered agent. But you can appoint an individual associated with your LLC as your registered agent as long as they meet the requirements set forth by your state.
So, yes. You can appoint:
- A family member
- An employee
- Another member
- A stakeholder
- Or an officer
Risks of Being Your Own Registered Agent
Appointing yourself or someone else associated with your LLC puts a lot of pressure and responsibility on the person you designate (on top of their other duties).
You can save money acting as your registered agent, but just because you CAN doesn’t mean you should.
Now, let’s talk about why acting as your LLC’s registered agent is a risky move.
A Registered Agent’s Address is a matter of Public Record.
All registered agents are required to use a physical address as a post office box isn’t allowed to be used.
Furthermore, this address is public information when you become a registered agent.
And if you don’t have a permanent address for your business, you’re stuck using your home address. This removes the sense of privacy you have because anyone can find out where you live. It also eliminates the level of separation you have between you and your LLC.
You Have to Be Present During Standard Business Hours
As a registered agent, state laws say you have to be physically present at the address you registered with during regular business hours every day. This means you technically can’t:
- Go on vacation
- Visit a client offsite
- Head to a personal appointment
- Go on a business trip
- Do a wide variety of other things during normal business hours
While many people don’t stick to this, it is against the rules and there is a small chance of having an issue. Leaving your registered address for any reason during standard business hours puts your small business at risk of missing crucial documents or losing your good standing status with the state.
You Could Miss an Important Legal Document or Deadline
As an entrepreneur, you have a lot on your plate. And odds are, you already work more than a typical 40-hour week. Adding more responsibility on top of that puts you in a risky situation.
What happens if you misplace a document or forget to send it to the right person at your company? At the time, it may not seem like a big deal. But you could face serious consequences or end up paying tens of thousands of dollars to fix your (entirely human) mistake.
Furthermore, you’re in charge of remembering when to file annual compliance reports and your taxes. Missing those deadlines could mean losing your LLC incorporation or paying costly late fees.
Your Customers or Employees Could See You Get Served
Acting as your LLC’s registered agent means there’s a possibility of being served at your place of business or home, depending on which address you use. This opens the door for public scrutiny from the always-watching eye of your customers, employees, and neighbors.
Benefits of Using a Registered Agent Service
Rather than appointing yourself or someone you know, you can hire a professional registered agent service provider instead. Aside from removing yourself from the equation, hiring a professional agent also means:
- Keeping your home address private
- Reducing junk mail
- Keeping track of important due dates
- Avoiding public service of process
- Receiving regular alerts for annual compliance/tax deadlines
- Prompt document delivery and notifications
- An extra layer of separation between you and your LLC
- Professional management by a trained registered agent provider
- Peace of mind
I highly recommend looking into a commercial registered agent service like Northwest Registered Agent or IncFile as a way to protect yourself and your business. If you haven’t formed your LLC yet, LLC registration service providers offer free registered agent services for the first year, but even the annual cost is only around $100-$125 annually. Check out our reviews of popular LLC formation services (plus which ones to avoid) to start forming your LLC today!