Starting a New Business? Why You May Need a Registered Agent

By April Maguire

3 min read

When starting a new business—especially one with a legally separate business structure—one of the most important details is choosing a registered agent to receive legal paperwork on your behalf should the need arise.

A registered agent—also known as a resident or statutory agent—is a third party to your business that is there to ensure you don’t miss any important notices regarding the organization. They receive official documents, including service of process notices, state correspondence, tax documents and lawsuit materials on your behalf. Your registered agent should be located in the same state as your business. For businesses that don’t hold physical locations in the states where they are registered, choosing responsible agents to receive their important correspondence is a must.

Does Your Business Need a Registered Agent?

Not every business type is legally obligated to hire a registered agent to receive its official mail. Non-statutory entities (e.g. sole proprietorships and general partnerships) aren’t required to file paperwork with the state. Hence, they don’t need to hire registered agents, though they may choose to do so for security and convenience purposes.

On the other hand, professional partnerships (e.g. limited partnerships, limited liability partnerships), limited liability companies and corporations are all considered statutory entities. Because statutory entities are governed by state laws, they generally must appoint a registered agent, usually with their normal incorporation filings. Because every state has its own requirements, it’s important to read up on the laws that apply to your business.

There are various benefits associated with hiring a registered agent, even if one is not legally required to do so. Not only will your agent keep track of important documents and reducing the legal consequences and embarrassment that come with losing notices, but they also reduce your own administrative workload. And because your registered agent’s address should remain constant, you won’t have to adjust the address at which you receive correspondence.

Additionally, having a registered agent is beneficial for companies who operate in multiple states or regions. Because all important materials will come to a central location, you can feel confident that nothing will be lost in the shuffle, which allows you to focus on running a successful business.

Further, registered agents are useful for business owners who work at home and want to maintain privacy from customers and clients. Instead of supplying your personal address to contacts, you can send all communications—solicited and unsolicited—to an outside party.

Requirements for Registered Agents

Not every individual has the qualification to be a registered agent. Along with being a resident of the state in question, a prospective agent must have a physical residence in the state, not just a P.O. Box.

Additionally, agents must adhere to specific state guidelines. While some states require agents to be attorneys or CPAs, others insist that agents be employees of the company in question. States may also have policies in regard to agent age and prevent companies from appointing registered agents who are under 18 years old.

Many states have specific guidelines with regard to the availability of registered agents. Along with being available during traditional working hours (9 a.m.-5 p.m.), registered agents have to be present throughout the year to receive mail. After all, if your company receives notification of an impending lawsuit, you want to receive the documents right away.

Registered agents make life easier for businesses of all shapes and sizes. Still, if you want your agent to ease the burden on your business, you need to put care into selecting the right person for the job. Do your research regarding the specific guidelines for registered agents in your state and rest assured knowing your business is in secure hands.

To learn more about starting a business, see our video on how to choose the business structure that works for you.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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