Every state requires that corporations, LLCs, and other formal business entity types (such as limited partnerships) formed or registered to do business in that state have an in-state Registered Agent.
Many states prohibit the business corporation, LLC, or other entity itself from serving as the Registered Agent, although most states will allow an individual associated with the business—like an owner, manager, employee, or its lawyer—to fill this vital role.
However, having an individual serve as Registered Agent often proves to be an unwise decision.
The following questions can help you decide whether having a professional Registered Agent makes sense for your business. If you answer “Yes” to any of these questions, you should definitely consider using a third-party Registered Agent.
1. Does your company do business in multiple states? Or, did you incorporate or form in a state other than where you do business?
Some business owners opt to form their company in a business-friendly state, such as Delaware or Nevada, even though their physical offices are located in a different state. And, businesses often expand into other states as the business grows.
When you register (a.k.a. "qualify") your company to conduct business in states other than your formation state, you must have a Registered Agent in each of those states.
The Registered Agent must have a physical address in the state. This is often referred to as a registered office. A post office box or privately rented mailbox won’t do. This often makes it difficult to find an individual to serve in each state where you must have a Registered Agent.
In contrast, some of the larger professional Registered Agent companies provide expert service in every state. And, it is easy to add additional states as your business grows.
2. Do you set your own business hours or work from multiple locations?
Your Registered Agent must be available during normal business hours at a fixed location to receive service of process (which provides notice of litigation) and other important documents, such as annual report notices from the state.
In many states, if the Registered Agent is not available to receive service of process, the papers may be left with any individual at the Registered Agent’s address. This could result in critical documents getting overlooked.
If the registered agent is unavailable, most states allow the lawsuit to proceed via substituted service. This type of service doesn’t always result in actual notice of the lawsuit which, unfortunately, can rob your business of the opportunity to defend itself.
If you set your own hours or aren’t tied to an office (for example, if you are a real estate agent or landscaper), using a professional, third-party Registered Agent helps ensure that a trained professional receives these critical documents and promptly brings them to your attention, greatly reducing the risk of missing important state or court documents.