Most states require newly incorporated small businesses to designate a registered agent for their company.
What is a registered agent? Often abbreviated as RA, a registered agent acts as the point of contact between a small business and its state of formation. They accept legal documents on behalf of the business and organize the materials. Then, a registered agent will deliver the paperwork in a confidential and timely manner. This ensures small business owners receive these official documents and may respond to them. A registered agent may be a person, like the owner of a business. A third-party service may also be designated as a registered agent.
Can an entrepreneur act as their own registered agent? Yes! Prior to assuming the designation, however, it is important to know about the role’s requirements. If you feel ready to assume the following responsibilities, you may act as a registered agent on behalf of your business.
Registered agents must be physically available.
Being physically available has a few meanings for individuals acting as registered agents.
First, you must be a resident of the state where the business conducts its operations. If a business incorporated in and does business out of California, for example, the acting registered agent must be a California resident. They should be able to show proof of this residency. This includes having a street address in the same state. Using a P.O. Box as a registered agent street address is not accepted — regardless of whether you act as a registered agent or use a third-party service.
Second, a registered agent needs to be available during normal business hours. These hours are typically between Monday through Friday from 8 AM until 5 PM. This is to ensure that the registered agent accepts service of process. If you find that your schedule tends to be busy and does not allow for much time at your designated address, you may decide to work with a third-party RA.
Registered agents need to be organized.
There’s a lot of paperwork to collect when you act as the primary communication between a small business and the state! Some of these documents may be renewal notices. Others may require deadlines for paying fees. Each piece of mail a registered agent receives is important to a small business. Therefore, it’s critical that a registered agent has excellent organization skills.
If you struggle to stay organized, you may reach out to a third-party RA for extra assistance. Entrepreneurs that are incredibly organized, however, understand the importance that this skill plays for a small business. Organizing documents means making sure nothing important falls through the cracks. It also ensures small business owners are able to respond in a timely fashion and maintain good standing with the state. Good standing means a small business has met its compliance requirements with its state of formation. If a business becomes disorganized and begins to submit payments late or returns annual maintenance documents after deadlines, there is a chance it could fall into bad standing — and even be involuntarily dissolved by the state.
Registered agents are the contact for sensitive matters.
One of the few downsides of acting as your own registered agent is that an RA may receive paperwork that relates to sensitive matters. Some of these may include a lawsuit or summons.
If you work from home and your business address is the same as your home address, then you will not need to risk the concern that a guest could stop by and deliver embarrassing paperwork. However, the same cannot be said for entrepreneurs with brick-and-mortar storefronts. Being served publicly with these types of documents could be embarrassing for the owner, especially if it happens in front of regular customers.
Owners that feel confident receiving any type of paperwork in public, and have met the additional requirements listed in this post, may be a good fit for acting as their own registered agent. However, if you find you would be embarrassed during this situation, lack physical ability to receive service of process, and aren’t incredibly organized, consider working alongside a third-party registered agent service.