Risks of Being Your Own Registered Agent

Denise Elizabeth P
Senior Financial Editor & Contributor
Last Updated: June 8, 2021
Date Published: June 8, 2021

One very important part of forming your business is designating a registered agent.

Most business entities formed in the United States require a registered agent to be a reliable means of contact for your company.

There are several options to choose from when appointing a registered agent – you can hire a registered agent service, have your attorney or lawyer be your registered agent, designate an employee as your registered agent, or be your own registered agent.

In this article we are going to talk about the different ways to appoint a registered agent and why being your own registered agent isn’t always the best idea.

Let’s first define the role of a registered agent and then discuss the different registered agent options.

LLC vs Sole Proprietorship

What is a Registered Agent?

A registered agent is simply a person or entity appointed to accept any official mail or important documents on behalf of your business.

Examples of these documents include service of process for lawsuits, compliance reminders, annual reports and filing notices, tax forms, and documents from your Secretary of State’s office.

The registered agent will often be responsible for keeping track of any deadlines or due dates.

There are several options for appointing a registered agent for your business:

  • Designate yourself as your company’s registered agent
  • Have a friend or family member be your registered gent
  • Assign the role to one of your employees
  • Assign the role to your lawyer or accountant (this can be very expensive)
  • Use a registered agent service (this is our most recommended option and is often the most affordable option)

Every U.S. state requires that corporations, limited liability companies (LLCs), and partnerships have a registered agent.

Other names for a registered agent include: resident agent, statutory agent, or agent for service of process.

You cannot form a corporation, LLC or partnership without a registered agent, and you will not be compliant with state government requirements if you do not maintain an active registered agent as long as your business is active.

In order to be a registered agent you need to meet the following criteria:

  • Be 18 years or older
  • Have a physical address in the state where the business is formed
  • Be available, in person, during normal business hours

Risks of Being Your Own Registered Agent

Risks of being your own registered agent

While legally you are allowed to be your own registered agent, there are some risks that you should consider before making this decision.

Here are some of the risks of being your own registered agent:

Be Available During All Normal Business Hours

As mentioned above, a registered agent but be available during normal business hours on all business days.

Normal business hours are usually 8am – 4pm or 9am – 5pm.

Being your own registered agent means that you will need to be at your place of business during normal business hours every Monday – Friday, without exception.

Running errands, lunch meetings, client meetings away from the office and travel is more limited if you are your own registered agent.

Registered agents need to be available to receive document deliveries, and in most cases, these documents will not be delivered if you are not there to sign for them.

This is a problem if you miss an important notice or renewal that needs your immediate attention.

Worse case scenario, a lawsuit could proceed against your company without you even knowing.

You can Only Conduct Business in your Home State

Registered agents need to be registered in each state that the business is operating in.

If you are serving as your own registered agent, you will only be able to conduct business in the state in which you live.

If you live in Oregon, but have a business in California, you will not be able to be your own registered agent unless you move to California and are physically present in your office.

In other words, you will only be able to serve as your own registered agent in your home state, because you cannot be in two places at once.

If you plan on having locations in multiple states, you will need to hire a professional registered agent service with offices in all 50 states that can handle your expansion without having to find new registered agents.

Your Address will be Public Record

If you are operating a home-based business and serving as your own registered agent, your home address will be made available to the public through a simple google search of your name or business name.

This obviously comes with some major privacy concerns and potential safety concerns.

If you value privacy, you will want to reconsider being your own registered agent.

Learn more about this here.

You can be Served in front of Customer and Employees

Anytime a lawsuit is filed, the person being sued will be served so that they are made aware of the lawsuit against them.

If you serve as your own registered agent, you will be served directly and risk being served in front of customer and employees.

In order to avoid this scenario, you should hire a registered agent service or outsource your registered agent service to someone else.

Registered Agent Service

ZenBusiness vs Legalzoom

As you can see, there are several valid reasons why you should not serve as your own registered agent.

If you would like to avoid all of these risks, then we highly recommend hiring a registered agent service.

A Registered Agent Service is basically a business entity that acts as your registered agent and receives important tax and legal documents on behalf of LLCs and Corporations.

This service is not free and you usually have to pay an annual fee for a registered agent service.

Although there is an annual fee, many businesses still choose to use a registered agent service rather than being their own registered agent.

There are many benefits to designating someone else to serve as a registered agent for your LLC or corporation, more specifically a registered agent service that specializes in just that, being a registered agent.

These registered agent service providers know the ins and out of being a registered agent and understand the annual deadlines as well as any legal documents that may come their way.

They provide knowledge, compliance with the law, privacy, flexibility, and peace of mind in knowing you won’t miss any important documents or deadlines.

Registered agents help businesses stay up-to-date on state requirements by sending regular reminders, and sometimes filings things like annual report filings and other official government notifications.

Registered agent services will also keep copies of your corporate documents.

In case of theft, natural disaster, or other unexpected losses, you will have a backup of all your important business and legal documents.

Hiring your accountant or attorney costs more than double on average, making a registered agent service the best choice.

Best Registered Agent Service

There are several registered agent service providers to choose from and for a complete list, read our best registered agent service guide here.

Here is a quick overview of our Top Rated registered agent service providers:

Northwest Registered Agent

 

For $125/year, you can get a registered agent through Northwest Registered Agent.

They are also the only nationally registered agent service that locally scans every document they receive on your behalf.

Other highlights include their excellent customer support as well as free registered agent service for a year with their business formation package.

Incfile

incfile-logo

Incfile is one of the most popular business formation service for their affordable formation packages and free registered agent service.

They offer a free LLC formation service that is pretty awesome if you need to form your business and get a registered agent service.

Registered agent service on its own starts at $119/year, which is a very competitive price as well.

Zen Business

ZenBusiness has one of the most affordable registered agent service out there at just $99/year.

Their online registered agent service application is so simple and quick, you can do it yourself.

They can also form your business if you still need to do that and their customer software is awesome for tracking annual reports and deadlines.

LegalZoom

Another popular option is LegalZoom and one added bonus is that they offer affordable legal advice if that is something you are also needing.

They are not as affordable but are an option if you anticipate the need for legal advice and help.

If you just need to form your business and/or get a registered agent, the three options mentioned above are going to be much more affordable.

Conclusion

As you can see, you are definitely allowed to serve as your own registered agent, there is nothing that says it is not allowed legally.

However, being your own registered agent does post some risks that could be avoided by simply using a registered agent service.

Serving your as your own registered agent really only saves you about $10/month but it comes with more risk than reward.

If you haven’t yet formed your business, keep in mind that many formation services offer free registered agent service for a year with the formation of your business.

You can learn more about that here!