When forming an LLC, there are 6 steps that need to be taken. One of these steps is hiring or choosing your registered agent. A registered agent is basically professional help that is responsible for handling your lawsuit files, organising your taxes and any other legal document on behalf of your business. It is a step that cannot be skipped when forming an LLC and is indeed necessary to have.
In this article we will explain the main reason as to why you need to use a registered agent and the reasons why.
Why should I use a registered agent?
A registered agent is basically your point of contact for your business. They can actually save you time on all the legal paperwork and lawsuits that need to be handled by you. It is beneficial in the long run to have an agent, since it creates a smooth flow for your business and lifts any weight off your shoulders for all the extra work that you need to do.
In order to be specific, a registered agent is responsible for handling tax forms, legal documents, official government correspondence and lawsuits. Registered agents accept the lawsuits for you and handle the service of process needed. They also discreetly notify you of your lawsuits, so that it doesn’t damage the reputation of your company.
It is required by law for agents to be responsible and assist businesses to be up to date with all the requirements needed by the state that the LLC is registered in. Examples can be to send annual reports to the government, as well as handle any other requests from the government when needed.
Another benefit of hiring an agent is that they can assist you with getting the extra professional services needed when it comes to accounting or legal help. They also have to maintain an organised system by keeping copies of all the necessary files for your business.
Can I be my own registered agent?
It is of course possible to be your own agent, but the eligibility requirements are depending on the state that you will form your LLC in. It is best to visit the site to see what your state requires for you to be a self registered agent.
The benefit of being a self registered agent is that you are saving money on fees that you would usually spend when hiring a registered agent. However, the downfall is that if you are to be served a lawsuit, it will have to be done in front of your employees or family. Another downfall is that you would need to be present at all times at your business, meaning that you cannot leave the building for any personal reasons whatsoever. The reason for this is because you cannot afford to miss any paperwork deliveries for your business. In general, you do have to be 18 and over, as well as have a physical address of where you are living in the state of where you’re applying your LLC in.
The cons of having an agent
If you are a new business owner and you want to keep your fees on a budget, it may not be so beneficial to hire a registered agent. The fees for hiring a registered agent is dependent on the state that you are in. However, if you do become a self registered agent you are also displaying your physical address as it will go on record – which means lack of privacy.
An agent can also be a liability for your company if they fail to meet any deadlines on time, which can of course be costly for your business. An example of this can be an agent failing to acknowledge you about a pending lawsuit. However, if you do become a self registered agent, you would be handling all the paperwork yourself and would have to deal with any liabilities and deadlines.