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Why Do I Need a Registered Agent Service for My LLC?

Nadav Shemer
Why Do I Need a Registered Agent Service for My LLC?
DIY solutions can be tempting for LLC owners, especially in the early days before revenue starts flowing in. However, there are instances where shortcuts pose risks, like acting as your own registered agent. In this article, we explain why it’s so important to use a registered agent service for your LLC – and the potential consequences if you don’t.

What is a Registered Agent Service?

A registered agent is a business or individual designated to receive correspondence from the state, such as a summons, subpoena, or notification about taxes, on behalf of a business entity such as an LLC or corporation. In all 50 states, an LLC doing business in the state is required to maintain a registered agent with a physical address in the state. Failure to meet this obligation can result in penalties. 

Technically, you can list yourself or an employee/associate/relative/friend as the registered agent for your business, using a home or business address in the state. However, it is generally advisable to hire a third party – known as a registered agent service – for the role.

Top 7 Reasons to Use a Registered Agent Service for Your LLC

1. You need a registered agent in every state you do business

You only need to incorporate in one state to create an LLC. However, to do business in other states, you must register as a foreign LLC in every one of those states. By law, you are required to maintain a registered agent in every state in which you do business. If your LLC is registered to do business in 10 states, then you must maintain registered agents with local addresses in all 10 states. The simplest way to do this is to hire a registered agent service.

2. Using a third party protects your privacy

Anyone who searches your LLC can see the address of your registered agent. This means everyone from spam marketers to disgruntled customers can send you mail. Using a registered agent service prevents members of the public from seeing your home or office address. When your third-party registered agent receives mail addressed on behalf of your LLC, they forward it to you without the sender ever finding out your personal address.

3. A registered agent services protects you from potential embarrassment

As an LLC owner, there’s no knowing when a customer or service provider might try to sue you. If you serve as your own registered agent, you put yourself at risk of being served in front of clients or employees. When you hire a third party for the role, your registered agent service receives all correspondence and discreetly forwards you anything sensitive.

4. You must keep your LLC’s registered address up-to-date

If you register your company under your home or office address, then you are obligated to update your registered agent details every time you move home or office. Using a registered agent service means you never have to think about changing your address again. Moving to a new home or office? No problem, your third-party registered agent service is still at the same address.

5. Your registered agent must be available during office hours

A registered agent must be able to accept physical correspondence during business hours – yes, even during a global pandemic. If your office is ever empty during the day, then it’s a big mistake to nominate yourself as the registered agent. One of the benefits of hiring a reliable registered agent service is that they’re always there to receive important state correspondence during work hours. 

6. You prefer to focus on growing your business

Running an LLC is incredibly time-intensive, even without accounting for admin tasks. Any time you can outsource something cheaply, you should. A third-party registered agent service takes menial tasks off your hands, giving you more time to focus on growing your business.

7. Failing to maintain a registered agent can lead to serious penalties

In all 50 states, failing to maintain a registered agent can lead to various penalties. These penalties may include: 

  • Default judgment. If nobody is physically present at your registered address to be served with a lawsuit, the court may issue a default judgment against you, which you are required to pay.
  • Losing your business’s good standing. This can make it difficult for your LLC to obtain financing, file lawsuits, or register in other states. 
  • Financial penalties. Some states impose fines on LLCs that fail to maintain a registered agent.
  • Dissolution. The worst-case scenario is that the state dissolves your business – making you personally liable to creditors.

How Do I Find a Registered Agent Service?

Like most things these days, the best way of finding a service is to go online. There are two ways of hiring an online registered agent service. The first way is to find a dedicated registered agent service. The alternative is to use what’s known as an online legal services provider. This is a service provider that helps with all the red tape of starting a business – from appointing a registered agent to other tasks like creating an LLC, obtaining an employer ID number to filing annual reports.

When you use a legal services provider to form an LLC, you may be able to get a registered agent service for free for the first year. After that, it can cost around $50-100 per year to maintain a registered agent in one state (and more if you need registered agent services in multiple states). The best legal services providers have registered agents in all 50 states, so you just pay for however many states you need.

Nadav Shemer
Nadav Shemer specializes in business, tech, and energy, with a background in financial journalism, hi-tech and startups. He writes for top10.com where he discusses the latest innovations in financial services and products.