When you start a business, you create a checklist full of items you need to cross off. Before you can open your shop, you'll need to choose a business name, possibly apply for a “business name” (DBA) name, register a trademark, apply for the appropriate business license, and find a registered agent (RA). there is.
If you're not familiar with the term “enrolled agent,” read on to understand the role of an RA in your business and learn why you need one.
What is a Registered Agent?
A registered agent serves as the state's vehicle for communicating with a corporation or limited liability company (LLC). Registered agents receive legal and official documents on behalf of your business, including franchise tax forms, annual reports, renewal notices, and legal notices ranging from court summonses to litigation documents. .
Who needs a Registered Agent?
Businesses registered with the state must have a registered agent. These businesses include corporations, LLCs, limited partnerships, and limited liability partnerships. Sole proprietorships and general partnerships are considered “common law” legal entity types and are not required to have a registered agent.
What is the value of an enrolled agent?
Enrolled agents are valuable business resources. Here are some of the benefits that registered agents offer:
- A registered agent will accept processing services. One of the most important immediate benefits of working with an RA is gaining an additional layer of privacy. For example, if someone sues your company, legal documents may be served. Rather than having this happen in front of customers and employees and potentially damaging the company's reputation, in the event of a legal action, a registered agent steps in and receives procedural documents on the company's behalf. It will be. They will receive your legal documents, organize them, and give them to you privately. This allows businesses to stay on track with administrative procedures while distancing themselves from legal action.
- The registered agent will be your point of contact. Enrolled Agents serve as convenient points of contact. The RA sends legal documents and official notifications to companies and reports whether the legal entity is in good standing with the state.
When you're working on a business case, don't discuss the case with anyone other than your attorney or post about it on social media.
Who can be a registered agent?
Typically, the registered agent is an individual (usually a company officer, director, attorney, or certified public accountant) or a third-party organization.
Enrolled Agents must:
- Must have a physical address within the state (PO boxes are not accepted)
- Ability to respond during normal business hours
- Be a resident of the state
- Be over 18 years old (for individuals)
Some business owners choose to become their own registered agent to save costs. However, if you act as her RA yourself, there may be some uncertainties, such as:
- I don't know which physical address to specify
- I am not sure if I will be available to pick up my documents during normal business hours.
- Worried about unexpected visitors coming to your residence or place of work?
Experts advise entrepreneurs to work with a third-party business RA. Third-party RAs are reliable, know what they're doing, and can help you keep track of state law changes and requirements. Note that each state has different regulations regarding who can be a registered agent. Check with your state's filing agency to ensure you meet all requirements.
If you open another business location in another state, you must designate a registered agent for that state.
What if my business does not have a registered agent?
If your business is registered as an LLC or corporation, you need a designated RA to comply with state law. Failure to maintain a registered agent can lead to a domino effect of trouble for your company, including penalties and revocation of your business' legal status.
Instead of risking everything, add “designating a registered agent” to your entrepreneur checklist early on. Peace of mind, more privacy, and increased security will give you and your small business a huge boost.
Kimberlee Leonard contributed reporting and writing to this article.