“Can I be my own registered agent?” is one of the many important questions new businesses ask themselves, and while the answer is “yes,” you will need to properly understand what’s required of you. A registered agent is someone you appoint at the registered address of your business to accept official mail and service of process on the business’s behalf. You can appoint a person or even an entity, like your business itself.
However, if you are to fulfill the position yourself, there are some key factors you need to take into consideration. When forming an LLC, having a registered agent is required by law. The law doesn’t state that you can’t yourself fill the position when you start your business. We will look at why this position is required and answer the question of whether you can be your own agent and why you should or shouldn’t hire one.
Why States Require Businesses To Have Registered Agents
When you start an LLC in the states, it’s required by law to have a registered agent and a registered address. This law was put into effect because the government needed to have a way in which to reach the business reliably.
When a lawsuit is filed against a business, the business needs to receive official notice of the lawsuit. Otherwise, it cannot go further in court. To ensure that all businesses can be legally and officially notified of such lawsuits, they need to have a registered address and agent where they can have the notice delivered.
When a business grows to have thousands of employees, they might try to hide behind those numbers and claim they never received the notice to delay the court proceedings. The government implemented this requirement for businesses to ensure the business can always be reached and has no excuse for not having received any official notices and service of process.
Why Businesses Hire Registered Agents
Many businesses prefer to hire an agent to accept their official mail and service of process. This is especially common in bigger businesses or businesses that don’t have a physical store or headquarters.
If you start an LLC that is a web-based business with no physical headquarters, hiring a person to fill the role also means that you can list the agent’s address or office space as your registered address. You don’t need to list your home address or rent a space for a headquarters that will scarcely be used. This protects your privacy and fulfills the requirement of an agent without extra paperwork or unnecessary expenses on your part.
Another reason to hire an agent is if you have working hours outside the usual 9-5. While your business might not require you to be in the office around the clock, the agent accepting official mailneeds to be in the office during regular working hours. That’s a requirement to ensure the government can reach you and deliver any notices.
Furthermore, your business needs to be registered with each state it has a branch in. That also means that in every state you have a business location, you need a registered address and agent. In this case, it might be better to use services that appoint such a person in the state so that the different agents are all managed by one organization. You will also have access to all critical business notices in one place.
Can I Be My Own Registered Agent?
When forming an LLC, the question frequently emerges: “Can I be my own registered agent?”. The straightforward answer is yes, you can fulfill the position yourself with no legal problems. When they first start up, many small businesses elect to be their own agent, especially if the business already has a registered address.
Many companies prefer not to deal with the hassle of the paperwork themselves. Still, others would prefer to save some money, especially if it’s a new company starting up from the ground. There are no legal requirements that make it illegal to be your own agent, so technically, nothing stops you from listing your name or the name of your entity.
However, before you do so, make sure you consider what it would mean to fulfill this position yourself. There are many aspects to consider when you start an LLC, and taking on the responsibility of this role might add more to your plate than is needed.
The Benefits Of Acting As Your Own Registered Agent
While there are some benefits to being your own agent, there are also some drawbacks to note. We’ll examine some of the top benefits and the risks of acting as your business’s agent. We’ll also consider the top three benefits and risks of acting as your own agent.
Increased Privacy
Filling the position yourself ensures only you have access to confidential information. It keeps the possibility of a leak between your employees or to other competitors low and ensures you have complete control over the flow of information. Since you’ll personally accept any service of process or official mail, no one else will view those documents unless you want them to.
More Affordable
While there are many affordable agent services, it’s still an extra expense that you can cut if you’re building your business from the ground up. It means you won’t have to pay any fees for the service, and it won’t be necessary to appoint someone new on your payroll for the position.
Convenience
If you run a small business, it’s often an unnecessary expense to put someone on your payroll to simply accept any notices when you can easily do so yourself. This is especially true if you own a business that operates at the registered address where you are present during business hours in any case.
What Are The Risks Of Being Your Own Registered Agent?
If you want to be your own agent, there are some risks you need to consider. The risks of being your own registered agent are not only to yourself but also to your company.
The most simple risk with some of the most significant consequences involves the potential of missing a delivery. You need to be present at your registered address during all business hours. If you step out for lunch and miss a notice being served, it can mean, from a legal perspective, that you didn’t respond promptly to the requirements of the notice. This could result in you automatically losing a lawsuit, since you were never present in court.
Another risk involves your privacy. When you’re the business’ official agent, and primarily if you operate your business out of your home, your address will be made a public record as the business’s registered address.
It also risks limiting your business to your state of residence. To expand your business to other states, you need an agent in each state, which isn’t possible if you don’t use a service or appoint another person.
Another, more social risk, is that you’ll most likely be served at work. This means if someone files a lawsuit against you, the notice can be delivered while there are customers and employees around to see it, which is not ideal for the reputation of your business.
Conclusion
From a legal perspective, the simple answer to “Can I be my own registered agent?” is “yes, it’s possible to fulfill the position yourself.” There are, however, some vital factors business owners should consider. These factors include the type of business, the business’ growth, and what levels of privacy you’re aiming for. Know the benefits and risks of fulfilling the role yourself when forming an LLC and the legal implications of doing so.