When running their own business, there are hundreds of things for owners to worry about. They should not have to worry about paperwork, annual reports, and other similar filings. Instead, they should be able to focus on the day-to-day operations of their business. That’s where an LLC registered agent comes into play. An LLC registered agent represents a company’s interests. Allowing an LLC registered agent to handle certain company matters could help protect certain aspects of a business.
1. What Is An LLC Registered Agent?
An LLC registered agent is a third-party that is available during business hours and who can accept notifications, correspondence, and other official documents on behalf of a business. They typically know how to handle state filings relevant to LLCs, such as
- Annual Reports
- Filing Fees
- Business Licenses
Most companies trust their LLC registered agent not only to receive legal papers but to send legal documents on behalf of the business as well. Most states require LLCs to nominate a registered agent, but it’s essential that owners choose someone who they can trust. If they do not pick someone who they can trust, they run the risk of their business dissolving because they did not take the proper steps to ensure their business remained in good standing.
2. Why Are Registered Agent Companies Beneficial?
Young business owners are likely busier than they could have ever imagined. Trying to handle the everyday operations of a business could be overwhelming. It’s not difficult to envision a scenario where an email or piece of mail from a government agency slips through the cracks.
Now, consider the fact that missing that email or letter could jeopardize a company’s ability to conduct business in that state. That’s what could happen if LLC owners fail to pay taxes or file an annual report in a timely fashion. Although requirements vary from state to state, some states only allow a grace period of a month or two for yearly reports. If owners do not file within this time, the state will move to dissolve their business immediately. Before they know it, they must pay costly fees to reinstate their business, all because they missed official correspondence.
Also consider the fact that as a business grows, owners are not merely receiving notifications from the state in which they initially registered the business. Instead, they’ll receive mail from every state in which the company is designated as an LLC. There’s a good chance that the company is required to file as an LLC in every state in which they conduct business. Owners would be flooded with mail around tax time and the deadlines for annual reports, and it would quickly become impossible to keep track of everything.
Registered agents help avoid these problems. A company is likely to have an LLC registered agent in every state in which it operates as an LLC. Government officials will direct all official correspondence to the company’s registered agent, who is then responsible for getting this information to the LLC owner. Trusting a reliable registered agent can help ensure that an LLC remains operational.
3. Advantages Of Choosing A Third-Party Agent
Most states stipulate that an owner can choose anyone to be the registered agent for their LLC, as long as the decision was voted upon by board members. It’s even possible for an employee of the company to act as the registered agent. Many young entrepreneurs are partial to choosing someone with who they are close, such as their roommate or spouse. The only real stipulations for a registered agent is that they have a physical address of residence in the state in which the LLC was registered, they are over the age of 18, and they are available during business hours to accept legal correspondence.
There is a significant advantage to hiring a third-party LLC registered agent. First and foremost, there’s a good chance that as their business grows, owners will not know people in other states who are willing to act as their registered agent. Choosing a third-party agent ensures that the LLC owner works with someone who can be trusted, even when hundreds of miles away.
Additionally, using a third-party agent ensures that the business owner can travel freely and focus on other aspects of the business. Remember that LLC registered agents must be accessible during business hours at the designated address. This means that Monday through Friday, 9 a.m. through 5 p.m., the registered agent must be at that address.
For those working from home, this may not seem like a big problem initially. But as the business grows and owners set up client meetings, there’s less likelihood that they’ll be at that address throughout the day. Additionally, those working from home would be required to make their home address a matter of public record, which many prefer not to do. Choosing a third-party agent means LLC members won’t ever have to worry about this.
4. Registered Agents Can Keep Owners Informed If They’re Sued
Unfortunately, one of the risks owners run when conducting business is that they open themselves up to lawsuits. If a company were ever to be served a lawsuit, the paperwork would likely be served to the registered agent. The biggest reason why this is important is that it significantly reduces the risk of a default judgment.
If owners do not receive notice of a lawsuit, there’s a chance that the judge rules in favor of the other party, without the defendant having the opportunity to testify. This could end up being crippling financially and could even put a company out of business. By using a trustworthy registered agent, owners can ensure that they’ll receive notice of lawsuits in a timely fashion.
If an LLC owner chooses to use a third-party registered agent, they could also protect their business from a potentially awkward or embarrassing situation. Imagine having clients or customers at a place of business, only for someone to walk in the door and serve the owner a lawsuit. The company’s reputation would take a severe hit. The same would be the case if a company’s employees were present to see the registered agent or business owner handed a lawsuit.
But, using a third-party registered agent keeps these processes separate. A third-party agent will not operate out of a company’s primary place of business. Instead, they work out of their own offices. Any notices that could damage a company’s reputation would be sent to the registered agent. Similarly, the registered agent’s address is the address that is on public address for the LLC, which could add an extra layer of privacy and security to the business.
Business Filing Section