Risks of Being Your Own Registered Agent

Risks of Being Your Own Registered Agent

Businesswoman at desk in modern workspace

For many, forming a business can be a life-long dream. Some motivated entrepreneurs start young, while others may decide to become business owners later in life. For each intrepid businessperson, the road may be different. The goods and services sold may vary. The size and reach of the business may range from a small "mom-and-pop" shop to franchises with multiple locations. However, whether it's a corporation, partnership or limited liability company (LLC), one of the required steps in forming a business entity is having a Registered Agent.

What Is a Registered Agent?

Before we get into the importance of having a Registered Agent, and the risks of being a Registered Agent, let’s quickly review what a Registered Agent is and the services that they provide.

Also known as an agent of process or statutory agent, a Registered Agent is the person or entity that accepts and signs for all of your federal and state documents on the behalf of your business. These documents may include compliance reminders, document filings, tax notices and even lawsuits or subpoenas. A Registered Agent keeps things running smoothly and ensures that nothing falls through the cracks when it comes to keeping your business compliant.

The Benefits of Having a Registered Agent

Running a business and handling the day-to-day operations and challenges can be hard enough without risking any potential missed filing or overlooked federal correspondence. One way to avoid these missteps is to have a Registered Agent represent your business. Other benefits of a Registered Agent include:

  • A Registered Agent notifies you of any upcoming deadlines or filings.
  • They make sure important paperwork or correspondences are not lost in the stacks of daily mail your business may receive.
  • Having a Registered Agent provides you with a physical address, which helps if you are a virtual business, use a P.O. Box, participate in office sharing or coworking environment or spend a lot of time out of the office.
  • They will handle legal filings, including summons, subpoenas and lawsuits so you will not need to deal with them at work. This also saves you from being served these legal documents in front of employees, customers or clients.
  • A Registered Agent makes sure that your business is in good standing with the state the agent represents.

Incfile | Registered Agent

Why You Might NOT Want to Act as Your Own Registered Agent

Some business owners may be tempted to take on the role as their own Registered Agent. One reason may be that it can save them money, though the average cost for a Registered Agent ranges between only $100–$300 a year, with some companies offering special deals and incentives. Taking into account penalties and fines for missed deadlines, the low price for having a Registered Agent and the peace of mind a third-party Registered Agent can provide, it's generally not recommended to be your own agent.

Not convinced yet? Even though you can act as your own Registered Agent — or designate a family member, friend or employee to fill the role — here are a few reasons why it's a risky move.

  1. You may not have the availability. A Registered Agent needs to be available during business hours (typically 9:00 a.m.–5:00 p.m.) to accept deliveries. Will you have the time and availability to accept what should be considered important documents and correspondence at your job? What will you do if you need to take a day off?
  2. Your address may not be acceptable. You need to have a physical address to operate as a Registered Agent, and again, you’ll need to be available during business hours. If you use a P.O. Box as your business address, it cannot be used as a Registered Agent address.
  3. You might miss important mail. You risk missing important deliveries if you are on vacation, visiting clients, working off-site or simply out to lunch.
  4. You risk your privacy. If you work from home or have a virtual business, you may want to think twice about listing your home address as your Registered Agent's "physical" business address. The address will be made public, which raises privacy concerns. You will also not want to be served a subpoena in front of neighbors or your family.
  5. Increased paperwork. If you move or designate someone other than yourself as the Registered Agent, you’ll need to file for an address change, which includes a fee. If your newly designated Registered Agent, who is your employee, cousin or in-law, decided to move, you will need to repeat the process, file again and pay the fee.
  6. You may lose focus. Being your own Registered Agent puts a lot more responsibilities and tasks on your plate. Having a reliable Registered Agent in place will give you peace of mind knowing that they are taking care of your important mail. This will free you up to focus on your business and your success.
  7. You can only be a Registered Agent in one state. If you do business in multiple states, you need a Registered Agent in each state. Since you cannot be in several places simultaneously, a Registered Agent service will be the best way to have an agent in each location.

stack of documents and papers

How to Pick the Right Registered Agent

When looking for a Registered Agent or Registered Agent service, make sure that they have a good reputation. Do some research and look at online reviews. It is also important to know what services you will be receiving and how much those services will cost. If you already have a Registered Agent and are not happy with the service provided, you can always change and find a new agent at any time.

Incfile provides a Registered Agent service across all 50 states. If you form your business entity with Incfile, you get a Registered Agent for free for the first year and only pay $119 a year to renew. Our service seeks to provide convenience, reassurance and accountability when it comes to managing your legal documents. If you sign up for Incfile's Registered Agent service, you'll have an always-available agent to receive correspondence and documents on your LLC's behalf; a digital dashboard to access important documentation as it comes in; email and SMS notifications when documents are received and automatic mail forwarding directly to you.

To guarantee the success of your business — and compliance with the law — the best option is to trust a professional agent with a strong track record to ensure your best interests. Incfile has helped business owners across the country achieve this balance, allowing small business owners and entrepreneurs to focus on their jobs and TCB — take care of business.

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