All businesses are required to appoint a registered agent when they form or incorporate. The registered agent’s job is to receive legal and government notices at its physical address and then forward them to you.
In all the excitement of starting a business, it’s easy to make a hasty decision when it comes to appointing a registered agent. However, the registered agent plays a vital role in protecting your company’s good standing—and yourself from adverse legal consequences.
A simple web search will turn up thousands of results for registered agent providers. Here are a few considerations to help you cut through the noise.
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Availability At Crucial Moments
In most states, your registered agent can be either an individual or another company, just not your own. Many entrepreneurs consider appointing themselves or a co-founder out of convenience or perceived cost savings.
Registered agents are generally expected to be available during all business hours to receive documents—a schedule that busy entrepreneurs can’t (or don’t want to) meet. And, the risk of missing a delivery can range from fines up to default judgment in any legal proceedings.
Tip: Ask whether you’re designating a registered agent that can reliably serve in its capacity.
Meets State Requirements and Supports Your Growth
As your business grows, it will need a registered agent that can meet the physical address requirement of each state. Individuals and even many smaller registered agent companies simply cannot offer the representation your fast-growth startup requires.
However, many registered agent providers provide nationwide service, allowing your business to meet requirements as it grows with the added convenience of using a single vendor.
Tip: When choosing a registered agent, ensure their services support your growth.
Provides Technology and Helpful Services
Starting and running a business is complex enough. Your registered agent has the potential to be a valuable resource, offering additional managed services to register your business and to protect your good standing. The right agent helps offload administrative tasks like filing and contact government agencies, allowing you to focus on growth.
Additionally, most registered agents offer technology to ensure you receive deliveries. The right agent will go a step further, offering a user-friendly portal to manage services and companies while providing notifications of critical annual report deadlines.
Tip: Consider whether your registered agent can serve your business beyond their initial appointment in state records.
Offers Easy-to-Understand Pricing
As you search for a registered agent, you’ll find annual service fees ranging from $49 to more than $300 per year. You might also see tempting offers for free registered agent service for a few months or a year.
Like your startup, registered agent companies have client acquisition strategies and their own expenses to cover. That “free” or deeply discounted service might come with strings attached, such as annual rate hikes, hidden fees, or erratic client service. A few years into your relationship, you may discover you’re paying way more than you initially expected.
On the other hand, you might be enticed to pay a high rate for what appears to be a premium service. In reality, rates of several hundred dollars a year simply aren’t suitable for the average startup, nonprofit, or small business. Don’t feel the need to pay more without reviewing all options. Higher costs do not necessarily equal higher levels of service.
Tip: When selecting a registered agent, inquire into their pricing. Is it simple to understand? Are you overpaying or underpaying for the level of service you need?
On the surface, choosing a registered agent seems like a low-consideration decision. However, as your startup grows, the right agent will minimize the risk of missed documents and unnecessary costs. And in the process, you just might find a long-term partner for success.
Harbor Compliance does not provide tax, financial, or legal advice. Use of our services does not create an attorney-client relationship. Harbor Compliance is not acting as your attorney and does not review information you provide to us for legal accuracy or sufficiency.
James Gilmer is a Compliance Specialist at Harbor Compliance, a leading provider of compliance solutions for companies of all types and sizes. Founded by a team of government licensing specialists and technology trailblazers, Harbor Compliance has helped more than 25,000 organizations apply for, secure, and maintain licensing across all industries. James is passionate about helping nonprofit organizations leverage compliance to enhance their fundraising and program activities and educating the sector on compliance issues. James is also a Co-Founder of Berks Sinfonietta, Inc., a nonprofit chamber orchestra located in Reading, Pennsylvania.
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