Starting a business can be exciting, and turning your company into a corporate entity can unlock several advantages. However, you will need a registered agent for your corporation. Some business owners decide to be their own registered agents. This path has several advantages, but business owners may overlook the disadvantages when making this commitment.
Wondering if you should be your own registered agent? This guide will cover the pros and cons of designating yourself for the role.
What Is a Registered Agent?
A registered agent handles the legal paperwork for a corporation. This individual serves as the focal point for government notices, tax documents, and legal correspondences. The registered agent must respond promptly and be available during regular work hours throughout the year.
Should You Be Your Own Registered Agent?
Becoming your own registered agent and embracing the DIY approach isn’t for everyone, but it has several benefits. It is important to go through the pros and cons before deciding if you should be your own registered agent.
Advantages of Being Your Own Registered Agent
Becoming a registered agent for your own company has several advantages. Here are the perks that you can expect:
Knowledge and Understanding
Becoming a registered agent will give you more experience in handling business documents. Learning your company’s legal requirements and responsibilities can help you stay on top of the business and always be in the loop.
You can save money by acting as your company’s registered agent. The salary of a registered agent varies for each state, but the average salary is $55,918 per year. You can use those savings to invest in your business or increase your personal earnings.
Becoming a registered agent can be more convenient than hiring an agency or an individual from outside your business. You can address the roles and responsibilities at any time instead of hoping the registered agent you hired is available during working hours at all times. You also get to sort the documents, making it easier to reference past information and stay organized.
Disadvantages of Being Your Own Registered Agent
The advantages make becoming your own registered agent sound like a great idea. However, business owners should also weigh the disadvantages before they consider becoming their own registered agents.
You have to be around during regular business hours to become a registered agent. This time commitment, combined with going through business documents, can keep you away from key business objectives. Some business owners who become their own registered agents spend too much time on the role and not enough time on growing the business.
When you become a registered agent, it’s up to you to stay on top of your business documents. The consequences of missing deliveries and deadlines depend on the documents. You may receive a legal document detailing a lawsuit. If you skip over this document and do not show up to court, the plaintiff can secure a victory by default.
You may also overlook a tax document and end up with penalties for falling behind. Hiring a registered agent allows you to stay on top of these documents while growing your business.
If you become a registered agent, you will lose some of your privacy. Public forums will have your home address, making it easier for people to find out where you live. Legal documents will also contain your address and be available to the public. If you want to keep your personal information private, you should not become your own registered agent.
No Physical Address
Registered agents must have a physical address. It’s a requirement for all agents since all business documents go to that address. You will have to use your home address if you do not have an alternative. Although a home address can work, your business documents will get mixed up with your personal mail, making it easier to overlook critical information.
It’s possible to be your own registered agent if your business operates in one state. However, it becomes an incredible hassle if your company operates in multiple states. Corporations need a registered agent for each state they conduct business in. Each of these registered agents must also have a physical address within the state.
For instance, if your corporation has physical offices in New York and New Jersey, you must have one registered agent in New York and another one in New Jersey. Even if you live close enough to travel to both locations, it won’t be enough. You will need a physical address in both states to be your own registered agent. This process becomes more complicated as your corporation expands into more states.
Corporations with large footprints may want to hire registered agents for each state they operate in instead of doing it in-house with multiple street addresses.
Consider Hiring a Registered Agent Service
You can take a DIY approach when opening your limited liability company (LLC) and becoming a registered agent. However, a registered agent service can save you a lot of time and minimize the likelihood of mistakes. A registered agent service stays on top of your business documents full-time, so you don’t miss any important paperwork.
These services operate during business hours at all times to ensure a reliable point of contact for your company. They are also more affordable than hiring a registered agent. Most registered agent services cost $99 to $300 per year.
Set Up Your Corporation for Success
A registered agent is an important component of any corporation. You can become a registered agent for your company or hire a registered agent to save time. It takes a lot of work to create a corporation and get everything right from a legal perspective. Doola offers fast and easy U.S. business formation services for anyone who needs help along the journey.
How much does it cost to be your own registered agent?
It does not cost anything to be your own registered agent. However, you may have less time to work on your business.
Can you be a registered agent for multiple businesses?
Yes, you can be a registered agent for multiple businesses. However, make sure you only take on as much work as you can handle. You can be a registered agent for a business only if you have a physical address in the same state as the company’s location.
Can you appoint a registered agent after forming your business?
Yes, you can appoint a registered agent after forming your business. However, your business must have a registered agent at all times.
Can you change the registered agent for an existing business?
Yes, you can change the registered agent for an existing business.
How often do you need to update the registered agent information?
You must update the registered agent information if you get a new registered agent or your current registered agent gets a new physical address.