If you’re an entrepreneur who is on the verge of becoming a business owner, you have to incorporate into the state in which your business operates. Incorporating our business is one of the best ways to protect your assets, such as your home, car, and savings, as you won’t be liable for the debts and judgments against your business.
Regardless of whether you’re forming an LLC or a corporation, it’s necessary to have a registered agent. Every American state requires businesses that register as legal entities to have a statutory agent or an agent of the process to receive state communications about important filings and changes in organizational requirements.
Why You Need a Registered Agent in Forming an LLC
It’s not always necessary to appoint a third party as your company’s registered agent. You can appoint yourself, or your business to act as its own registered agent.
Nevertheless, it’s not a good idea to appoint yourself as a registered agent, tempting as it may be. It’s simply not a good business practice.
The best thing you can do is to hire a professional registered agent. They will fully satisfy the demands placed on you or your business, the result being that you can concentrate on important parts of running your business.
It might seem less expensive and simpler to be your own registered agent, but in many cases, it’s a big mistake.
What is a Registered Agent
A registered agent can be an individual or a third-party organization that receives service of process when a business is a legal party in a lawsuit or summons. They accept tax and legal documents on behalf of the business.
If a business doesn’t hire or designate a registered agent, there are certain consequences. Failure to adequately maintain a registered agent can negatively impact your company when it comes to tax issues, litigation, and more.
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Your business could be administratively dissolved by the state; it’s possible. The registered agent represents your official contact with the state. They must have a physical street address and be available during general business hours.
As a rule, the registered agent is provided the formation documents filed in the jurisdiction where the business was created. For instance, if you form an LLC or a corporation in the State of Wyoming, you would have to designate a Wyoming registered agent to represent your company.
Given that certain states have specific requirements, check with the local laws to determine if you should use a person or a business. At the time of company formation, there must be a registered agent. Don’t let the designation lapse.
The state will most likely refuse to approve your Articles of Incorporation or Articles of Organization. Additionally, failure to maintain a registered agent could cause business risks, as follows:
- Lack of information
- Lost standing
- Financial liability
It’s clear to see that it’s paramount to have a registered agent for your business. We’ve listed some compelling reasons why entrepreneurs need to comply with this very important requirement.
Why Hire a Registered Agent Service
As discussed earlier, naming yourself as the registered agent isn’t a good move. With great power, comes great responsibility. You’re better off using professional registered agent services.
This way, you can focus on your entrepreneurial duties. In what follows, we’ll highlight a few reasons why the expense of a registered agent is well worthwhile.
Immediate access to served documents
The due process clauses in the United States Constitution prevents courts from exercising personal jurisdiction over a defendant unless they have proper notice of the court’s proceedings.
This is precisely why the defendant is served with a court summons and complaint. It’s not enough to mail the process to the defendant; the legal documents must be handed directly or left with a suitable person.
The registered agent is the person who receives lawsuits and other documents on behalf of the business. You have immediate access to sensitive documents that require attention.
If you’re away for client or sales meetings, it’s easy to get swept away and get pulled into work-related tasks.
Your personal content information won’t be made public
When starting a new business, many choose to maintain a home office. If you’re in the same situation, you don’t want to make your home address public.
The address of the registered agent is a matter of public record, so your personal contact information will be listed on public documents and process servers, notifications being sent to your home. When it comes to setting the standard for privacy, you can count on a registered agent.
Service of process, as well as official mail, will be delivered to the registered agent.
You don’t have to maintain normal business hours
Companies tend to follow the standard 9-to-5, but entrepreneurs often find themselves working at unusual hours putting in about 40 hours a week.
If you’re not able to keep normal office hours, it’s a good idea to use registered agent services to ensure that important documents still reach you. The registered agent will be available during regular business hours, while you can maintain irregular work hours.
You don’t have to stay in the office all day long. Designate a registered agent and office. Business hours largely depend on the state in which you’re doing business.
In Florida, for example, it’s necessary to keep registered agent offices open from 10 a.m. until noon except Saturdays, Sundays, and legal holidays, according to the statutes.
You can operate in multiple states
Perhaps you intend to conduct business in multiple states. You could be based in Wyoming and have clients in California. Nothing is stopping you from becoming a bi-coastal entrepreneur. Virtual productivity and communication tools make it possible to run a business from just about anywhere.
If you run a multistate LLC, having a registered agent comes in handy as they help you comply with local regulations and ensure important notices are kept in place. You’ll receive a high volume of documents, which need to be handled in a timely manner.
The registered agent is your point of contact in the sense that they know your business inside out. They will provide precise, consistent information about your compliance responsibilities.
To sum up, a reliable professional can offer much-needed peace of mind. You’re always on top of your legal obligations.
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