Registered Agents and Why Every Small Business Needs One | Inc Authority

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Registered Agents and Why Every Small Business Needs One

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If you own a small business, you need to be aware that most states require you to have a registered agent. This is a responsible third-party in the same state as the business entity, who can be the point of contact to receive legal documents such as; service of process notices, correspondence from the Secretary of State, and other official government notifications (usually tax forms and notice of lawsuits) on behalf of the corporation or LLC.

If you do not have a physical location in the state in which your business is registered, you must select a registered agent to accept documents on your behalf. The state in which your business is registered needs to know it has a contact person for your business within the state at all times. While it is legally possible to serve as your own registered agent, it is advisable to designate a third-party to perform this important role.

In addition to not worrying about missing important documents and legal notices, having a registered agent also means that you will not have to accept potentially embarrassing legal and tax documents in front of clients. Another advantage is that you can easily change your business address without having to file more paperwork to change your address with the state for each and every move.

Interested in learning more about registered agents? Read on …

Is you business at risk?

If your business does not maintain a registered agent, it is at risk in several ways, including the following:

Lack of information: If a representative of the business is not physically present to accept certain documents on behalf of your business, these papers cannot be delivered. This means that your business may not receive information needed to operate successfully.

Lost standing: Losing your business’s good standing with the state can result in serious repercussions. Your business can be prevented from bringing a lawsuit in the state, expanding into other states, and/or obtaining necessary financing.

Financial liability: You and your business may be hit with fines and penalties for noncompliance.

Dissolution: The state can administratively dissolve your entity, forcing you to forfeit the limited liability protection provided under a corporation or LLC, making you personally liable to creditors.

What services should registered agents provide?

While there are a number of companies that offer registered agent services, not every registered agent will be able to meet your specific needs. In fact, registered agent service companies can differ greatly in price, experience, and customer service. Always do your research. Keep in mind that when hiring a professional service company for registered agent services, you should receive the following services:

–Subject matter expertise: Professional registered agents must be familiar with state-specific filing and regulatory requirements.

–Availability: Registered agents need to be available during state-required business hours to accept service of process on behalf of your company.

–Consistency: Registered agents must provide a consistent physical address.

–Confidentiality and privacy: Registered agents should prevent your address from being made public and eliminate the risk of business owners being served at home or business.

–Customer support: It is important to be able to ask questions and be able to get in touch with registered agents at any time.

–Trust: Always ensure you appoint an experienced provider you can trust.

What factors should you consider when choosing a registered agent service provider?

Compliance Management: Because remaining compliant is vital to your organization, be sure the registered agent is familiar with filing requirements and due dates.

State Availability: Since some providers only offer services in select states, ensure that the registered agent provides services in each state that your business operates in. While some providers only offer services in select states, others offer nationwide and international services.

Cost: You should understand all of the costs up front. Ask for an itemized invoice and inquire about potential price increases after the initial year. In addition, ask about any other hidden fees.

Level of Experience: Experience is vital in service delivery. When selecting a professional registered agent, be sure to consider experience. Questions to ask include:

–How long has the registered agent provider been in business?

–Does the registered agent have experience in the industry?

–In what states does the registered agent operate?

–How many clients has he/she worked with?

–How many years has he/she been in operation?

–Has he/she worked with clients in your business niche?

Are there penalties for not having a registered agent?

One of the requirements of creating an LLC is naming a registered agent. And while it may be tempting to save money by naming yourself as your registered agent (or even skipping this altogether), your business could face penalties for not having a registered agent.

For example, some states impose fines and penalties on organizations that do not comply with the LLC requirements. Additionally, if you do not have a registered agent to receive litigation documents, process servers can attempt to serve your business through the Secretary of State. If this continues to be unsuccessful, the court case can lead to a default judgment against the business.

Failing to name a registered agent can also shut down your business completely. The state can suspend your permission to conduct business and remove it from good standing, which means you can’t expand into other states and you won’t get the financing you need to grow.

The bottom line is that a registered agent is vital to your business—and Inc Authority can help. Contact us today to see how one of our business specialist can set up your LLC so you can thrive.  Form your free LLC today! 

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