Last Updated on September 26, 2020
With most company’s actively looking to save money, becoming their own registered agent is typically a high priority for many start-ups.
A crucial role for all company types, it’s essential that all business entities, when formed, nominate an official person to represent their company.
However, it is legally possible to take the role of a registered agent for yourself or nominate a family member, friend, or even another employee. This is as opposed to considering a professional such as an accountant or lawyer, or professional service that deals primarily with registered agents, for example.
Yet, there are some potential risks worth carefully considering before you continue with such a decision.
The Role of a Registered Agent
A registered agent is an individual who is responsible for receiving official government documents.
Once they have such documents in their possession, it is up to them to ensure the business is informed of their receipt, that the documents are digitally backed up, and finally forwarded to your official business location.
Such forms can take the shape of tax forms, annual reports, state documents, compliance reminders, and lawsuit processes.
A registered agent will also play a vital role by informing the business of due dates and deadlines.
5 Potential Risks of Being a Registered Agent
Risk 1. You Must Be Available at Your Place of Work Throughout the Entire Business Day
The rules for a registered agent state they must be present at the place of business where the address is registered to.
Therefore, if you are not an employee or even part of the business itself, this is not the most practical of situations.
This problem is that from Monday through to Friday, from 9 am until 5 pm; you will need to remain on the business premises. This is to ensure you are there to take delivery of the necessary documents, as only the registered agent can sign for these.
Unfortunately, this also means no wandering off for lunches or nipping out to run any errands, no matter how quickly you think you’ll be. It also means you won’t be able to take a day off.
Should delivery be attempted, and you aren’t there to receive it, you risk being oblivious of potential lawsuits against the business until it becomes too late to act.
Risk 2. Under No Circumstances Can You Miss a Delivery
Some registered agents make the mistake of believing they can get around having to be present on the business premises from Monday to Friday, 9 am to 5 pm. Examples here can include calling up when the documents turn up to re-schedule another time or asking them to be handed over to someone else should you be unavailable.
However, this is not how the process works, and under no circumstances will such documents be signed over to anyone else other than the registered agent.
What’s also worth noting here is that even if you are in the building itself but can’t quite physically make it to the handover, you will be deemed to have missed the delivery. This applies regardless of whether you were on the phone, in a meeting, speaking to another person in the building, or even in the bathroom.
More so, the individual delivering the documents will not make any exceptions. So, if you are away from the site when they arrive and get someone to call you, the person delivering will not wait for you.
Either way, you cannot afford to take the risk of missing a delivery.
Risk 3. You Can Only Conduct Business in Your Own State
By serving as your own registered agent, you will not be able to undertake business anywhere other than in your own state.
The rules state that each business in each state must have its own registered agent. Therefore, you can’t just expand your company into a new state without putting in place yet another registered agent beforehand.
The limitations of having a registered agent for each state extend to those areas whereby you cannot expand your business should you hire an accountant or a lawyer to act as your registered agent.
Also, this rule reduces the likelihood of selecting a family member, friend, or business associate to act as your registered agent.
Risk 4. Your Personal Address Will Become Public Knowledge
A concept that significant concerns many people when becoming a registered agent is that their address is immediately made public for all to see.
Furthermore, if your business is a home-based one, this can trigger many an obvious privacy issue.
For those businesses whereby the company address is out of the home, this isn’t a problem. Yet, for those running a business from home, there is no other option than to declare the address when registering as an agent.
Unfortunately, there’s no getting around this one, and if putting such information on record really isn’t viable, then you won’t be able to fulfill the registered agent’s role.
Risk 5. You Could Become Served in Front of Employees and Customers
Should your business have to endure the trauma that comes from having a lawsuit filed against you, having an outsourced registered agent at least eliminates the process of being served in public.
But, if you become a registered agent yourself, this is a potential scenario that, if played out, will more than likely take place in front of customers and employees. Thus, the stress and, indeed, humiliation is significantly increased here.
The Alternative to Being a Registered Agent
Due to these risks highlighted, many people decide to employ the services of the professionals when it comes to a registered agent.
By doing so, not only do all the above problems become void, but the company you select will be able to offer you increased services and features as standard.
Ultimately, though doing the job of registered agent yourself will save you a little less money initially, in the long term, the stress and hassle will become more increased, as too over time will the costs.
So, if you are keen on discovering what a registered professional agent could offer your business, we recommend taking a look at companies such as LegalZoom, Zen Business, and Swift Fillings as a start.