5 Risks of Being a Registered Agent: When DIY Doesn’t Work

Published on:

When you are starting a business and choose to form an LLC (Limited Liability Company), you might wonder why you need a registered agent service.

Surely you could just receive the mail for your company yourself and act as your own registered agent?

If you are creating the LLC in the place where you business has an address, you can legally use that address (or your home address) as your registered agent.

But as we explain in this article, it is hard to recommend this as there are significant risks to being your own registered agent and it is usually better to use one of the registered agent services mentioned here.

What is a Registered Agent?

In simple terms, a registered agent is an individual or entity (say a law firm or accountant) in a particular state that serves as that LLC’s physical address.

The primary reason you need a registered agent for your LLC is that it serves as a physical address at which to receive service of process in the event of a legal issue arising.

But in reality, a registered agent usually plays a number of other functions for the owners of an LLC, including:

  1. Receiving and passing on government correspondence on behalf of the LLC in a timely manner
  2. Passing on any other correspondence and (in some cases) phone calls in a timely manner
  3. Tracking compliance events for the LLC such as deadlines for filing annual reports

When you form an LLC (or another kind of corporate entity) in a particular state, you will be asked who will serve as your registered agent so it is a key part of the LLC formation process.

Risks to Being Your Own Registered Agent

1. You Have to Be Available During Business Hours

It is a requirement in all states for a registered agent to be available during business hours. This means it is not practical nor desirable to use your house as the registered agent address. And unless you business address is staffed 100% of the time between 9 to 5 Monday to Friday, then it is also unsuitable to use as a registered agent address.

2. Registered Agents Need To Be Always on Alert

Registered agents have a serious function to fulfil and if you take on that responsibility, those duties will be yours to fulfil. Much of the paperwork you’ll receive from the state will be time sensitive, as will ant legal documents served on you. You need to be prepared to receive these and address them promptly.

3. You Can Only Conduct Business In Your Home State

You need a registered agent in any state where you do business. So if you serve as your own registered agent, you are restricting to fulfilling that function only in your home state.

That’s where ZenBusiness and the other national registered agent providers come in handy as it is very simple to add service in other states as you expand your operations into other areas.

4. You Lose Your Privacy

The registered agent’s address goes on a range of different federal and state filings and therefore is publicly available to people searching. This is another downside to serving as your own registered agent, particularly if you are using your home address.

5. Your Customers or Employees Could See You Get Served

This risk applies if you use either your home or a business address as a registered agent for your LLC. If some arrives for service of process, then your employees or your family can see that you are being sued. That can lead to rumors circling that can put you under pressure or cause family members or employees to raise questions. Whereas if you use a professional registered agent service, these difficulties don’t apply.

Why it is Better to Use a Registered Agent Service

Using one of the reputable national registered agent services circumvents all of these issues. A registered agent service will receive all mail during the mandated times, including service of process.

Your professional registered agent service will pass these on to you straight away and give you compliance reminders when you annual report and any other filings are due.

Using a registered agent service is a cheap and reliable way to ensure your business remains compliant.

The Best Registered Agent Service: Top Five Picks

Top five table:

ImageProductFeaturesPrice
Best value
ZenBusiness
ZenBusiness

Price: $99 per year

  • Popular and solid value for money
  • Bundled deals on LLC formation ($39 LLC formation includes one year of registered agent service)
  • Good customer service
9.4
Visit site
Best customer service
Northwest Registered Agent
Northwest Registered Agent

Price: $125 per year

  • They scan all docs from their local offices
  • Long-standing company
  • Great customer service with personalized support
9.3
Visit site
Great value
Incfile
Incfile

Price: $119 per year

  • Free LLC formation is tempting
  • Good customer reviews
  • Digital dashboard
  • Automatic forwarding of all correspondence
9.1
Visit site
Best no frills
Incorp
Incorp

Price: $99 per year

  • No frills but effective
  • Equal cheapest prices
  • Reliable
9
Visit site
Strong brand
LegalZoom
LegalZoom

Price: $299 per year

  • Big name and brand power
  • Partnerships with lawyers
  • More than just LLC formation
  • $159 for registered agent fee if you form an LLC with them

 

8.9
Visit site

Photo of author

AUTHOR

Rick Wallace is an investor who has established several LLCs in different states. He writes about starting businesses via LLCs including topics such as choosing a registered agent.