What are the Pros and Cons of Registered Agent Service?
The main advantages of a registered service are professional reliability, they are always available to receive important documents, they protect your identity and privacy, and they are highly affordable for most businesses.
And, the key disadvantages are the annual fee, possible recurring costs, and the potential upselling of additional services.
WHAT ARE THE PROS AND CONS OF USING A REGISTERED AGENT SERVICE?
Are you a business owner and looking for a registered agent for your company? Do you want to know more about the pros and cons of registered agent service?
We’ll take you through everything you need to know about the benefits and disadvantages of hiring a professional registered agent service.
Did you know – a registered agent must be provided by all limited liability companies (LLC), limited partnerships (LP), limited liability partnerships (LLP), and corporations.
Registered agents are sometimes called statutory agents, resident agents, or service of process agents.
JUMP TO CONTENT
- The Advantages
- The Disadvantages
- What Does a Registered Agent Do?
- Eligibility Requirements of a Registered Agent
- Commercial vs Non-Commercial Agents
- Frequently Asked Questions
ADVANTAGES OF REGISTERED AGENT SERVICE
What are the advantages of hiring a registered agent service? Let’s take a look at the key pros of using a professional registered agent service.
ALWAYS AVAILABLE ON-SITE
If you hire a professional registered agent service you will have the reassurance that they will always be on-site and available at the specified address – 52 weeks per year, during regular business hours. This means they will always be there to receive official documentation for your company.
You can rest assured that documents will be received and passed on to you and the company owners in a timely manner. This is what these companies specialize in, and what they’re best at. Everything will be received, promptly processed, and nothing will go missing.
YOU ARE NOT TIED DOWN TO ONE LOCATION
Hiring a registered agent service means you are not tied down to a specific location. If you appoint yourself, a colleague, or a family member as a registered agent – this means they must stay at the specified address during business hours all year round.
If you act as your company’s registered agent you will not be able to travel for a meeting or take a vacation. You must be present at the address provided at all times. Using a registered agent service prevents you from being tied to one location.
PROTECT YOUR PRIVACY
Another advantage of a registered agent service is that it protects your privacy. When you submit your company documents to your state authority you must provide the name and contact details of your registered agent.
If you appoint yourself or another individual as registered agent their name and contact details will become a matter of public record. This can raise uncomfortable privacy concerns. By hiring a registered agent service – all you have to do is provide their name and address.
A great pro of registered agent services is their affordability. Even the best registered agent services are very competitively priced and have packages to suit most company budgets.
Prices vary from company to company and on the package you choose. However, you can expect to pay between $100-$150 per year. We think it is a great option for a business considering the benefits it delivers and the level of service provided – as long as your budget can cover it.
THEY MEET ALL REQUIREMENTS
A registered agent service satisfies all the mandatory requirements of serving as a registered agent. Most of these requirements are straightforward, but not all.
For example, you must have an address in the same state the business is registered in, you must have a physical street address, and you must be over 18. However, the requirement to be present at the specified address all year-round during regular business hours can be a challenge.
An approved registered agent will satisfy all requirements. And, most states maintain a list of approved commercial registered agents. For more info see – registered agent requirements.
FREE SERVICES AVAILABLE
Another great benefit of a registered agent service is that they are often available free of charge. The service is often bundled in as a free add-on when purchasing other business services.
For example, the Best LLC Formation Companies often offer a free registered agent service when you buy one of their LLC filing services. If you are also forming a company, eg registering an LLC, you can avail of one of these offers.
Note, when a registered agent service is bundled free of charge with a company formation package – it is usually free for the first year only. You may have to pay for the second year, so be vigilant for automatic roll-over charges at the end of the 12-month period.
Hiring a professional registered agent can help avoid some potentially embarrassing situations. For example, if a court is to serve papers on your company and you are acting as your company’s registered agent – these documents could be served to you in front of employees or customers.
They could even be dropped in to you while you are in the middle of a meeting. If you want to protect the image and reputation of the company and avoid such a situation, hiring a registered agent is a great idea. Such papers will be delivered to your registered agent provider and they in turn will contact you to let you know.
DO BUSINESS IN OTHER STATES
If you want to do business in multiple states – you’ll need a registered agent in each state. This is where a professional registered agent can deliver excellent value for money.
Many services maintain offices with physical street addresses in all fifty states across the US. This makes it easy for you to do business in a foreign state without having to source a new local registered agent. You can just name your existing agent and provide their address for each state you plan to do business in.
Another great pro of a registered agent service is document scanning. This means that the agent scans your documents as they are received and uploads an electronic copy onto your customer dashboard.
Scanning and posting documents online is a great way of ensuring the timely handover of important documents to business owners. And, many registered agents offer same-day delivery. This means they will scan and post the documents on the same day they are received.
An often-overlooked advantage of hiring a registered agent service is the fact that some of them also offer legal services. And, for a modest fee, you can bundle this additional service onto your registered agent.
If ongoing legal advice is something you think you’ll need and you want access to a legal professional at a reasonable rate – look out for registered agent services that also provide legal business advice.
BEST REGISTERED AGENT SERVICES
The Best Registered Agent Services provide all the services mentioned above. They have a wealth of experience and offer a highly professional service. Hiring a firm to act as your registered agent frees you up to concentrate on running and growing your business.
DISADVANTAGES OF REGISTERED AGENT SERVICE
What are the disadvantages of using a professional registered agent service? As part of the pros and cons of registered agent service – let’s take a look at the main drawbacks.
The main disadvantage of using a registered agent service is cost. If you hire a company to act as your registered agent, they are going to charge a fee. However, the fees are modest and they tend to range from $100-$150 for the best services.
There are also offers you can avail of to get a free registered agent. If you are forming an LLC and purchase an LLC formation package – many companies offer a free registered agent for the first year. Fees tend to kick in, in year two.
Watch out for recurring fees. If you sign up for a registered agent for one year – be clear that you are paying for 12 months. And, that there is no automatic rollover into year two.
Some companies will try and sell you a registered agent service that has an automatic rollover and a recurring fee. When ordering a registered agent service make sure you know what you are signing up for.
UPSELLING & ADD ONS
Another disadvantage of a registered agent service is upselling. Some companies use pushy sales techniques to try and sign you up for additional services and products. If a registered agent is all you need – just sign up for that service.
You don’t have to purchase any add-ons that you aren’t interested in. If the sales pitch becomes too intense you should move on to another provider. There are many services out there to choose from.
WHAT DOES A REGISTERED AGENT DO?
A registered agent is a person or company that accepts official documentation on behalf of a business. They must be available to receive documents at a specified address 52 weeks per year during normal business hours.
Every LLC, Limited Partnership (LP), Limited Liability Partnership (LLP), and Corporation must have a registered agent. A registered agent is sometimes referred to as a resident agent, statutory agent, or service of process agent.
Examples of the documentation received by a registered agent include – legal papers, tax notices, and government correspondence. For more information check out – What Is a Registered Agent?
WHAT ARE THE ELIGIBILITY REQUIREMENTS OF A REGISTERED AGENT?
To be a registered agent several requirements must be met by the individual or company.
SAME STATE LOCATION
The registered agent must be located in the same state as the business is registered.
PHYSICAL STREET ADDRESS
The registered agent must have a physical address and cannot use a PO address. They must be available in person to receive important correspondence such as legal or court documents.
The registered agent must be available all year round at the specified address during normal business hours. This means they must be physically present in that location 52 weeks per year during office hours, without exception.
INDIVIDUAL – MINIMUM AGE
If you are appointing an individual – they must be at least 18 years of age.
PROFESSIONAL SERVICE – CHECK STATE APPROVAL
If you are using a professional service you should check that they have been approved by your state to serve as a registered agent. Most states keep a list of approved companies that can act as registered agents.
COMMERCIAL vs NON-COMMERCIAL REGISTERED AGENT
What’s the difference between a commercial and non-commercial registered agent? A commercial registered agent is a business that acts as a registered agent.
These are professional registered agent services. You should check with your state to see if a commercial registered agent has been approved by your state before you hire their service.
A non-commercial registered agent is an individual that acts as a registered agent – not a professional service. If you appoint an individual they must meet all the registered agent eligibility requirements outlined above.
FREQUENTLY ASKED QUESTIONS
Here are the questions we get asked most frequently when covering the pros and cons of registered agent service.
WHY DO YOU NEED A REGISTERED AGENT?
A registered agent is a legal requirement for all limited liability companies (LLC), limited partnerships (LP), limited liability partnerships (LLP), and corporations in the US.
The agent must be present and available at a specified address during business hours to receive important company documents. You will not be able to form one of these companies without appointing a registered agent.
CAN THE REGISTERED AGENT BE THE OWNER OF THE COMPANY?
Yes, the registered agent can be the owner of the company. Any individual that meets the registered agent eligibility requirements can serve as a registered agent – including the owner of the company.
IS A REGISTERED AGENT REQUIRED FOR AN LLC?
Yes, a registered agent is required for an LLC. An LLC is required to have a registered agent at all times. An LLC will need to appoint an agent during the formation process and this will be recorded in the company’s initial filing. The name and contact details of the agent will then be routinely reported in annual and biennial reports.
- Pros & Cons of an LLC Filing Service
- LLC vs Sole Proprietorship
- LLC vs Partnership
- LLC vs S Corp
- LLC vs C Corp
ABOUT THE AUTHOR
Editor in Chief
Jason is editor in chief at My LLC Guide. He holds a wealth of business management experience and has been advising companies on business formation issues for many years. Jason specializes in resource planning management, staff utilization, and productivity consulting.
He has worked predominantly in the west coast area where he graduated from the Marshall Business School at the University of South California. When he's not working in his business advisory role, Jason likes to climb on his Indian Scout motorbike and enjoy the open road.