“Kyle, What do we do with this notice!”
I still remember getting a panicked email several years ago from a colleague asking why their client had just gotten a very scary notice from the state of North Carolina along with a hefty fine! It’s a scenario I’ve seen play out too often: a growing company expands into a new state, misses several notices, and soon has legal paperwork and a large penalty to deal with, all because they didn’t understand the benefits of using a professional registered agent service.
The good news is that the time and money you invest today setting up a professional registered agent will almost certainly save you significantly more time and money in the future! In this article I’ll discuss what a registered agent is, what options you have, why it matters, and provide you with next action steps.
What Is a Registered Agent?
For companies that do business in multiple states and are registered to do business in those states, a registered agent is a person or company that you designate to receive legal, tax, and government documents on your behalf in that state. While some states allow you to list you’re your address in your home state, many states require companies to list a physical address in that state (no P.O. boxes). A registered agent helps fulfill that requirement.
What Options Do You Have?
Depending on the state, you likely will have a lot of options! For many states, as long as you list someone at an in-state street address, the state will accept them as your agent. For some business owners that own multiple properties, they may list a second home with the state. Others may list a friend or relative that lives in that state. Frequently I see businesses list an employee’s address. My recommendation is to also use a professional service to serve as your registered agent.
Why Does This Matter & What Are the Benefits?
- Legal – In many states it is a legal requirement to establish a registered agent when you register to start doing business there (e.g. hiring an employee in that state, working on a job site in that state, etc.). In many states, in addition to having an in-state street address, the person must be available during business hours to accept & sign for mail.
- Administrative Help – Many businesses find using a professional registered agent service to be a huge administrative help. Professional agents will help you stay on top of all of the filing requirements in each state (e.g. when to file your annual report), and many of them can handle filing such reports for you. In addition, having a professional service handling all of the official tax and legal notices from a state can be helpful to ensure no mail “falls through the cracks.” Also, as you expand into states and need to fill out new paperwork to register there, many registered agent services can handle that for you. Many offer online dashboards where you can quickly stay on top of all of the states you’re in.
- Confidentiality – One of the downsides of listing an employee as your registered agent is now that employee is seeing all of the tax & legal notices your business may be receiving. By using a professional service, you can maintain a higher level of confidenciality.
- Privacy – A final consideration is maintaining privacy for you as an owner, as well as your business. All states have a free public database that anyone can search to find out basic information on your business. If you are listing your personal address or an employee’s address, that address is now a public record.
What To Do Next
- List every state your business is registered in. If you have employees, job sites, inventory, or offices in other states, then you are likely registered with that state. Go through your records and make a list.
- Check who’s currently named for each state. All states have a business lookup where you can see if you’re registered with the state, and what address they have on file. Compile all of your addresses into one master list.
- Strongly consider using one professional registered agent service to manage everything. As previously mentioned, this will help keep you legally compliant, provide privacy, and will help out with the administrative workload. There are many registered agent services out there for you to choose from, but some to consider include Harbor Compliance, Northwest Registered Agent, and Registered Agent Solutions, Inc. (RASi).
Setting up a registered agent is one of those small, unglamorous tasks that quietly protects you for years. Spend sixty minutes and a couple hundred dollars per state now, and you could sidestep scary notices & hefty financial penalties for years to come.
If you are unsure about your tax obligations in various states, that is exactly the kind of thing I help clients untangle. Reach out and we’ll take a look together.
