Do you need a registered agent for your LLC? When to be your own and when to pay

Every LLC has to name a registered agent when it's formed, and keep one for as long as it exists. The role is simple: a person or company with a physical address in the state who accepts legal papers and official mail on the LLC's behalf, during normal business hours.

You can do it yourself for nothing. Plenty of owners do. The question is whether the trade-offs, mainly privacy and reliability, are worth the $125 to $249 a year a service charges.

What a registered agent actually does

The main job is receiving "service of process": the formal delivery of a lawsuit, subpoena or similar legal notice. Courts need a reliable place to deliver these, and the registered agent's address is that place.

The agent also receives official mail from the state, such as annual report reminders and notices about your LLC's standing, and sometimes tax notices. A good agent passes everything to you promptly, often by scanning it and sending an alert the same day.

That's the whole role. A registered agent doesn't run your business, file your taxes or give legal advice.

Registered agent vs your other addresses

An LLC's filings can involve three different addresses, and they're often confused.

• The registered agent's address is where legal papers are delivered. It must be a physical address in the state.
• The principal office address is where the business is run. Many states ask for it on the formation filing or the annual report, and it also becomes public.
• The mailing address is simply where you want ordinary mail to go, and it can usually be a PO box or a mail service.

Using a commercial registered agent keeps your home address off the first. It doesn't automatically keep it off the second. If privacy matters to you, check what your state's forms require for the principal office, and whether your agent lets you use its address there too.

The rules for who can be one

The details vary by state, but the core requirements are similar everywhere.

• A physical street address in the state. A PO box or a virtual mailbox usually doesn't qualify.
• Available during normal business hours to accept papers in person.
• Consent to serve. Some states, Texas among them, require the agent to consent to the appointment.
• A person who lives in the state, or a company authorized to act as an agent there. Your LLC can't usually act as its own agent, but you, an employee or a friend can if they meet the rules.

Being your own registered agent

If you live in the state and run the business from a fixed address, being your own agent costs nothing and works fine for many owners. Before you decide, weigh three things.

Your address becomes public

The registered agent's address goes on the public record, in a database anyone can search. If you work from home, that means your home address. It attracts marketing mail at best, and the occasional unwelcome visitor at worst.

Someone has to be there

A process server can arrive any day during business hours. If you're often out at client sites, traveling or working from a coworking space, papers can go undelivered. If a lawsuit is filed and you never receive it, the case can go ahead without you and end in a default judgment against the LLC.

Being served in front of others

Being served with a lawsuit at your office, in front of clients or staff, is awkward. A service receives it quietly and forwards it to you.

Paying a registered agent service

A commercial registered agent handles all three problems. Its address goes on the public record instead of yours, someone is always there during business hours, and you get a scan of anything that arrives, usually the same day.

Here's what the main services charge after the first year.

• Northwest Registered Agent: included free for the first year with its $39 LLC formation, then $125 a year. It also lets you use its address on other filings, which it calls Privacy by Default.
• Bizee: a free first year with its formation packages, then $149 a year in most states and $119 in some.
• ZenBusiness: $199 a year, not included in its formation plans.
• LegalZoom: $249 a year.

Since the core legal function is the same everywhere, the price you pay mostly buys the extras: how fast you're alerted, how mail is handled, and how much of your address the service keeps off public records. Our comparison of ZenBusiness, Northwest and LegalZoom covers the services in full.

Before you sign up with any service, ask four questions. How quickly will you be told when legal papers arrive, and how? What does the renewal cost, and does it renew automatically? Can you use the agent's address as your business address on other filings? And does the service cover every state where you might register later? The answers matter more than the first-year price, which is often free.

When you must use someone else

You can't be your own agent in a state where you don't have a physical address. That comes up in two situations.

• You formed out of state. A Delaware or Wyoming LLC owned by someone who lives elsewhere needs an agent in Delaware or Wyoming. Our guide to the best state to form an LLC explains why that's usually a reason to form at home.
• You register in another state. When your LLC registers as a foreign LLC in another state where it does business, it needs an agent there too. A service that covers every state makes this simpler.

Founders who live outside the US always need a paid agent, since they have no US address at all.

What happens if you don't have one

An LLC that lets its registered agent lapse, for example by not renewing a service, falls out of compliance with the state. The consequences build up.

• Missed lawsuits. Papers can't be delivered, or are delivered to an agent who no longer forwards them, and you learn about the case only when there's a judgment against you.
• Penalties and loss of good standing. The state can mark the LLC as not in good standing, which can block loans, contracts and new registrations.
• Administrative dissolution. Left long enough, the state can dissolve the LLC, removing its liability protection until it's reinstated.

If you're served with a lawsuit

Most owners never are, but it's worth knowing what to do in the first hour if it happens.

1. Don't ignore it. A lawsuit comes with a deadline to respond, often 20 to 30 days depending on the court. Missing it can mean a default judgment.
2. Note the date you received it and the deadline stated on the papers. Your registered agent's scan will show when it arrived.
3. Call an attorney licensed in that state. Even a claim that looks baseless needs a formal response.
4. Tell your insurer if you have general liability or professional liability insurance. Many policies require prompt notice and may pay for your defense.
5. Keep the papers together with any correspondence about the dispute.

A good registered agent's role ends at step one: getting the papers to you quickly and with a clear record of when they arrived. That's worth more than any of its extras.

How to change your registered agent

You can change agents at any time. The new agent agrees to serve, and you file a short form with the state. It's usually cheap: Texas charges $15 to file its change-of-agent form for an LLC, and Florida charges $25.

1. Choose the new agent and sign up, or confirm you meet the rules to act yourself.
2. File the state's change form, often called a statement of change of registered agent. Many services file it for you as part of signing up.
3. Cancel the old service's renewal once the state shows the new agent, so you don't pay twice.

Your LLC, its EIN and its bank accounts stay the same. Only the agent on file changes. If you move house and you're your own agent, file the same change form with your new address, since the state will keep sending notices to the old one.

The decision in one list

1. Do you have a physical address in the state? If not, you need a service.
2. Are you there during business hours, nearly every weekday? If not, pay for a service.
3. Do you mind that address being public? If you do, pay for a service.
4. Otherwise, be your own agent and save the fee.

Whichever you choose, make sure the address on file stays current. Our guide to starting an LLC covers where the registered agent fits into the rest of the setup.