What Are Registered Agents & Why Are They Important To SMEs?

Starting your own business is one of the best ways to be your own boss in the United States. A survey conducted by Digital found that two in five people plan to start a business to earn more money, work for themselves, and have more flexible hours.

An important step in getting your endeavor legally recognized as a business is to get a registered agent. You can’t go about your business in the US without one, so it’s best to understand what their function is, how to get one, and why they are essential to SMEs.

What is a registered agent?

A registered agent is an entity or individual that is meant to receive legal documents and service of process on behalf of a business or company. This means that any tax notices, legal proceedings, communications from the government, and lawsuits will be sent to the physical address they have registered. From there, it is within their responsibility to inform the business owner about pertinent communications and forward any relevant documents.

A registered agent is required to operate within the same state as a business. The business owner chooses to appoint the registered agent, which can be an employee, a professional registered agent from a service, the owner themselves, or the business itself. It’s worth noting that it’s usually not recommended to appoint yourself or your business as the registered agent because this restricts your schedule and can be a privacy risk.

Finding and getting a registered agent recognized by the state is generally the same in all states, but there are a few differences here and there. For instance, if you’re wondering how to find the best registered agent in Oregon, you would be able to choose from a registered agent service or appoint your business provided it has a physical address. In Montana, a business is now allowed to be its own registered agent.

Furthermore, you’ll find that certain states impose more regulations on how registered agents operate. In Alabama, registered agents must be available during business hours. Interestingly, California allows corporations to act as registered agents for other business entities as long as they file a Section 1505 Certificate to their Secretary of State.

Why Registered Agents are Important to SMEs

The importance of a registered agent cannot be understated. Their existence serves many crucial purposes for SMEs:

Meeting Legal Requirements

The most important reason to get a registered agent is that it is legally required for your business to continue operating in America. Although the exact punishment differs depending on the state, failure to appoint one can result in fines and legal shutdown of your business. You’ll even find that many LLC formation services already come with registered agent services because of how much these processes go hand in hand.

Compliance with Time-Sensitive Matters

Service of process deals with many legal matters that usually have deadlines attached. On top of that, notices from the government will require prompt responses and enough time to figure out the next steps. A registered agent ensures that business owners stay on top of things in this department and don’t miss out on any crucial messages. This helps avoid penalties and unexpected legal obligations.

It’s also worth remembering that claims may continue without you even if you don’t respond in time. The California Department of Consumer Affairs notes that recipients only have around 15 days of notice before hearings, and recipients need to file written requests quickly if they wish to move any hearings.

Increased Freedom and Privacy

A registered agent allows business owners to have more privacy and enjoy some flexibility. The agent has their own registered address where all relevant mail is sent, so they are able to consistently check for correspondence and notices. With this, owners have more freedom with their time and where they want to operate. It also comes with the advantage of protecting the owner’s personal address for any communication.

Efficient Communication

With a registered agent, you are ensured of timely notice for any legal proceedings. You also get any important documents forwarded to you as soon as possible. Registered agents can scan and forward documents to you through email the moment they’ve received them, and can even give you updates as long as they have been sent the proper papers.

Also Read: Cybersecurity For SMEs: 7 Effective Solutions

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