The Disadvantages of Being Your Own Registered Agent

One of the incorporation requirements is that you need to have a Registered Agent. An RA is required to accept legal and official documents on behalf of the corporation. 

It is an important position, and the choice of an appropriate RA is crucial to the corporation’s smooth functioning.

With that said, any person or entity can be the RA. A family member or friend, your lawyer, an entity, or even you can act as the RA. The corporation cannot be its own RA, but an external entity can be the RA for a corporation. 

 

Requirements to Become a Registered Agent

 

The only requirements for someone to be an RA are that:

  • The person has to be 18 years of age or above.
  • The person or entity has to have a physical address in the state where the corporation operates.
  • The person or entity has to be a resident of the state where the organization operates.
  • The person or entity has to be present in the office from Monday to Friday, 9 am to 5 pm, to accept notices.

 

As you can see immediately, this is a tall order for one person. It will be nearly impossible for you to handle an RA’s duties along with other responsibilities.

Most often, when incorporating an entity, cash is at a premium. You may think that you will be able to handle the RA’s duties for your company and save money on hiring an external RA. This is not advisable for several reasons listed below.

 

Why Being Your Own Registered Agent Isn’t Recommended

 

  • Change of Address Issues

First, the RA’s address has to be registered with the local government officials. The address has to be a local address. At a later date, if you change your address, you have to notify the government. 

Paperwork and a fee are involved in this change of address. Each time you move to a new location, the local officials need to be notified. This can be quite a task. In case you decide to relocate outside the state, this is also a significant problem. This is because the RA has to be a resident of the state where the corporation is registered.

On the other hand, if you get an external RA or agency to handle this aspect of the business, you are free to change your address as many times as you want. You don’t even have to notify anyone. In such cases, the RA will have to provide their address to the authorities.

 

  • You Are Bound by Time and Presence

The next major challenge to being your own RA is that you have to be present at the registered address during working hours to receive legal service of process documents.

This literally means that you need to be present at the official address from 9 am to 5 pm, from Monday to Thursday, without exception. No chance of holidays or stepping out for a meeting with a client.

You will not be able to step out for a business lunch or meet a client, just if the person serving you the notice comes in while you are away. Suppose you miss being served a legal notice. In that case, the court proceedings could continue without you being present, which could be detrimental to your organization. 

Even though you are physically present in the office and busy on a phone call, he may not serve you when the official serving the process notice comes in. This can cause a lot of damage.

On the other hand, a professional RA or service would take away this headache so that you can concentrate on other, more critical aspects of your business. 

 

  • The Dangers of Missing Important Legal Documents

Additionally, there are chances that you may miss important service of process notices. If that happens, your company could be in a lot of legal trouble. 

This is because, as a registered agent, you will receive a lot of mail. Most of it would be junk mail, but you will need to sort through all of it for important notifications. 

Suppose you miss the deadlines for submitting a tax report or other necessary filings. In that case, this could potentially be detrimental to your business. The better option would be to get a professional entity or RA to handle all the official correspondence and legal compliances. 

A registered RA will go through all the official mail and sift out the important ones. Copies of these will be sent to you for further action. 

This way, you take the pain out of worrying about deadlines and unfulfilled compliances. The RA will handle all of it for you. This reason more than justifies the cost of hiring an external agency to handle all legal compliances for your organization.

 

  • You Need to be Physically Present in a State

The RA has to provide an address in the state where the business is registered. This means that if you are the RA for your company, you have to be resident in the same state. If you are the RA for your corporation, you cannot be resident in another state. 

Also, at a later date, if your organization decides to open branches in other states, then you need to have an RA with a local address in each of those states. The RA will also have to be present in the office to receive legal and official documents on all working days.

Now you can see the impossibility of trying to be your own RA. You cannot be physically present at multiple locations.

The best option for a corporation with units in different states is to hire a professional agency to handle RA duties. Once again, the expense involved is justified in terms of peace of mind and ease of doing business.

 

  • Reduced Privacy

As mentioned earlier, the RA has to provide an official address to receive notices. If you are your own RA and work from home, you may be tempted to give your residential address. 

This leaves your address open to public scrutiny, and you will receive a lot of junk mail at your personal address. 

As mentioned earlier, this means you will have to sift through a lot of junk mail. You may miss important mail in the bargain.

Rather than making your address public, the better option is to get an external entity to handle this aspect of your business

 

  • You Could be Served a Legal Notice in front of Employees or Clients

Receiving a legal notice is a harrowing experience in itself. As your organization’s RA, the experience is worse if you get served a legal notice in front of your employees or clients. 

To save you from going through this humbling experience, we suggest that you plan to outsource RA’s task to a professional or agency. 

 

 

Conclusion

Even though using an entity or external RA’s services can be costly, it is justified. If you decide to handle being your own RA, you will face many issues like those listed above. 

No matter how organized or committed you are, the requirements of being an RA for your own corporation can weigh you down. It is much better and easier to engage an external agency’s services to handle this aspect of your business. 

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