The United States government has placed emphasis on the value of entrepreneurship in the country. Small businesses make up the majority of the economy and create job and learning opportunities. Despite the effects of the pandemic, entrepreneurship is on the rise in the U.S, with the government putting programs into place that will help support the growth of new and current businesses.
The White House has said that “the Small Business Administration (SBA) will increase the maximum amount of funding a small business can borrow [through their COVID Economic Injury Disaster Loan program] from $500,000 to $2 million, which can be used to hire and retain employees, purchase inventory and equipment, and pay off higher-interest debt. This increase will help small businesses: an SBA analysis of current COVID EIDL borrowers who qualify for the increase shows that more than 80% have 25 employees or less.”
When starting up a new business, entrepreneurs must conform to state and federal regulations. One of the federal requirements for all formally registered businesses is that they need to appoint a designated registered agent.
What is a Registered Agent?
Registered agents can sometimes go by different titles; for example, a California registered agent is also known as an agent for service of process. However, regardless of the title, registered agents are responsible for all communication between the Secretary of State– such as the Annual Reports and certificate of good standing. They are also in charge of receiving all service of process for the business in the case of a lawsuit.
The registered agent’s name and address are also made publicly available so that outsiders know who to send the paperwork to. It gives business owners peace of mind knowing that there is only one contact point for legal notices that the business might receive.
Who Can be a Registered Agent?
Any business owner or employee of a business can be allocated the position of a registered agent in the United States as long as the individual is of legal age and has a street address in the relevant state. Business owners could also choose to elect a member of their company, or even a trusted friend, as long as the person meets these requirements too.
However, the issue that often arises is that the person selected needs to be available whenever they are required; this makes it difficult for in-house registered agents to take time off. As a result, many businesses prefer to use a professional registered agent service.
Do Registered Business Agents Make Money?
Registered agents are required to be available from 8 am-5 pm every working day, which is often why entrepreneurs opt to hire the services of a professional registered agent. It is often more feasible to pay for the service from a professional provider as opposed to having to pay the full salary of an in-house registered agent.
The amount that is paid to a registered agent is a tax-deductible expense for businesses. This includes the basic service fees as well as any additional fees for extra services. Even if a business is not legally required to have an external registered agent but opts for one, the fees are still tax-deductible.
Benefits of a Professional Registered Agent Services
Utilizing the services of a professional registered agent can have a variety of benefits, such as:
Compliance- Since most registered agent services maintain a compliance calendar, they will remind members when annual reports or other filings are due and assist with the filing.
Discretion- Having to receive service of process for a lawsuit at a business should be a discreet situation to not alarm employees and clients. A registered agent will receive these documents at their office and have them delivered subtly.
Flexibility- Registered agent services run physical offices and therefore have staff to cover those hours; this means that there will be someone available during the necessary times— allowing business owners greater flexibility in the hours and locations that they work.
National Coverage- For businesses that plan on expanding into other states— a registered agent is necessary for a foreign entity. Most registered agent services operate in all U.S states.
Privacy- Registered agent services will use their own address and details in place of the business owner’s. This allows for greater discretion and anonymity.
For more detailed information and a breakdown of some of the top registered agent services available, The Really Useful Information Company (TRUiC) is a great online resource to start with.
Registered agents are a government requirement and allow for efficient communication between the state and business. While it is possible for entrepreneurs to use an in-house individual, a professional registered agent saves businesses the time and hassle of having to be available for contact during business hours.