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Should Entrepreneurs Act As Their Own Registered Agent? by @DeborahSweeney

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Should Entrepreneurs Act As Their Own Registered Agent?

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“To act as your own registered agent or to work with a third party? That is the question.” We might have paraphrased this famous quote from William Shakespeare to fit into the present day, but we have a feeling the Bard might have shared similar musings if he had been an entrepreneur.

For those that don’t know what a registered agent (commonly referred to as an RA) does, this is an individual or a company that is designated by an LLC or corporation to accept official documents on behalf of a small business. While many small business owners choose to work alongside a third party, some decide to act as their own registered agent. This is still legally acceptable, so long as you thoroughly understand what is expected of you in this role. Here’s a look at some of the responsibilities that come with acting as your own RA.

A physical address is required.

As a registered agent, you must have a physical street address. A P.O. Box is not considered to be an acceptable address. Furthermore, the street address must be in the same state you do business and the RA must also be a resident of the state. If your LLC or corporation has been formed outside of your home state, you may need to work with an outside registered agent service until (and if) you decide to move the business to that state and work from a physical address within that location.

You must be available during general business hours.

Corporations and LLCs that are formed on a state level must have a designated registered agent in order to accept correspondence on behalf of a business and remain complaint with the state law. Correspondence tends to arrive during general business hours and registered agents must be available at that time to accept service of process. This can prove to be difficult for ‘treps on the go, who may not be available or physically present at their designated address during normal operating hours.

Are you ready to receive this much paperwork?

Registered agents accept quite a few legal documents on behalf of a small business which may include franchise tax forms, annual reports, renewal reminders, and lawsuit paperwork. They also accept official documents from the state. If you don’t mind staying organized with all of this paperwork, then you may be able to be your own RA. However, if you’re concerned that some of the documents might get lost along the way or disorganized you may find it’s a better idea to work with a registered agent service.

I don’t think I have the bandwidth to be my own RA! What should I do?

Reach out to a third party registered agents and work alongside them! You’ll find that it provides peace of mind to work with knowledgeable and reliable professionals that know exactly what they’re doing and are often more affordable than hiring a CPA or attorney. If you need help finding one, visit your state’s Secretary of State website for a list of active registered agents.

Everything You Need to Know about Registered Agents by @deborahsweeney

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Everything You Need to Know about Registered Agents

by Deborah Sweeney | Featured Contributor

Starting a business involves making a lot of choices, and with those choices comes the opportunity to do plenty of research. You have to choose the right entity to file your business as, you need to become an expert on small business taxes, and you need to weigh your options when it comes to hiring a registered agent service or being your own registered agent. Consider this your registered agent (or RA) research.

First of all, what is a Registered Agent?

A registered agent is an “agent” of your corporation or LLC.  You’re supposed to officially designate this agent at the time of your incorporation or LLC registration in accordance with state requirements. The main role of a registered agent is to act as the representative for accepting Service of Process, and to forward any and all official legal and tax correspondence from the state to you, the business owner. They receive business and legal documents from county, state, and U.S. agencies. These documents include such things as notice of litigation (as mentioned above) franchise tax forms and annual report forms. Basically, a registered agent is an individual or entity who receives documents relating to the corporation.  In most cases, having a registered agent, whether you act as your own or hire a service, is mandatory.

Why exactly do you need one?

Once a business is formed on the state level, most jurisdictions require corporations or Limited Liability Companies to designate a registered agent to receive documentation on behalf of the company.  You also need one to remain in compliance with state law. If you don’t register and designate an agent your company: can’t legally enter into contracts and gain access to the state court system, is subject to monetary, civil, and possible criminal sanctions, and/or cause your jurisdiction to revoke a business’s corporate or LLC legal status.

Registered Agent Conditions

Your RA must have a physical street address in the state your company is formed.  This means no P.O. Boxes.  Additionally, the RA must be available during regular business hours to receive service of process. Their name and address needs to be listed on the formation documents of the business and that information is kept on record as the official contact for the company.  In fact, registered agent information is considered a matter of public record.

Your Options

A small business owner can definitely act as their own registered agent, just be sure to understand all that that entails, like needing to stay open during standard business hours. You get to save some money and not deal with a third party service, but make sure you’re keeping everything compliant or you stand the risk of falling out of good standing.

You can also hire an outside service to act as your registered agent. Many business owners like this option because it gives them a sense of privacy. Were they to ever be served, the mail wouldn’t be delivered directly to them; it would be delivered to their registered agent. This way, if a document must be served to your company, it will be served to the independent third party, as opposed to serving you with legal and/or personal business documents in the presence of customers, clients, vendors, employees, and neighbors.

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Deborah Sweeney – Legal Expert, CEO, MyCorporation.com – Calabasas, CA

Deborah Sweeney HeadshotAs CEO of MyCorporation Business Services, Inc. (MyCorporation.com), Deborah Sweeney is an advocate for protecting personal and business assets for business owners and entrepreneurs. With her experience in the fields of corporate and intellectual property law, Deborah has evolved from lawyer to business owner. She has extensive experience in the start-up and entrepreneurial industry as she has been involved in the formation of hundreds of thousands of businesses for MyCorporation.com’s customers.

Ms. Sweeney received her JD & MBA degrees from Pepperdine University. She is active in the community and loves working with students and aspiring entrepreneurs. She serves on the Board of Regents at California Lutheran University and is a founding member of Partners of Pepperdine. Deborah has served as an adjunct professor at the University of West Los Angeles and San Fernando School of Law in the areas of corporate and intellectual property law. Ms. Sweeney is also well-recognized for her written work online as a contributing writer with top business and entrepreneurial blogging sites.  She is a regular contributor on Forbes, American Express, Social Media Today, and BlogHer among many others.

In her ‘free’ time, Deborah enjoys spending time with her husband and two sons, Benjamin (8) and Christopher (6). Deborah believes in the importance of family and credits the entrepreneurial business model for giving her the flexibility to enjoy both a career and motherhood. Follow her on Twitter @deborahsweeney and @mycorporation.

What to Put Into Your Corporate Maintenance Plan by @DeborahSweeney

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by Deborah Sweeney, CEO of MyCorporation.com | Featured ContributorBeautiful Woman with Pencil and Folder Isolated on White.

A few months ago I wrote an article for SheOwnsIt on keeping your business in compliance, which had some broad advice on how to ensure your business stays in good standing with the state. At the end I briefly touched on respecting corporate formalities, but I didn’t include very much detail as to what can be done to make sure your corporation doesn’t fall out of compliance. Having a corporate maintenance plan is more of a recommendation than a requirement, but if adopted and stuck to it can save you loads of stress and even some money. When planning out your corporate calendar, be sure to include the following three items.

Shareholder Meetings

Corporations are required to have, at the very least, one shareholder meeting every year, during which different agenda items are voted on and the shareholders have a chance to catch up on the latest news with the business. These meetings don’t have to be boring get-togethers in a stuffy airport Hilton conference room – shareholder meetings can be held over casual appetizers and drinks, if you’d like them to be. Just keep in mind that corporate directors have to inform shareholders of the date, time, and place of the meeting, and minutes have to be taken. Plan these meetings as far in advance as you can, and then send a reminder as the date closes in. It’s also not a bad idea to start planning from the start either. At the beginning of the year, find a good time to schedule the shareholder’s annual meeting so it doesn’t sneak up on you later on and you don’t have to rush to throw something together.

Internal Records

Another important part of your corporate plan will be setting out how you will maintain internal records. Along with keeping the minutes for the shareholder’s meeting, you will need to keep minutes for any meeting in which the directors or executives make decisions for the business. However, minutes should remain light – there is no reason to write every single detail down. Create a template that has spaces to detail when and where the meeting was, how many people attended, the agenda items, and a breakdown of the votes. You can amend the minutes before making them official, but remember that what you put down has to be an accurate record of what happened – otherwise you could find yourself in hot water.

Reports and Renewals

Finally, write down all of the important dates and deadlines your business has coming up – when your annual report has to be filed by, when renewals have to be sent, when you have to pay your registered agent, etc. The easiest way to fall out of good standing is by missing one of these dates, and while your registered agent should tell you when these deadlines are approaching, you don’t want to depend on them entirely. Highlight these dates in your maintenance plan, and don’t leave them for the last minute.

Corporate maintenance requires a bit of extra work, but you can make it easier by planning everything out early in the year. The whole reason for writing a corporate maintenance agenda is to keep you from scrambling at the last minute and possibly missing an important date for your company. By adhering to corporate governance requirements by holding meetings, diligently recording minutes, and sending in the reports and fees required by the state, you’ll never have to worry about falling out of good standing, and won’t be hit with non-compliance fees. In my opinion, that peace of mind is well worth the few days it takes to set up your corporate maintenance plan.

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About the Author:

Deborah Sweeney HeadshotDeborah Sweeney is the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best. Follow her on Google+ and on Twitter @deborahsweeney and @mycorporation.

How to Keep Your Business Compliant by @DeborahSweeney

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by Deborah Sweeney, CEO of MyCorporation.com

I cannot begin to stress how important it is to make sure your business stays compliant with the state. Small business owners have a tendency to procrastinate when it comes to filing important paperwork and paying state fees, but if your business falls out of good standing with the state you will have to pay, both monetarily and with your time, to get your company compliant again. It’s a much, better idea to instead just buckle down and stay on top of everything, especially these three required areas.

Your Estimated Tax Payments

You really don’t want to test the boundaries of government oversight when it comes to taxes and the IRS. Anyone who is self-employed and expects to owe more than $1,000 when they file their return has make quarterly estimated tax payments. If your business is a corporation and you expect to owe more than $500, you also have to make estimated tax payments. The IRS does provide instructions on how to determine estimated tax, and when payments are due – as a quick heads up, the next due date for 2013 is September 16th. For individuals, these instructions are part of the 1040-ES package, and for corporations the instructions are part of the 1120-W. Now, it is okay if your calculations are slightly off, but if you’re grossly underpaid you will be hit by some steep fines. Paying estimated taxes can feel a bit like trying to predict the future, so most accountants recommend you pay at least 100% of the taxes you paid last year. If you are really worried, re-estimate in the middle of the year (August is a good month to do this during) and see how close your estimates were to what you actually owed during the first two quarters.

Your Annual Reports

If you run your business as a sole-proprietorship, you don’t have to worry about annual reports – though we do recommend reconsidering your business structure. But, if your business is structured as an LLC or a corporation, most states will require you to file a report on your business and pay a fee every year. This report is meant to ensure that the information filed with the state, like who your registered agent is and where your business is located, is up to date. Not filing an annual report is one of the quickest ways to fall out of good standing, so make sure you always mark your calendar with when you need to file.

Respect Corporate Formalities

Neither sole-proprietorships nor LLCs have to worry about adhering to corporate formalities, though most business advisors suggest that LLCs should still hold annual meetings, adopt an operating agreement, and document any business decisions and financial activity for the sake of legal protection. Corporations, on the other hand, are required to adhere to strict, formalized operating procedures. When you form a corporation, you must hold an initial meeting for the directors to adopt bylaws, elect officers, and issue stock. After that, you have to have annual meetings for the directors and the shareholders, and keep the minutes for these meetings in your records. Business and financial activity must also be documented, and nearly any change to the business has to be adopted through corporate resolutions. It is easy to fall behind on the many formal requirements that corporations have to adhere to, but if the state looks into your records and sees you aren’t following the rules, they can revoke your status as a corporation. So keep detailed records and respect state requirements.

Staying compliant with the state can be a very time-consuming, arduous process, but it is something that every small business needs to do. Make sure you know exactly what deadlines you have to file by, how much money you have to send along, and what hoops you have to jump through to stay compliant. The last thing you want is to have to pay exorbitant fees and file a bunch of paperwork to get back into good standing, and putting in a little effort now will save you from having to worry and stress about your business’s standing later on.

Photo Credit: ♥beryl via Compfight cc

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About the Author:

Deborah Sweeney HeadshotDeborah Sweeney is the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best. Follow her on Google+ and on Twitter @deborahsweeney and @mycorporation.