A registered agent is a person or company officially designated to receive legal and government documents for a business entity. This includes lawsuits, state notices, annual report reminders, tax correspondence, and compliance warnings.
For most formally registered businesses, the answer is simple. Yes, you are legally required to have one. The only question is whether you should appoint yourself or hire a service.
Which Businesses Must Have a Registered Agent
You need a registered agent if you formed a business entity with the state. This includes:
Limited Liability Company
Corporation including S corp election
Limited Partnership
Limited Liability Partnership
Nonprofit corporation
Foreign entities registered to operate in another state
Sole proprietors and general partnerships usually do not need one because the owner is already legally reachable.
Reason: the state must always have a reliable legal contact for service of process. Courts cannot function if lawsuits cannot be delivered.
What the Registered Agent Actually Does
The role is often misunderstood. A registered agent is not a manager, accountant, or business consultant.
Their legal duties are specific:
Receive service of process during a lawsuit
Accept tax notices and compliance letters
Receive annual report reminders
Maintain a physical address in the state of formation
Be available during normal business hours
If a lawsuit arrives and no one receives it, the court can still proceed. This leads to a default judgment.
That is the real risk.
Can You Be Your Own Registered Agent
Yes in most states. Many owners do this when starting out.
However you must meet strict requirements:
You must have a physical street address in the state
You must be available at that address during business hours
Your address becomes public record
You accept legal papers in person
This last point matters. Service of process can happen in front of employees, customers, or neighbors.
When Being Your Own Agent Causes Problems
Most businesses switch to a service later because practical issues appear.
Privacy exposure
Your personal home address becomes searchable in state databases
Missed documents
Travel, meetings, vacations, remote work, or irregular schedules create legal risk
Multi state expansion
You cannot physically exist in every state
Embarrassing service of process
A lawsuit can be delivered publicly during business hours
Mail reliability
Government letters often look like junk mail and get ignored
What Happens If You Do Not Maintain One
States enforce this aggressively.
Typical consequences:
Administrative dissolution of LLC or corporation
Loss of liability protection
Late penalties and reinstatement fees
Default judgment in lawsuits
Loss of good standing status
Once dissolved, contracts, banking, and payment processors can break.
When Hiring a Registered Agent Service Makes Sense
Most businesses benefit once any of the following applies:
You operate from home
You travel frequently
You run an online business
You want privacy
You operate in multiple states
You want compliance reminders
You do not keep fixed office hours
The cost is usually small compared to legal exposure.
Situations Where Acting as Your Own Agent Is Acceptable
You have a staffed physical office open all day
You do not mind public address listing
You operate only in one state
You can reliably manage compliance deadlines
Many small local storefronts fall into this category.
Key Decision Principle
This is not a tax decision.
It is a reliability and risk decision.
If a legal notice arrives tomorrow at 11:30 AM, will someone guaranteed receive it?
If the answer is uncertain, you should not be your own agent.
Resources
Internal Revenue Service business structure overview
https://www.irs.gov/businesses/small-businesses-self-employed/business-structures
Small Business Administration choose a business structure
https://www.sba.gov/business-guide/launch-your-business/choose-business-structure
National Association of Secretaries of State business formation resources
https://www.nass.org/business-services
Service of process legal explanation Cornell Law
https://www.law.cornell.edu/wex/service_of_process