What is a Registered Agent & Why Do Online Businesses Need One?

What is a Registered Agent & Why Do Online Businesses Need One? 1

Online businesses have become popular ways to make money online. Practically everyone shifted to working from home thanks to COVID-19, with tons of apps that have made it all the more feasible to completely operate an online business with ease. 

On top of being simpler to start up, there’s also the fact that consumers have simply embraced e-commerce more. For starters, Forbes’ breakdown of e-commerce statistics in the United States found that 9.69 million people in the country shop on social media. That doesn’t even count as dedicated platforms for e-commerce.  

So, if you’re planning to get a slice of that, you may be wondering if the same rules that apply to offline businesses apply to you. One of the biggest things you will likely have questions about is what a registered agent even does and why an online business might need one.  

What is a Registered Agent?

A registered agent is responsible for receiving service of process on behalf of your company. The agent is designated by the business owner and must be registered with the Secretary of State. You can actually make your business or yourself the registered agent, but this is often advised against because of the liability and compliance issues that may come with it.  

Basically, if you have tax notices, lawsuits, legal correspondence, and any official documentation from the government addressed to your business, your registered agent is the one who is responsible for receiving these and ensuring your timely response.  

It’s worth noting that a registered agent isn’t always called such in every state. There are different names for the role despite the fact that they all fill in the same spot. For instance, Arizona refers to this role as a statutory agent. In New York, it’s an agent for service of process (which is usually a role taken on by the Secretary of State in their case).

Do You Need a Registered Agent? 

Generally speaking, all states require businesses to have a registered agent. And yes, that includes online businesses. What will really determine whether or not you legally need one to operate is the nature or structure of your business.  

The only entities that don’t require a registered agent are sole proprietorships and general partnerships. A lot of online businesses being operated by a single person tend to lean toward sole proprietorships because they require little to no paperwork. You’ll often find this type of structure in states with the largest consumer activity in this field, which PC Mag’s online shopping trend post reveals to be Washington that’s seeing some of the most online purchases from residents. 

If you’re running a more complex online business and have employees, you will likely be required to register as a different business entity. In these cases, you will need a registered agent.  

How to Get a Registered Agent 

If you’re choosing to pick your own registered agent, you can actually appoint any trusted individual and just get them registered with your Secretary of State. As long as the individual is of legal age, resides in the same state as your base of operations, and is available during regular business hours, they should be eligible. 

Of course, you may find it easier to go for a commercial registered agent service. This is very useful if you’re overwhelmed by the choices and want to get someone with experience. According to Namechk’s guide to finding the best registered agent in Texas, the top commercial services will be able to handle the entire filing process for you online. On top of that, they will provide a designated address in the right state and ensure that the agent they provide is well-versed in local laws and regulations that pertain to your particular business model.  

Why You Need a Registered Agent 

So, why does your online business even need one? Aside from the fact that it’s a legal requirement, it’s all about maintaining compliance. The costs and repercussions that come from non-compliance can completely sink your business, so it’s best to have a great registered agent who is up-to-date with regulations. You’ll need someone who is not only well-versed in state-specific guidelines but also requirements that apply to primarily online businesses. Cross-state compliance will also need to be considered since online businesses aren’t just bound to one area.  

 A registered agent also helps with digitizing any documents sent your way that would be better preserved and tracked digitally. Commercial registered agents may offer this additional service on top of mail forwarding, which is great since it’s easier to backup Gmail emails than it is to keep track of and secure a bunch of papers in real life. This improves security as well as long as you are mindful of your cyber protection. Small businesses are often targeted in cybercrime, and Yahoo News reports that California is the most hacked state, with 67,095 losses.  

For more things internet, check out some other Say Geeks’ articles