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Designating a registered agent

One of the most important steps in establishing a small business is typically the formation of a limited liability company, or LLC. This provides a number of benefits; LLCs protect their owners from debts incurred by the company, help build credibility and provide tax benefits. In order to create an LLC in Maryland, you must name a registered agent. A registered agent is responsible for collecting and maintaining important tax and legal papers on behalf of your business, including documents sent by the state of Maryland and lawsuit notifications.

LLCs allow you to designate yourself as your registered agent, but there are a number of drawbacks to this approach. Your registered agent must be located in the state in which your LLC was formed. If you established an LLC in Maryland, but later moved to another state and relocated your business with you, you may not serve as a registered agent in Maryland. Likewise, you must name a registered agent for any additional states you wish to do business in, unless you open physical offices in each.

Naming yourself as a registered agent can also affect your privacy. A registered agent's address is available to anyone, including marketers and spammers. Designating a professional third party as your registered agent prevents your contact information from being readily available and saves you the trouble of receiving mass amounts of unsolicited junk mail. Similarly, registered agents must be available during standard business hours in order to accept important documents. If you set your own hours or do not work in a traditional office, opting for a third party makes you much less likely to miss important notifications.

Finally, a registered agent must keep a current address with the state. Any changes to this address, even if it remains in the same state, must be approved via a formal filing process. There is also a fee involved.

Source: Business Insider, "You Shouldn't Be Your Own Registered Agent," Aug. 6, 2012

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