Many accounting professionals are often called upon to take on additional tasks for their clients. One such task is serving as a client’s registered agent. Although a CPA’s financial and compliance expertise makes the CPA the ideal candidate for this role, there are certain considerations to address before taking on this responsibility.
What is a Registered Agent?
A registered agent is an individual or business entity that is designated to receive legal documents and government notices on behalf of a company. Some examples of correspondence registered agents are authorized to accept include the following:
- Service of process (such as lawsuits)
- Official federal and state correspondence
- Subpoenas
- State and federal tax notices
- Court summons
- Wage garnishment notices
- Corporate filing notifications
Every corporation, LLC, or limited partnership is required by law to maintain a registered agent with a physical address in the state in which the business was formed. The agent must be available during normal business hours to receive official documents. Typically, a corporation or LLC cannot serve as its own registered agent, but a business owner, employee or family member can. However, there are certain requirements for serving as a registered agent.
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What are the Requirements for Serving as a Registered Agent?
The requirements for serving as a registered agent vary from state to state, but in most cases, registered agents must have a physical office, not just a P.O. Box, in the state in which the business operates with office hours from 8 a.m. to 5 p.m. Monday through Friday. If a client has locations in multiple states, there must be an agent designated in each state. The agent must be legally authorized to conduct business in the state, and the agent must reside in the state in which the agent serves.
To become a registered agent, a CPA must do the following:
- Ensure someone is available in the office during regular business hours to accept time-sensitive documents.
- Obtain explicit permission from clients of the intention to serve as a registered agent.
- Submit a formal agreement or application with the state, if required, and complete any necessary paperwork.
- Pay any fees if required to do so by the state.
- Remain in compliance with state regulations and regularly update your business information if required.
- Forward all legal correspondence to clients in a timely manner.
The Benefits of Serving as a Registered Agent
For many accounting professionals, the benefit of serving as a client’s registered agent is the value it adds to the client-CPA relationship. Offering a full suite of accounting-related services reflects a commitment to the long-term success of clients. Assisting clients in remaining compliant in their business filings builds trust and loyalty and increases the likelihood they will recommend you to others.
Keeping all your clients’ accounting tasks under one roof makes sense, because CPAs are already familiar with filing deadlines, annual reporting requirements, and other federal and state obligations. Centralizing these tasks can simplify the administrative workload and make compliance easier on all involved.
Best Practices for Becoming a Registered Agent
If you’re interested in becoming a registered agent for your clients, there are several best practices to consider:
- Develop a written agreement that clearly outlines the scope of duties, responsibilities, and limitations.
- Implement reliable software tracking and calendaring systems to monitor the receipt of documents and compliance deadlines.
- Carry appropriate insurance, such as professional liability or E&O.
- Periodically assess whether the services are truly benefitting your business with regards to client satisfaction and revenue.
The Downsides of Becoming a Registered Agent
For some accounting professionals, there is an appeal of adding a new revenue stream while serving dual functions for established clients. To others, the additional responsibilities are simply too much. Most notably, the requirement that the registered agent be available during normal business hours, five days a week, to receive official correspondence may be unrealistic, especially for smaller firms.
Third-Party Registered Agent Services
If you’ve been considering becoming a registered agent but are hesitant to take on the additional workload, there is a solution. Third-party commercial agents allow you to offer these services to your clients while they do the hands-on work. Some of these agents, such as CorpNet, are in charge of receiving and managing your client’s paperwork, meaning they take on the responsibility of being available in the state of formation during regular business hours. The documents are uploaded to a secure portal, and you can then forward them directly to your client, while keeping your own branding and client point of contact.
Another option is a referral program. If you’d like to help your clients find a registered agent without ongoing responsibilities, many commercial agents have referral programs in which they deal directly with the client. In this case, you would receive a referral fee, but the third party would do all the work. Both approaches allow you to maintain your trusted advisory role without taking on the additional administrative burdens of becoming a registered agent.
Acting as Your Client’s Registered Agent
Whether you choose to become a registered agent or hire a third-party vendor to take on the work, offering this service to your clients can be a great benefit to your CPA business. For some accounting professionals, it can be a value-added service that helps foster trust and loyalty. But for others, the logistics and liability don’t make sense, and outsourcing may be the best way to go.
Either way, CPAs play a critical role in helping business clients keep their legal documents and paperwork in order and ensuring they maintain compliance. Taking on the dual role of CPA and registered agent allows crucial responsibilities to stay in house, thus streamlining the work while creating an additional revenue stream.
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