When starting a nonprofit, you may feel overwhelmed by all the decisions you have to make. At least when the decision is about choosing a registered agent, it’s a clear-cut one! This is because every state requires a new nonprofit to choose a registered agent. The choice is typically between an individual or a service. For most organizations, the decision seems simple, but is it?
In this article, we’ll delve into the pros and cons of each and share what else you need in a registered agent.
What is a Registered Agent?
You’ll face various rules and regulations within your state and the Internal Revenue Service (IRS) when starting a 501(c)(3) nonprofit. Since most nonprofits file as a corporation with their state, one of these requirements is to have a Registered Agent.
When filing your articles of incorporation, every state requires businesses and nonprofits to have a registered agent responsible for receiving all legal documents for the nonprofit. These documents typically address the nonprofit’s state tax requirements and other legal issues. The registered agent may also be served legal papers for the nonprofit, like a summons or subpoena.
Whether your nonprofit is a small volunteer-led organization or a national nonprofit with locations across the country, a registered agent is a requirement, and the person must be trustworthy and reliable.
Without one, your organization can’t get off the ground and could lose its tax-exempt status.
Who Can Be a Registered Agent?
Nonprofits can choose any legal adult or a company to be their registered agent. States only require that a Registered Agent be located in the state and keep regular business hours.
Individual Registered Agent
Choosing an individual as your registered agent is common with most new nonprofits. In the beginning, the founder of the organization is generally the best choice as most new nonprofits have limited cash flow, and this decision won’t incur extra costs. A most welcome bonus at the outset and when starting a nonprofit with no money!
The only issue with choosing an individual is that as your organization grows, this person may move on and leave your nonprofit. In this case, you’ll need to update the corporate filing with the state and choose another registered agent.
Registered Agent Service
As a nonprofit grows in size and budget, choosing a service for your registered agent could be a great option. There are several specialist companies nationwide that offer this service. The benefit is that these companies understand the rules and requirements of the state, can immediately send documents to your primary office, and maintain a stable address that you can depend on for years.
For national nonprofits, using a service or corporation as their registered agent could be the more efficient option. Since registered agents must be located in each state, a national registered agent service can limit the time and trouble it takes to find a separate person for each location.
Choosing a Registered Agent for Your Organization
Your nonprofit needs a registered agent, or your application for the corporation will be rejected. If you don’t ensure this person is active with the organization and can legally accept documents, you are in danger of jeopardizing your tax-exempt status.
So, who do you choose?
We’ve already discussed the pros and cons of choosing between an individual or registered agent service, but that’s just the beginning. The registered agent is responsible for receiving and passing along legal documentation in a timely manner. They must also copy and store these documents for the organization. With this in mind, there are several other things your registered agent must have or be, including:
A fixed address
You must update your corporate information with your state whenever you change registered agents or if your registered agent moves. It is in your best interest to choose a registered agent with no plans to relocate or leave the organization.
Regular office hours
Whether you choose an individual or service, the registered agent must keep regular business hours so they can receive a subpoena or a legal summons for the organization.
Must be 18 years or older
States require registered agents to be adults.
Be organized, trustworthy, and reliable
In addition to being an adult, your registered agent must also be dependable, organized, and reliable. You’ll need someone who can keep the information they receive private and secure. This will be the person to store copies of sensitive organization documents and forward these to the board, so you need someone ethical and trustworthy.
If hiring a company, make sure they have offices in every state
A national registered agent service should have a presence in every state and understand each state’s registration and renewal requirements. This provides your nonprofit with a source of information when you have questions.
Conclusion
It’s a complicated process, but a necessary one! Hopefully, we’ve taken the complexity out of the issue and you’re more reassured about how to choose the best registered agent for your nonprofit.
Remember, your new nonprofit may be thrown for a loop by unexpected regulations and requirements from the state. A trustworthy registered agent will be an immensely helpful resource in this case.
If you’re starting a nonprofit, visit our website for a step-by-step guide to help you file state and federal documentation and build a solid foundation. Donorbox offers unique fundraising features and affordable prices for nonprofits of every size. We’re excited to help you on your path to achieving your mission!
At Donorbox, we prioritize solutions that help our nonprofits increase their donations. We know that funding is key when starting a nonprofit. Also, effective donation forms are a vital part of nonprofit sustainability.
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Kristine Ensor
Kristine Ensor is a freelance writer with over a decade of experience working with local and international nonprofits. As a nonprofit professional she has specialized in fundraising, marketing, event planning, volunteer management, and board development.
Kristine Ensor
