It’s a great time to start an eCommerce business. Even as inflation and supply chain issues complicate things for both consumers and businesses, the market remains ripe for success. Right now, 70% of Americans shop online.
The landscape may even become more promising for the little guy in the coming months. The New York Times reports in ‘U.S. Accuses Amazon of Illegally Protecting Monopoly in Online Retail’ that the Federal Trade Commission is adamant about making room for competition in the eCommerce space. So, smaller entrepreneurs may no longer be blocked from selling their goods on different platforms (potentially even their own.)
If you’re looking to join the fold, you’ll need to get the legalities squared away. That brings us to the discussion of whether or not you would actually need a registered agent.
What is a Registered Agent?
The first thing you need to understand is what a registered agent even is and why this role is important. A lot of people think that this is just a glorified representative, but a registered agent is pretty crucial if you want to stay on top of your compliance. The agent is responsible for receiving service of process and handling any official or legal correspondence directed to your business.
This means tax notices, lawsuits, government communications, and the like will be received by them. These types of documents and actions require timely responses and can also determine whether you need to make any changes to your operations. Failure to keep up with these may result in problematic fines and potential penalties, so it’s important to have a registered agent who has the experience and know-how necessary for the state you operate from.
Does eCommerce Require a Registered Agent?
Generally speaking, all businesses that are headquartered in the United States are required to have a registered agent. This applies regardless of what state you’re operating in. And yes, this applies to eCommerce businesses as well (even if you don’t have a physical shop.)
That said, this depends on whether you are running as a sole proprietorship or other business entity. A lot of businesses, especially those primarily online, actually choose to run as sole proprietorships as these are the easiest to form and require little to no paperwork.
This rings especially true for businesses launching in the top states for business in the US. According to Utah’s Division of Corporations and Commercial Code’s ‘Considerations in Forming a Sole Proprietorship’, this business structure is the most common and simple one chosen by entrepreneurs in the state. Of course, that also means that the business owner has full liability for management, losses, and the like.
Sole proprietorships are not legally required to have a registered agent. So, it depends what business structure you choose, and then that will ultimately determine its benefits.
How to Get a Registered Agent
If you are running as an LLC or other business structure, then you will need to have a registered agent. You’ll need to get an agent as you file for your business registration. You can either appoint one yourself or make use of a commercial registered agent service.
Based on ‘How to Find the Best Registered Agent in California’ by Namechk, registered agents are required to maintain a physical address in the state, be of legal age, have the ability to deliver and process documents efficiently, and be available during regular business hours (9:00 AM to 5:00 PM). Although this is specific to California, which is notorious for being the most heavily regulated state for business, the same general rules should apply to other states as well. If you’re not sure how to find the best candidate, commercial services will appoint one for you and designate a physical address to represent your business on public record.
You should also note that some states will have a different term for the role, but it still exists to serve the same purpose. For instance, Arizona refers to this role as a Statutory Agent. Make sure to check updated information with your Secretary of State, too, because some states have seen changes to their naming conventions over the years. In 2017, Connecticut switched from Statutory Agent to Registered Agent after generations of the previous term.
Once you’ve got these requirements covered, make sure you cover all the bases by reading up on ‘How to Start an eCommerce’ business. If you want to succeed in such a populated space, you need to take all the right steps to carve out your own market and get conversions.