HomeBUSINESSWhy Do Tech Business So Desperately Need Registered Agents?

Why Do Tech Business So Desperately Need Registered Agents?

Getting into the tech industry has been very promising in the last decade for many entrepreneurs. With how rapidly resources are growing and advancing, the market is only going to grow further in the coming years. Right now, the IT sector is largely what is powering the US economy despite the challenges brought on by inflation. For starters, the tech-focused market is responsible for 28% of establishments and 22.4% of jobs in the United States.

While most of the industry’s focus is on the adoption of AI-driven solutions and building the cloud further, many tech businesses suffer greatly because they don’t have a solid registered agent on their side.

What is a registered agent?

A registered agent is responsible for receiving tax notices, legal documents, and formal inquiries on behalf of a company. Any service of process directed to a business will be sent to the registered agent, who will then survey its legitimacy and ensure timely response and compliance from said business.

Every state requires businesses to have one, but many businesses just opt to represent their own business or give the role to an existing employee. While this is the “easiest” route, it loses much of the advantage the role provides for businesses (especially in tech.) It’s also worth noting that this role has other official names, depending on what state you’re in. For instance, major tech mecca California dubs this role an Agent for Service of Process.

Why do tech businesses need a registered agent?

Meeting State Requirements

It may seem like the most obvious reason, but any tech business looking to survive the ups and downs of the landscape will need to make sure they meet their state’s requirements. Although many changes continue to be implemented through the years to keep up with new technologies, there are certain guidelines that remain inarguable.

This remains true for the fastest-growing tech hubs in the country. Just look at a guide on how to find the best registered agent in Georgia, home to the vibrant tech hub of Atlanta. Regardless of the nature of the business, the agent must be active upon registry of the business otherwise it will not be considered as a legally operating entity. The state also requires that registered agents be available during regular business hours and maintain a physical address in the state.

Maintaining Compliance

The biggest reason why tech businesses absolutely need a good registered agent is because of their role in maintaining compliance. There are so many regulations being faced by tech companies, especially in niche sectors that are still emerging, so it’s essential to have someone to hold the fort for legal communications. Just look at New York’s takedown of Blue Global LLC, which saw its CEO paying out $1 million for non-compliance.

Add in the recent debacle with DoNotPay’s attempts to have AI represent them in court being faced with potential jail time, and there’s more than enough reason for tech companies to just stick to the safe and true route of having the right people on your team.

Ensuring Business Continuity

Business continuity is a must in tech, perhaps even more than it is in other industries. With so many tech companies adopting hybrid setups and dealing with new forms of infrastructure, there is a need for a singular point of communication. With a registered agent, this is achieved without sacrificing resources. The organization then gets to focus on its daily tasks with the certainty that any legal and urgent notice will be forwarded accordingly.

Reducing Potential Costs

When calculating the total cost of non-compliance paid out by companies in the US, the startling total comes to over $14 million. This covers penalties, fines, and revenue loss, among other things. In comparison, the total average cost that businesses invest in compliance hovers around $5 million.

It’s more relevant to reduce costs in this area as B2C tech veers further into e-commerce. When you ask ‘How Much Does E-commerce Cost?’, the usual considerations only cover strategy, hosting, management, content, and realization. The reality is that compliance can go far beyond any of those costs, and a registered agent is just what you need to keep these hefty fees at a minimum.

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