In most cases a Delaware registered agent is not only prudent, it’s a fundamental business requirement—especially if you own a Delaware LLC, limited partnership, or corporation.
Registered agents are an instrumental part of the business and LLC formation process, but they also assist businesses with meeting their legal compliance deadlines and abiding by laws established by the Delaware Secretary of State Division of Corporations.
But what exactly is a registered agent, how can you choose the best registered agent service, and do you need one?
What Is a Registered Agent in Delaware?
A registered agent is an individual or business entity that agrees to accept official mail from government agencies (like the Delaware Department of State or the Delaware Division of Corporations), void notices from the Secretary of State, and legal notices (like a service of process, heaven forbid) on behalf of your company.
One thing that Delaware law spells out is that the physical presence of registered agents is absolutely necessary. Your Delaware registered agent must be present at your registered business address during normal business hours. Not only that, but if your business expands to other states, you must designate a registered agent in each state that your business operates in.
But what good does it do you for someone else to receive each service of process and piece of mail for you if you never see it? That’s where the second half of a registered agent’s duties comes into play: mail forwarding and other services that ensure you receive your legal documents and certified mail. These duties ensure you are able to meet filing deadlines with the Delaware Division of Corporations and represent yourself in case of lawsuits.
Sometimes a registered agent is referred to as either a resident agent or a statutory agent. At any rate, all three terms refer to the same duties.
What Is the Purpose of a Registered Agent in Delaware?
If all a registered agent does is accept service of process and official mail from the Delaware Department of State and Division of Corporations, then you’re probably thinking you could do the job yourself by setting up a PO box for your company and regularly checking it. How hard could that possibly be, right? Wrong. That’s not an option, and I’ll explain why.
First of all, Delaware law requires that registered agents have a physical street address, which means that PO boxes aren’t allowed. Second, there are many other services that a Delaware registered agent service provides.
Compliance
Every business is required to file an annual report, usually on the anniversary of your business formation. One of the most essential duties of a registered agent in Delaware is ensuring that business owners are aware of the annual report deadline set by the Division of Corporations, as well as other important compliance deadlines.
How do they make sure you’re aware of these deadlines? Good registered agent services issue compliance notifications.
Missing a compliance filing can cause a slew of legal and financial problems for your company. But by maintaining a registered agent in Delaware, you’ll stay informed about not only these deadlines, but also any legal or administrative issues, so that you can deal with them in a timely manner.
Management of Important Documents
Business owners who only have PO boxes or whose businesses don’t have a physical street address can find the stipulation of a physical address annoying. Whichever address you list as your business address on your formation documents is the address that will be listed on public record for your company. That’s why listing your home address isn’t the best idea.
But your business address is where legal notices (like service of process), mail and tax notices will be sent, and you don’t want to miss those. Some registered agent services (the good ones, anyway) have online document management systems to which your important documents are uploaded and viewable anytime. With these systems you can manage and store your legal documents.
This is preferable to the basic mail forwarding offered by most registered agent services because you’ll be notified about issues a lot faster, and it provides you with a convenient storage system.
Who Can Be a Registered Agent in Delaware?
Nationwide, registered agents are required to meet a few standard criteria. Here are some of the requirements that your Delaware registered agent or registered agent service has to meet:
- 18+ years old. Every registered agent in Delaware must be at least 18 years of age
- Physical address. Laws in Delaware require that your Delaware registered agent must have a physical street address in Delaware, which, again, means you can’t list a PO box.
- State laws. Some states have laws that specify who can be a registered agent and what their duties are. This means that you should read up on the regulations established by the Secretary of State for your registered agent in Delaware.
- Who you can designate. As long as the person or business meets all the requirements for Delaware registered agents, you’re free to designate anyone you wish as your registered agent. You can designate a family member, friend, employee, or even your lawyer. Just make sure it’s not some rando who likes to disappear at odd hours of the day. This is your livelihood we’re talking about.
What Happens If My Business Operates Without a Registered Agent?
If no one is present to accept service of process when a process server attempts to deliver it, the process server will deliver it to the Secretary of State instead, since the Secretary of State is in charge of business dealings. The lawsuit will proceed without you and the court may issue a default judgment before you’re even aware you’ve been sued. Because you weren’t aware of the litigation, you’re left with no choice but to abide by the ruling.
Another important thing for every business owner to know is that if you fail to maintain a registered agent in Delaware or to meet your compliance obligations as Delaware requires, then your Delaware LLC or business could lose its good-standing status. It’s a big deal when a company loses its good standing status. It could prevent your business from qualifying for loans, expanding to other states, or conducting business in the state of Delaware.
The most frightening aspect of losing good-standing status for limited liability companies is that it could result in what’s known as administrative dissolution. Administrative dissolution basically means that your LLC is automatically dissolved due to an administrative issue. If your LLC is dissolved, you’re no longer legally allowed to use your business name in the state. In fact, other companies could swoop in and take your business name for themselves. So even if you resolve this issue quickly, it’s possible that you’ll NEVER be able to use your business name again.
It’s pretty risky to run a business once the LLC has been dissolved, too. The limited liability protection that typically protects the personal assets of a business owner are nullified when an LLC is dissolved. And their personal information, and that of each LLC member, is vulnerable.
Of course, the consequences listed here for failing to designate a registered agent in Delaware or to hire a Delaware registered agent service aren’t exclusive to LLCs. These ramifications can be experienced by other types of business entities as well.
Can I Be My Own Registered Agent in Delaware?
Since no state specifically forbids you from being your own agent, the answer is yes, you can be your own Delaware registered agent. However, you should learn about the pros and cons of being your own agent before you make that decision.
Cons of Being Your Own Registered Agent
Liability
The biggest downside of being your own registered agent in Delaware is the catastrophic results of missing important correspondence or legal notices, like service of process (which is hopefully a rare occurrence for you).
If you miss a service of process, you won’t be able to defend your company in court because you won’t know about the court proceedings, so you’ll just have to deal with the ruling made against your company—no matter what it is.
Lack of Privacy
Another drawback of being your own registered agent is listing your home address in the event that your business doesn’t have a street address.
Hiring a registered agent service allows you to list your registered agent’s information on the public record for your company in lieu of your own, but that’s not an option if you decide to be your own registered agent.
Not only is this a major privacy and security concern, it means that hackers and cybercriminals have access to your information and it leaves you open to identity theft and other risks.
Time
One of the biggest disadvantages of being your own agent is the sheer amount of time it takes up. A lot of people don’t know how time consuming being a Delaware registered agent actually is. To perform the job according to state law, you have to be present at your business address during normal business hours to receive mail and service of process on behalf of your business.
The problem with that is this: it’s pretty likely that your business also operates during those same hours. This means you can’t perform both Delaware registered agent duties and business ownership duties simultaneously without creating some sort of groundbreaking technology that allows you to be in two places at once.
Pros of Being Your Own Registered Agent
There is one good thing about being your own registered agent: you won’t have to pay fees to a registered agent service.
But now that you know about all the risks and work associated with being your own Delaware registered agent and the time it takes, you may realize it’s worth it to pay for a registered agent service simply for the peace of mind and convenience.
They’re really not that expensive anyway.
Should I Use a Registered Agent Service?
There are a few reasons that so many businesses use registered agent services:
- Because they supply you with compliance alerts, you’ll be notified about upcoming filing deadlines and get annual report reminders.
- A registered agent service lessens the risk of losing your company’s good-standing status and missing a service of process.
- Due to the fact that you’re not simultaneously wearing business owner and Delaware registered agent hats, you’ll be freed up to effectively run your business.
- If your company operates in more than one state and you choose a national registered agent service, you’ll be able to easily comply with the regulations of multiple states
- Business owners who keep abnormal hours of operation aren’t required to magically produce more hours in the day to keep up with registered agent duties as well. Contrary to popular belief, business owners have to sleep sometime.
- Hiring a registered agent service ensures that businesses without a physical location or with only a PO box don’t have to list the owner’s home address on the public record.
- A little-known fact about businesses is that they receive a ridiculous amount of junk mail. If you’ve listed your home address, all that junk mail goes to your home. In contrast, if you hire a registered agent service, they’ll deal with this influx of junk mail for you.
- Some Delaware registered agent services provide premium services that you may not want to do without. They’ll provide identity theft insurance or pay state fees or change-of-registered-agent fees.
- Some Delaware registered agent services also supply LLC formation or business formation services, which means you can take advantage of bundle deals and promotions like getting registered agent service free for a year when you sign up for a formation package.
Ultimately, you’re the only one that can decide whether a Delaware registered agent service is the best option for your company. But with that said, I ALWAYS recommend that new businesses use registered agent services.
What Is the Best Registered Agent Service?
Not all registered agents are created equal. Here are some of the things you should expect from a quality Delaware registered agent service:
Service Features
In the simplest of terms, you shouldn’t hire a registered agent service if they don’t offer the services you need for your company.
Some Delaware registered agents only offer compliance calendars that are easily lost or forgotten while others offer compliance alerts to make filing deadlines a breeze. Some Delaware registered agents only provide basic mail forwarding services, which can be slow, while others provide online document management systems and an online account you can sort through and view your documents, all from the same dash.
Value
The benchmark of high-value registered agents is a combination of a wide variety of services and low prices. With that being said, you should avoid “budget registered agents.” These registered agents use low prices ($39–$59) to draw in potential customers and then charge ridiculous additional fees for necessary services (like compliance notifications and online document systems) once they’re hooked. So steer clear of budget registered agents.
Easy Sign-Up
Some Delaware registered agents have sign-up processes that take weeks or even months to get through and require a ton of paperwork. An indicator of a good registered agent service is a simple, straightforward, and quick sign-up process.
User-Friendly Interface
You’ll use your registered agent system a lot, so it’s important that it’s simple to use. Some Delaware registered agent providers have ancient interfaces with complicated navigation systems that are a minefield of technical problems and glitches. Choose a registered agent with a simple-to-use interface instead.
Customer Service
It doesn’t matter whether you have a great registered agent with a quick and painless sign-up process and simple user interface, you’ll eventually encounter a technological issue or have an urgent question that requires an answer. And given the fact that your registered agent has the power to keep your company in business or close it forever due to negligence, good customer service is crucial.
I used these rating factors, as well as my four-stage investigative process, to find the best registered agent services in Delaware and found that Northwest Registered Agent is the best choice for many businesses. If you’d like to know more about registered agent services, or how to choose the right one for your company, read my guide on the best registered agent services.
Conclusion
Business owners are faced with learning tons of new information, like management techniques, top-of-the-line equipment and technology, business terminology, and laws and regulations. In addition to all of that, they’re required to remember annual report filing deadlines, as well as other important compliance matters, so that they don’t risk getting in trouble with the Delaware Division of Corporations. Registered agent services exist to make owning a business easier by lessening some of this workload.
If you haven’t already chosen the structure for your business entity and you’d like to learn more about LLC formation, check out my guide on how to start an LLC. And if you’d appreciate a bit of guidance through the formation process, read my article on the best LLC formation services.
Delaware Registered Agent FAQs
What’s the Difference Between a Commercial and a Noncommercial Registered Agent?
The distinction between a commercial registered agent and a noncommercial registered agent was established in the Model Registered Agents act, the American Bar Association’s attempt at national, standardized regulations for registered agents. A commercial registered agent is one that’s registered with the Secretary of State. Some states require that all professional registered agent services register as commercial registered agents.
A noncommercial registered agent is any registered agent, business or individual, that hasn’t registered as a commercial registered agent. This means that if you’ve designated a family member, like your great-uncle Fred, as your registered agent, they’re a noncommercial registered agent.
How Do I Change the Registered Agent for My LLC?
If you find yourself unsatisfied with your current registered agent, the good news is that it’s quite simple to change registered agents by filling out a Change of Agent form. You can submit the Change of Agent form online with the Secretary of State. There is a filing fee for submitting the Change of Agent form.
How Much Does a Registered Agent Cost?
The cost of your registered agent depends on factors like which provider you choose and which services you require. In general, they cost between $39–$299 per state, per year (plus state fees). If you’d like to learn more about registered agent pricing, check out my article on the best registered agent services.
