What is a Delaware registered agent and does my startup need one?

Accounting, Bookkeeping, Finance, HR, and Tax for Startups.
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Video Transcript:
Hey, it's Scott Orn from Kruze Consulting. And today we're talking about what is a registered agent and how does it help my startup? Now, pretty much every startup incorporates in the state of Delaware.
And the reason for that is Delaware is a very business-friendly state. Everyone understands the litigation process. So you're gonna incorporate there but then you're also going to register in the other states you're actually operating and doing businesses. Most startups are working in California, Texas, New York, Massachusetts, Colorado. Folks, places like that. So you're gonna need to register and pay taxes in those states too. But you'll always have your overall Delaware C-corporation status above all that.
Now, the Delaware corporation status is really important because it's a liability shield for you. So it protects you as an individual operating the company. So you don't wanna lose that. And one of the ways you could accidentally lose that is just by failing to designate a registered agent.
A registered agent in Delaware is a company, usually it's a company, it could be a person but it's always gonna be a company pretty much who actually is there on record to receive paperwork and handle stuff for you. Now, the fees for a registered agent are really cheap. It's anywhere from like 75 bucks to 200 bucks. Very, very easy, cheap for a startup. But you have to have one. If you don't have one, you're gonna start out just by getting some fines, which are kind of a pain in the butt but you can pay those.
But the big one is you could actually lose your liability shield. Like, your corporate status will be taken away. So you really don't wanna do that. You don't wanna sacrifice that. Now, if you're a Kruze client, we will actually advise you on the best registered agent and help you handle that.
Now, I also don't want you to get confused between Delaware franchise taxes and a Delaware registered agent because the registered agent will not pay your Delaware franchise taxes for you. That's something you need to do in conjunction with your accounting firm. So if you're a Kruze client, we're gonna take care of your Delaware franchise tax every year in February. It's usually due around March 1st. That's something we do really easily and we handle that for you. If you don't have us or you're not working with us quite yet, then we have some free tutorials on the website where you can learn how to do that.
But just don't forget. Again, it's kinda the same thing as a registered agent. If you forget to pay your franchise tax, they'll let you go for a while. But you'll be racking up some penalties.
Eventually, if you don't pay, you can lose your corporate status. So be super-careful. As soon as you incorporate, establish a registered agent. Oftentimes your law firm will help you with that. Again, 75 bucks, 200 bucks a year. Very easy. And then again, don't forget to pay your Delaware franchise tax. That's a big no-no. Hope that helps. Thanks.

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Need help with your startup’s bookkeeping, finance, or taxes? Visit Kruze to see if our team can help you! kruzeconsulting.com/