Using a shelf company to start a business

Using a shelf company (also known as an aged or ready-made company) to build business credit can have some advantages, but it’s important to understand the pros and cons before deciding if it’s the right strategy for your specific business goals. Here are some potential advantages:

  • Established Corporate History: Shelf companies have already been in existence for some time, which can give the appearance of an established business with a history. This can be beneficial when dealing with lenders, suppliers, and customers who may be more inclined to work with a company that has a longer track record.

  • Faster Access to Credit: Since shelf companies are pre-existing entities, they may be able to access credit and financing more quickly than starting a new business from scratch. This can be particularly useful if you need funding urgently.

  • Potential Easier Qualification: Some lenders and suppliers may have more lenient criteria for established companies with a history of good credit compared to brand-new startups. This can make it easier to qualify for loans, lines of credit, and trade credit.

  • Increased Credibility: An older company may be viewed as more credible and reliable by potential partners, clients, and investors, which can help you attract business opportunities and investment.

  • Limited Liability Protection: Like any other company, a shelf company offers limited liability protection to its owners (shareholders), which means your personal assets are generally shielded from business debts and liabilities.

However, it’s essential to be aware of the potential downsides and consider them alongside the advantages:

  • Cost: Shelf companies are typically more expensive to purchase upfront than starting a new business. You’ll need to factor in the cost of acquiring the aged company, which can vary depending on factors like its age and history.

    We offer high quality shelf companies at lower cost. Please email Assetprofile@gmail.com for a list of our clean shelf companies.

  • Due Diligence: You must thoroughly research the shelf company’s history and financial health to ensure there are no hidden liabilities, legal issues, or outstanding debts that could become your responsibility once you acquire the company. A company without an EIN is a company that can’t open accounts. Therefore, a shelf company without an EIN is safer than a shelf company that has an EIN. The solution is to obtain a shelf company that is unused and apply for the EIN afterwards. Protect yourself from a bad shelf company.

  • Limited Customization: A shelf company may come with a pre-determined name and structure that may not align perfectly with your business goals or branding.
    Instead of filing a change of name, consider filing a Doing-Business-As (DBA) to focus on a certain industry or direction.

  • Compliance and Tax Considerations: You’ll need to ensure that the shelf company is in good standing with all required the Secretary of State where it was filed. If you find a seller of shelf companies where the entities are not in good standing, that’s a bright red flag to stay away.

  • Reputation Risk: If the shelf company has a negative history or any association with previous legal issues, this could potentially harm your business’s reputation.

In conclusion, using a shelf company to build business credit can be a viable strategy in certain circumstances, particularly when you need to establish a business quickly or want to take advantage of an existing corporate history. However, it’s crucial to perform due diligence, understand the costs involved, and consider whether it aligns with your long-term business objectives. Please call 484.599.1070 or email Assetprofile@gmail.com for a list of our clean, home-grown, shelf companies without an EIN.

What industries are best when using an aged shelf company? What are some examples?

Starting a business with an aged shelf company can be advantageous in various industries, but the suitability of the company will depend on your specific business goals, the nature of the shelf company, and the industry you plan to enter. Here are several of many industries where using an aged shelf company might make sense:

  • Real Estate: An aged shelf company can be particularly beneficial for real estate investments and development. Having an established entity can help build credibility when dealing with lenders, sellers, and partners in the real estate industry.

  • Consulting and Professional Services: If you plan to offer consulting or professional services, an older company may convey a sense of experience and trustworthiness to potential clients.

  • Import/Export: Businesses involved in international trade often require a track record and established corporate history to build relationships with suppliers, customers, and customs authorities.

  • Financial Services: Companies in the financial sector, such as investment firms or insurance agencies, may benefit from the perceived stability and credibility that comes with an older company.

  • Technology Startups: In some cases, tech startups looking to attract investors or partners may find it advantageous to use a shelf company with an established history, especially if it aligns with their technology or intellectual property.

  • Franchising: If you plan to open a franchise, some franchisors may prefer working with businesses that have an established track record and financial history, making a shelf company a potential advantage.

  • Importing Pharmaceuticals or Medical Devices: Industries with stringent regulations, like pharmaceuticals or medical devices, often benefit from having an established entity with a clean compliance history.

  • Manufacturing: For businesses in manufacturing or industrial sectors, having an older company may provide credibility when dealing with suppliers, distributors, and customers.

  • Construction: Similar to real estate, construction companies can benefit from an aged shelf company’s credibility when bidding for projects and securing contracts.

  • Hospitality: Starting a restaurant, hotel, or other hospitality business with an aged company might be advantageous when seeking financing or partnerships.

Remember that the suitability of a shelf company for your specific industry and business plan will depend on various factors, including the company’s history, its financial standing, and any existing legal or tax considerations. It’s crucial to conduct thorough due diligence and consult with legal and financial professionals to ensure that the aged shelf company aligns with your business goals and complies with industry-specific regulations. Additionally, consider whether the company’s existing name and structure are suitable for your business or if modifications are necessary.

Avoid dissolved and reinstated shelf companies

We only sell shelf companies that we filed, maintained properly, and filed all the annual reports. Many of our competitors are selling aged shelf companies that were dissolved and reinstated. Avoid any company that was dissolved and reinstated. The lenders flag those companies.

Inspect what you expect

Always verify that the company was filed and well maintained before you buy the shelf company. Look at the history and verify that the company wasn’t dissolved and reinstated. Avoid any seller of shelf companies that minimizes this problem.

When an aged shelf company has been dissolved and subsequently reinstated, it means that the company ceased to exist as a legal entity for a period but was later brought back into existence through a process known as reinstatement. Here’s what typically happens when a company goes through this process:

  • Dissolution: Dissolution is the legal process by which a company’s existence is officially terminated. This can happen for various reasons, such as failure to file annual reports, pay fees, or comply with state regulations. When a company is dissolved, it loses its legal status, and its assets and liabilities may become subject to certain legal procedures.

  • Reinstatement: Reinstatement is the process of restoring a dissolved company to its previous legal status. To reinstate a company, the business owners or authorized parties must typically follow a specific procedure outlined by the state’s business regulatory agency. This often involves rectifying the issues that led to the dissolution, such as paying outstanding fees, filing missing reports, and addressing any compliance issues.

  • Effect on the Aged Shelf Company: When an aged shelf company has been dissolved and reinstated, its history usually reflects this interruption. Potential consequences may include:

  • A gap in the company’s history during the period it was dissolved.
  • Changes to the company’s status, such as a change from “active” to “dissolved” and back to “active” on official records.
  • Potential challenges related to its creditworthiness or reputation, as some parties may view the dissolution negatively.

It’s important to note that the impact of dissolution and reinstatement can vary depending on the state’s laws and regulations, the reason for dissolution, and the specific circumstances of the company. Here are some considerations:

  • Credit and Reputation: Some creditors, lenders, and business partners may view the period of dissolution as a red flag or a sign of instability. They might be more cautious when dealing with a company that has undergone this process.

  • Business History: The company’s business history and creditworthiness may be affected by the dissolution, especially if it had a strong credit history before dissolution. Rebuilding trust and creditworthiness may take time.

  • Legal and Tax Implications: Companies that have been dissolved and reinstated should ensure that they comply with any outstanding legal and tax obligations, as well as any requirements imposed by the state as part of the reinstatement process.

If you are considering acquiring an aged shelf company that has been dissolved and reinstated, it’s crucial to conduct thorough due diligence to understand the reasons for dissolution, the implications of the reinstatement, and how it might impact your business plans. Consulting with legal and financial professionals experienced in the specific state’s business regulations is advisable to ensure that you are fully aware of any potential challenges or legal obligations associated with the aged shelf company’s history.

What States Should I Consider When Buying the  Shelf corporation?

Obtain a  Shelf corporation from a state that requires a low annual filing fee to maintain the company, respects your property rights, and doesn’t require disclosure of the owners of the company on public record. Montana corporations are ideal. The annual filing fee is $20 per year. The New Mexico LLC’s work great in California as well. There’s no annual fee for a NM LLC.

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