A shelf corporation, shelf company, or aged corporation, is a company or corporation that has had no activity. It was created and left with no activity - metaphorically put on the "shelf" to "age". The company can then be sold to a person or group of persons who wish to start a company without going through all the procedures of creating a new one.
Common reasons for buying a shelf corporation include:
• To save the time involved in taking the steps to create a new corporation.
• To gain the opportunity to bid on contracts. Some jurisdictions require that a company be in business for a certain length of time to have this ability.
• To create an appearance of corporate longevity, which may boost investor or consumer confidence.
• To gain access to investment capital.
•To gain easier access to corporate credit.
These reasons are open to criticism. Many years ago, it would take months to properly incorporate a business. However, it is now quite easy, at least in Australia, the United States, Canada and Western Europe; to do so. In fact, it can now be done in as little as a couple of hours in some jurisdictions. A corporation might end up "on the shelf" precisely because of a bad business history. It is questionable whether a shelf corporation improves access to capital, since creditors and investors look into a company's history as part of due diligence.
A number of consortia "produce" and sell shelf corporations, promoting the fact that the new buyer can at the same time have a corporation with a long history, and yet have complete control over the establishment of the corporation's board of directors and shareholder profile.
One item to be aware of is the re-aging of the shelf corporation. If the credit bureaus learn about the company being under new management they will list it on their reports effectively "re-aging" the company. The only way to avoid this is to make sure the credit bureaus do not find out.
Is the name of the shelf company important? Should I change the name of the company?
Remarkably, the name of the shelf company is NOT as important as you think. What you do is more important than the name of your company. But you still want a catchy name, right? Obtain the shelf company and file it in your home state. Then determine if the preferred name is available in your home state. File a Doing-Business-As (DBA) in that state, if the name is available.
Should I change the name of the shelf company?
No, lenders consider name changes as a new company. If you seek to max out available financing, stay away from name changes.
What do I get with my shelf company?
Original articles, resolutions, operating agreement (LLC), bylaws (Corporation), release of control over the company.
What should I look for in looking for a shelf company?
• It's clean of liabilities.
• Seller of shelf corporation or shelf LLC will guarantee claims that it's clean.
• No previous owners.
• Ample selection of companies.
• Reasonably priced.
Should we use a virtual office?
The virtual office industry is great for convenience but NOT for companies applying for corporate credit. When too many companies share an address and don’t pay off their loans, an address may be flagged. In the effort to look legitimate, the company looks suspicious because too many companies occupied that address and a few didn’t pay their loans.
What shall you do about the company filing in your home state?
File the company in your home state. You can serve as the registered agent for the company. The registered agent is the point of contact for the company in case the government, or court, seeks information about the company. File the company in your home state as a foreign LLC or foreign corporation.
Who should be the corporate officers?
Lenders will request that you serve as Director and Officer of the company that’s applying for corporate credit.
What about privacy?
You may have privacy or corporate credit. But you may not have both at the same time with the same company. We sell shelf companies to empower business owners to access capital. Privacy services are not offered here.
What about offshore shelf companies?
We haven't identified any benefit in obtaining an offshore shelf company to build corporate credit or to obtain capital. We don't recommend it.
Will a shelf company help me save money on taxes?
No tax savings offered or promised. The lender will ask you to file the shelf company in your home state before applying for financing. There are no taxes savings other than what's provided after you incorporate any other business. Check with your tax advisor.
Do you have aged corporations with aged EIN’s?
EIN’s are random numbers. They are not sequential. Therefore, you really can’t tell if the EIN is new or old. This is a common question by those who seek to build corporate credit. If having an “aged EIN” were of benefit, we would apply for them. Those selling corporate credit programs commonly present this as misinformation. Furthermore, a corporation without an EIN is more likely free from liabilities.
What about a business license?
Visit BusinessLicenses.com to determine what licenses you may need.
What needs to be done after I obtain the company?
Apply for EIN, apply to do business in the state in which you seek to do business, apply for the local or state level business license, build the corporate credit, apply for financing.
Can I convert the corporation to an LLC? LLC to a corporation?
No, the lenders consider this a new company.
If I have good credit, how long will it take to build corporate credit?
4-6 months.
If I have bad credit, how long will it take to repair it?
1-3 months to repair your personal credit, then 4-6 months to build corporate credit. Sometimes, it may take less.
Can I select any business name?
Try to stay away from companies that possess the following words in the company name: Funding, Investment, Holding, Capital, or Real Estate
Why don't you publish the names of the aged shelf companies online? I don't see them on your website.
We respect your privacy and your affairs. Whether you acquired an existing company is your business. By publishing the list of available aged shelf companies online, the seller is claiming to the world that these available entities are for sale. We don't think this works in the best interests of the client.
We prefer to email you a list of available aged shelf companies so we may protect your interests, when you acquire the entity. In this manner, you reserve the choice to tell others whether you acquired an existing company.
Inquire whether the aged shelf company was consistently in good standing.
There are providers, who sell aged shelf companies, that are over five years old. Many times, these companies were not consistently in good standing. As a result, when the company is researched by a lender or credit rating outfit, the shelf company itself may be "red flagged." This may prevent the obtaining of financing. If the company wasn't always in good standing, the age of the company may be reset to when it was brought "back from the dead."
All of our companies are home grown. We don't acquire them from others. We file the corporations and LLC's ourselves, maintain them in-house, and we make certain that they are always in good standing. This results in a quality company that you may rely on to build corporate credit.
When does the age of the aged shelf company translate into a liability?
A company that is over five years old, and has nothing to show for it in terms of assets, may be perceived as a strange bird. Let's place you in the position of the banker or financial institution. You're the banker and company owner approaches you for a loan. The company has no assets despite being five years old. Don't you think this is strange? How can a company be in business for five years and accumulate nothing?
A two or three year old company normally lacks any assets of substance. But as we approach five, seven or nine years, there comes a time when the business must "put up or shut up." As a result, obtaining an aged shelf company that is two to three years old helps substantially. However, obtaining an aged shelf company that is five years old or older, may lead to additional inquiries and expectations. Considering that an aged shelf company that is five years old costs about $5000, that additional cost doesn't translate anything into added value or benefit.
Solution: Keep your costs low. Obtain a two to three year old company and don't overspend. There's no need to buy a five year old entity, or something older, when it will not translate into an advantage.
