A shelf company is known by many names, such as Shelf Corporation or Aged Corporation. Shelf companies for sale were established with the intention of aging without being used – no actions are carried out.
The corporation was founded to sit on a “shelf.” And to be sold once it had “aged” enough in a metaphorical sense. Why? Some entrepreneurs choose to buy a shelf company. Instead of going through all of the necessary start-up procedures for a new business because:
- They don’t have time to set up a new organization and want to bid on contracts right away.
- To be eligible for bidding privileges, several authorities require enterprises to have been in operation for a certain amount of time.
- They seek to give the impression that the company has been there for a long time to build consumer and investor confidence.
- They will have more time to apply for investment capital.
- Using off the shelf companies for sale, they have considerably easier access to corporate loans. Lenders consider a corporation with a long track record to be less hazardous.
- They may be able to apply for accounts with bigger credit limits and negotiate reduced interest rates.
Consumers and investors alike want to build ties with reputable organizations that have been in business for a long time. It reduces a variety of business hazards. Sure, this line of reasoning makes sense, but is it fair to fresh new businesses? How could they possibly compete and establish themselves if every door they knock on gets closed in their face merely because their organization was only registered a few months ago?
Be cautious when Buying Shelf Company for Sale
In today’s environment, making a reputation for oneself is difficult; this is one of the key reasons many new business owners select to buy an off-the-shelf corporation. They already have so many problems to cope with that purchasing a company with a track record appears to be a great option. If you don’t have to, why waste time and resources?
Do not be fooled by the numerous benefits that a shelf company can provide; there are a few disadvantages. Consider the following factors before signing a purchase contract:
- Using a shelf company for sale to build a long company history is a smart strategy, but it will only work if the credit bureaus are unaware of your transaction. Being under “new management” can cause the company’s age, robbing it of its longevity advantage.
- Shelf companies are a terrific alternative if you can deal with your ethical conscience. Whatever your reasons for buying something are, or whatever other appealing arguments you come up with. You will be deceiving your customers, investors, and anybody else you do business with. You will be alright as long as this does not upset you, but if you respect your ideals, it may be best to start from the ground up. You’ll feel much better about yourself, and you’ll never have to worry about curious investigators finding out your secret again.
Conclusions
Older shelf businesses can be useful for acquiring asset protection rapidly, gaining access to contracts or leasing agreements, and incorporating after years of operating as sole proprietors.
Not all shelf companies for sale are created equal. To protect you from potential responsibility, be skeptical of any seller who cannot confirm in writing that their inventory of shelf companies is clean, with all state fees current. A seller claiming to provide shelf firms with built-in corporate credit is not selling a clean company.
