Shelf Corporations: The Pros and Cons
Website design By BotEap.comConsumers generally look for companies that have been in business long enough to develop a relationship with them. If you have a shelf corporation, they might feel confident enough to go ahead and make a purchase.
Website design By BotEap.comA. Since a corporation is a created business, it can be sold to anyone who wants to start their own business but does not have the desire to go through the process of starting one.
Website design By BotEap.comB. Another benefit of buying a corporation is that small business owners looking to bid on projects but need several years in the market can use a years-old corporation to their advantage. It’s like saying it was established since 1990, but it only really started in 2009. The shelf company was established in 1990, so it’s true.
Website design By BotEap.comC. Corporations are big business for professionals. In fact, many Professionals have a career building and selling corporations to buyers seeking a long history without the past.
Website design By BotEap.comD. For many stable corporations this is the way to go if you want to speed up the process of obtaining corporate credit for your business. In many cases, this will work well for you because it shows the lender that you are an established entity rather than just another startup, which is considered high risk.
Website design By BotEap.comIn the eyes of the lender, it reduces the risk involved should they decide to issue a loan. This could mean the difference between getting the corporate credit your business needs or being turned down. It can also affect your credit limit and the amount of interest you pay on it.
Website design By BotEap.comThe cons
A. As a buyer of a corporation, you should be a bit smart if you are buying the company to help establish a long business history. If credit bureaus learn that a business is under “new management,” they can age the business again up to the date of purchase, eliminating longevity. This is happening more often. Website design By BotEap.comB. How honest is it to invest in a corporation? Are you not misleading lenders, consumers, and other businesses when you use this to promote your new business? There are many ethical concerns with shelf corporations that some business owners struggle with. Although they are legal, many people are not sure of being ethical and do not want to participate in the process.
A. As a buyer of a corporation, you should be a bit smart if you are buying the company to help establish a long business history. If credit bureaus learn that a business is under “new management,” they can age the business again up to the date of purchase, eliminating longevity. This is happening more often. Website design By BotEap.comB. How honest is it to invest in a corporation? Are you not misleading lenders, consumers, and other businesses when you use this to promote your new business? There are many ethical concerns with shelf corporations that some business owners struggle with. Although they are legal, many people are not sure of being ethical and do not want to participate in the process.