Aged Shelf Corporations And Business Credit Faq

The shelf company’s age: Lenders won’t extend credit to companies that are less than two years old.

Business Licenses: A corporate license confirms the company’s compliance and protects its shareholders. None of our shelf companies have a business license because they didn’t need one. When you obtain a business license for the shelf company in your state, you’ll appear as the first owner on record in the application.

Location: After you acquire a shelf corporation or shelf LLC, register it in your state and secure a business address. Operating from a business address gives you a significant edge, as home addresses typically receive lower ratings and less support. For a cost-effective solution, compile a list of businesses you interact with, such as real estate agents, life insurance agents, or dry cleaners. Offer them $100 per month for office space and mail collection services. Then, list this location as your company’s business address. Avoid using virtual workspaces like UPS locations or other virtual office services.

Annual revenues: If the company has no revenues, rely on sales projections. Our shelf corporations didn’t generate any sales because they had no business activity.

EIN: You need an EIN to open bank accounts and conduct business. Our shelf companies don’t come with an EIN. You’ll need to file Form SS4 with the IRS to get one.

Number of Employees: Think about hiring paid professionals like tax advisors, attorneys, or business consultants. Our shelf corporations don’t have employees and don’t owe any employment taxes.

Information required: You need a DUNS number to get store credit. The level of funding you require and the specific financial institution will determine if you need to provide additional information.

Bank accounts: When you secure funding, the bank will ask you to open a new account, making your existing account a secondary one. You’ll likely open this new account at the same bank that extends the credit. Our shelf companies come with something other than an EIN or bank account. Using a shelf company with an existing EIN or bank account exposes you to risks like inconsistent business reports, outstanding debts, back taxes, or potential legal actions. Why would someone sell a two-year-old shelf company with an EIN and a bank account if they’re trying to evade responsibilities? For all these reasons, never use a shelf company or LLC that already has an EIN or existing bank account. The safest option is a company without an EIN or a bank account. After buying the business, you must obtain an EIN and open a bank account yourself. The IRS provides EINs for free, and as the owner, it’s your responsibility to get one. Don’t pay a third-party vendor to obtain your EIN for you. For guidance on how to open a business bank account, please visit this link: https://youtu.be/fqZNew9ASkY

Websites: Your company should have a website and a dedicated email address. The website’s name does not have to be the same as the name of the shelf company. You can also have a DBA for the company to include on the website.

Phone Numbers: The phone number must be a physical landline number. A VOIP line can also be used, but a landline is preferred. The phone number must be in the company’s name rather than yours.

Shelf Company Fraud: Be suspicious of buying a company from an incorporator that resurrects defunct corporations. A restored shelf company is not legitimate if the initial owners did not consent to the filing. If a shelf business is resurrected, the bank or financial institution can fail to remember its age (from the date of incorporation). From the bank’s perspective, the shelf company’s existence started again on the day it was rebuilt. When a 20-year-old company was reinstated at this stage last year, the age was one year. It is not a 20-year-old company because, for example, it has been dissolved or has been inactive for the past 20 years.

The aged shelf company’s seller can inform you that the 20-year-old shelf company is 20 years old. The documents are official when they are from the Secretary of State; nevertheless, how the bank perceives the corporation’s age varies significantly from how the incorporator who is attempting to sell you the company perceives it. An incorporator who persuades you to buy an expensive business, regardless of age, but does not teach you the facts about how banks make decisions is committing fraud. This is true if the incorporator is aware that you are looking to establish commercial credit for the entity you are purchasing.

The second part of this scam is the reinstatement of such shelf companies without the owner’s permission. The scammer came and reactivated a dormant company, leaving the legitimate owners in the dark. In several instances, this is dangerous. To begin with, it is illegal to resurrect an entity that does not belong to you. The phrase “mail fraud” comes to mind right away. Second, selling you a company that has been illegally reinstated is a form of fraud. Finally, obtaining an EIN and opening a bank account in the name of a company that does not belong to you are felony crimes punishable under federal law. The danger is not worth the trouble. In collecting the funds, the trader could even be engaged in wire or postal theft, which may be called money laundering.

Someone should only own a company if they hand you a certificate of good standing and a series of submitted papers of incorporation. And if you do business with a company that the lender did not own, you do not own it. Receiving stolen property is a serious offense. Penalties, both civil and criminal, are both likely and unavoidable. This is a massive case of corporate identity theft.

The restored company may have undiscovered obligations such as bad debt, back taxes, unfiled tax returns, and convictions. Imagine throwing your money, income, effort, and commitment into a company you thought you owned but didn’t, just to see the IRS show up. Why stress yourself out and go round and round in circles?

You are best off buying an off-the-shelf company that has been filed and run by the same people for a long time. We may not promote reborn companies. We only sell companies that we have registered, held in good standing year after year, and have only sold once. Since we are the incorporators, you are referred to as the initial participant.

Refrain from being easily convinced by companies who are dishonest; they won’t hesitate to complicate your life in the process.