Consumers generally look for companies that have been in business long enough to develop a relationship with them. If you have a bookshelf corporation, they might feel confident enough to go ahead and make a purchase.
A. 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.
B. 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 established since 1990, but really only from 2009. The shelving company was established in 1990, so it’s true.
C. Corporations are big business for professionals. In fact, many Professionals maintain a career in building and selling shelf corporations to buyers looking for a long history without the past.
D. 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.
In 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.
The 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 happens more often.
B. 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. While they are legal, many people are not sure of being ethical and do not want to participate in the process.
