What is a shelf corporation, and why do I hear so much about it? The shelf company is one which has been inoperative for a long time. But the paperwork of this company is up to date; therefore, someone can acquire this for a specific purpose. When a fresher enters the business world, the formation of the company comes to him as a big hurdle. There are too many hassles in creating a company, lots of paperwork, and statutory document preparation required for the incorporation of a company. To avoid this painstaking effort, usually, a new entrant tries to buy a readymade company and, in a bid to become an owner, buy a shelf corporation. It gives the owner two significant benefits; and, on the one hand, overcomes the problem of creating a new company. In another way, readily available documents of the self corporation help in fund mobilization for the business.
The bank is the main source of funding, irrespective of manufacturing and trading, for any business. Banks are also trying their best to provide a line of credit to potential entrepreneurs, but not without a proper and in-depth due diligence. Usually, banks do this kind of exercise through their infrastructure, but sometimes a banker is depending on the Paydex score, provided by some renowned agency, like Dan & Bradstreet. To get a high score from such agencies, the paperwork and the bank's payment history play the most crucial role. However, if you have already made your mind to buy a shelf company, you are on the right track. Doing so has the potential of making it easier for the owner to get a whopping Paydex score of 80 or more.
Should only newcomers opt for shelf corps?
Apart from newcomers, the veterans in the business world often try to acquire or buy a shelf corporation. Sometimes they need this to de-risk their businesses, but in numerous cases, this is done just for tax evasion. In a bid to evade the tax burden, the intending company procures or buys shares of the shelf company and siphons their wealth from the existing company to the newer one, as an investment. Whatever be the reason, it is always advisable to buy a shelf corporation for a smooth and meaningful operation of the business. Don't hesitate; go and grab the opportunity.
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