Shelf Corporations – What are they and how do they benefit?

Common Names for Shelf Corporations:

-Aged Companies

-Shell Corps

Definitions:

Shelf Corporation - literally a company (LLC, Inc, partnership) that was filed with the state a long time ago and sat on a "shelf" ever since. The company has been doing nothing, getting dusty on a "shelf" while the years go by.


Aged Company - aged refers to it being incorporated a long time ago. Sometimes an aged company is a "shelf", other times it was actually used to conduct business. Unlike a true "shelf corporation", an aged company had financials running through it in the past, nothing recent.

Shell Corps - holding company for other business endeavors; a "shell" to cover present and past activities under one roof. Typically a "shell" is filed in a consumer friendly state (Nevada, Wyoming) and incorporated with undisclosed/private information. Shell Corps are not aged, but a combination of both has become popular (i.e. buy an aged shell corp)

Pro's Cons

Shelf Corporations are good to buy because you can show that the company has been in business for more than 2 years. Often lenders, and business credibility is gained after showing that the business has been established for more than a year. 20, 30 year old shelf corps are also bought to show "have been doing business for 30 years!" - typically the very old ones are used for marketing, not any type of lending gain.

The downside to shelf corporations is that they are very transparent. Everyone knows that you really haven't been in business for that long. Often the registered person's name doesn't match any key figure of the buyer. No financials exist for the company in the "shelving" period and that losses credibility.


Aged Companies, are a good idea because they really existed and operated in the past. An aged company can be a shelf corp if only during its birth there were financials, and since then it was left on the shelf to get old. Otherwise, aged companies have financial proof of existence and favorable to banks and show the strength.

The bad side to aged companies is that they are very expensive, and come with a lot of liability. Aged companies were used to conduct business in the past, and if anything bad happened the new owner is responsible for the past.

Shell corps are a great idea to keep the owners information private, and can blanket a lot of different activities under one roof. It is also great because in a different state there are tax benefits and as long as done right, can be very advantageous savings reasons.

Shell companies are very hard to maintain because it only works if Everything is done by the book. It doesn't make sense to invest in a shell company and not buy a shelf or aged, but combining it all can be very costly.