A shelf company or aged company is an LLC or a corporation that was filed on a prior date and then allowed to age for several years. Creating a business requires deciding the kind of legal structure for the company. The corporate structure can be LLC, Partnership, sole proprietorship, and corporation. Again, you can choose to form either a corporation or a limited liability company. Here is the guide if you are planning to set up an Inc. via Shelf Company.
What is an Inc.?
Inc. means that the company is incorporated or the company’s business structure is a legal corporation, and it has been designated formally as a corporation under the laws of the state. Inc. or Incorporation is similar to Corp or Corporation when it comes to the legal structure, limited liability, tax structure, and compliance obligations. From the owners and shareholders, an Inc. and a corporation is an entirely different entity.
After a company is incorporated legally, it becomes a separate entity from those investing the capital in running the company. In other words, the company becomes a distinct “person” under the law.
Also Read About C-Corporation and S-Corporation
How can you incorporate your company in six simple steps?
1. Deciding to incorporate-Before setting up the Inc., it is very crucial to understand the benefits of incorporating. So, the first step is to determine and understand what exactly Incorporation means for the business owner. You must consider your administrative and financial expectations from the company.
2. Application for the company’s name availability- You are required to file an application for the availability of the name of the company. Notably, the name cannot be identical to the name of any existing company. Using the already existing name is an offense under the law.
3. Preparation of the Articles of association- You need to prepare the articles of association and the memorandum of association. Notably, a memorandum of association is a document that defines the area where the company can operate. It is indeed the most crucial
The articles of association must contain the below-mentioned points:
- The number of shares.
- Issuance of preference shares.
- Share allotment.
- Capital alteration.
- Share certificate.
- Conversion of shared into the stock.
- Preliminary contracts’ adoption.
- Voting and proxy rights.
- Audit committee, Managing directors, manager, secretary, and additional directors.
- Issuance of stocks and debentures.
- Reserves and dividends.
4. Documentation filing- Duly signed memorandum and articles of association must be filed with the Registrar where the company’s registered office is proposed to be located.
5. Certificate of Incorporation by Registrar- Based on the information and the documents, the Registrar will register and issue a certificate of Incorporation. The certificate will ensure that all the requirements of the act are complied with, and the company is authorized to be registered under the act.
6. Corporate identity number allotment- The company identity number will also be allotted by the Registrar,
Recommended Reading: How to register a business in the U.S?
Why is it essential to incorporate a business?
Incorporating a business means that you are turning your business into a legally recognized company by the state of Incorporation. It potentially transforms how a business is seen by the eyes of the law.
Its primary importance is limited liability. The owner is always responsible for all the losses and debts of the company that might accumulate along the way. But, incorporated companies do not make the owners’ personal assets liable for the losses of the company. It simply means that the owner’s personal assets are not used to satisfy the company’s liabilities and debts.
The three most crucial reasons for incorporating a business are:
- Its life isn’t really dependent on the life of the individuals, unlike partnership and proprietorship. It continues until the accomplishment of its objectives.
- The ownership can easily be transferred, sold, or given to any other individual.
- It is always significantly easier to raise capital with the incorporated company because of its limited liability and easily transferable shares.
What are the benefits of having an Inc. using Shelf Company?
- Customers feel safer to do business with the previously made shelf corporation because a shelf company empowers the business to compete with the existing competitors.
- The more the confidence of the customers in the corporation, the more will be the sale and revenue, and a shelf company indeed means greater confidence.
- Shelf corporations often access biding opportunities that the freshly made companies cannot access.
- Most importantly, the credibility of the Incorporation is enhanced by using shelfCompany.
- The availability of the loans is always proportional to the age of the company and the revenue made by it. Shelf incorporated companies indeed manage to get higher loan opportunities.
- It offers convenience and immediacy for starting the business with an aged incorporation date.
How a Shelf LLC is different from a Shelf incorporated (Inc.) company?
- Although both offer limited liability and hence, protect their owner’s
personalassets being liable to the company’s debts, the way of the operation of the protection differs in both structures.
- For an Inc., ownership, and control are separated. The shareholders are the ones who hold the company, but they often have limited governance rights. On the contrary, in an LLC, members make decisions regarding the management of the company.
- In an Inc., it is always much easier to attract passive investors because of the separation of the management and the ownership. While in LLC, it can be comparatively difficult to obtain finance from venture capitalists and banks.
Read: how you can set up an LLC using Shelf Corporation
A brief list of different shelf Inc. in the United States
- Maxway Management, Inc. – Filed on December 29, 2020, and is available at $1,095 in Arizona.
- Candax Marketing, Inc. – Filed on December 29, 2020, and is available at $1,092 in Wyoming.
- Robertson Advisors, Inc. – Filed on December 29, 2020, and is available at $1,092 in Arizona.
- Dexter Industries, Inc. – Filed on December 23, 2020, and is available at $1,110 in Wyoming.
- Baxter associates, Inc. – Filed on December 23, 2020, and is available at $1,110 in Wyoming.
- Barubian Management, Inc. – Filed on December 23, 2020, and is available at $1,110 in Wyoming.
- Mavstar Management, Inc. – Filed on October 24, 2020, and is available at $1,290 in Wyoming.
- Universal Consulting Group, Inc. – Filed on October 24, 2020, and is available at $1,290 in Wyoming.
- K-Way marketing Group, Inc. – Filed on October 24, 2020, and is available at $1,290 in Wyoming.
- Bayside Holdings group, Inc. – Filed on July 23, 2020, and is available at $1,570 in Wyoming.
Also Read: America’s top 3 states for business