Shelf Corps or Shelf Corporations are typically corporations that have been left on the “Shelf” to grow old. Typically, individuals buy dormant corporations to
1. Have access to credit that you wouldn’t have access to with brand new corporations.
2. Have the ability to apply for a government contract. Some contracts require companies that are two years old or older.
When you search for old corporations, you will find that there are law firms that sell dormant corporations, as well as providers of dormant corporations. Many of the rack sellers who claim to sell racks and build business credit with them are scammers. In 2010, it is impossible to get $150K in unsecured personal credit with a corporation. So if you see something like this being advertised, you should know that it is a scam.
Typically you will be able to get 20K-50K (50K is a bit of an exaggeration) no PG cash business credit with a corporation, so if you are looking for more than this you will have to get more than one corporation. These lines of credit can be obtained in as little as 2 weeks if done correctly. Due to the lower range of business credit that comes with dormant corporations, you may want to take a serious look at how much you are paying for a dormant corporation. I suggest you pay no more than $4000 for a shelf corporation with an established credit history and more than $3000 for one with no paydex.
What you need to know about shelf corporations is that most shelf corporation vendors do not sell actual shelf corporations. They buy corporations that are now out of business, reincorporate them, and sell them. Thing is, these bodies cost the reseller $150-$300 and resell for $2000+. It will be hard for me to explain everything in this article, but I’ll cover as much as I can in the little space I have.
Basically, you go to the state you’re interested in on the Secretary of State’s website and look for corporations that have to pay their state fees. You then check the credit of the corporation you’d like to acquire to make sure it has good credit or not bad credit (depending on whether you just want a dormant corporation with a good paydex score or a clean corporation). Once you have identified the corporation you want, you will want to contact the previous owner of the corporations and ask them to agree to transfer the corporation to you.
This process is simple but there are two parts of the process that are a bit tricky. First of all, checking credit at an affordable price is quite a challenge. You pay DnB $100+ for a full DnB credit file for the specific corporation. The other tricky part of the process is getting the owner to transfer the business to you. I have covered both topics in two of my eBooks. My blog also has a lot of free and valuable information on building business credit from scratch.
In conclusion, buying a dormant corporation is something that can be very beneficial in building business credit quickly. Just be very careful who you buy it from and consider how much you pay for it.
