A shelf corporation is a company that was created years ago for the sole purpose of being sold in the future simply for the value of its age. A person forms a company and does nothing with the corporation other than filing the annual reports and covering the annual fees. Once the corporation is a few years old it has a sort of value for the right person.
A shelf corporation doesn't engage in any real business. Most shelf corporations have been totally inactive. They have never had income, assets or bank accounts, operations or activity of any kind. During the aging period some efforts may be undertaken to establish a credit history, file basic tax returns, open a business bank account, and other simple actions to demonstrate some activity. These types of shelf corporations are more valuable and are sold for more money.
A company is "founded" when they initially setup their corporation. Many potential business resources are hesitant to engage brand new or up-start corporations. The age of your company can give greater credibility to customers and lenders than a business that was recently established. Say you were an accountant for 10 years, but just opened your business. By buying an aged corporation that has been open 10 years, you can then advertise that you have been in business for 10 years, and your corporate records also support that.
Many lenders now look at the bank account start date as the corporation start date. Most shelf corporations don't come with established bank accounts. Some shelf corporations have actual credit problems making it harder to get funding, not easier. Most lenders know what to look for to see if the corporation is a shelf corporation. Things like your business Bank Rating could tip them off. Public records also show the change in ownership which raises red flags.
Shelf corporations are NOT necessary to build business credit. Using a shelf corporation is not the best way to build business credit. Due to their expense and potential issues, they can actually hurt you more than they can help. The best way to build business credit is to work with vendors who approve new businesses, as many do. The best way to get funding is to use collateral, or have your business generating cash flow. Other ways to get funding are to use good credit partners to obtain unsecure financing.
Critical Factors, most-often referred to as the Significant Assumptions in most business plans, are those factors that are critical to the success of your company. They are referred to as critical factors because, while there are many factors that contribute to the success of a company, critical factors are ... CRITICAL.