Incorporate Immediately

Incorporate Immediately

Establishing a business as a distinct legal entity like a corporation or a limited liability company (LLC) is an important step in separating business credit from personal credit. Here are some key points regarding this process:

  • Legal Separation: Incorporating a business or forming an LLC provides legal separation between the business and its owners. This means that the business is responsible for its own debts and liabilities, protecting the personal assets of the owners.

  • Credibility: A formal business structure can add credibility to the company in the eyes of lenders, investors, customers, and vendors. It often suggests permanence, seriousness, and a commitment to the business’s ongoing success.

  • Building Business Credit: Once a business is incorporated, it can begin to establish its own credit profile, separate from that of its owners. This is done through obtaining a business tax ID number (EIN), opening a business bank account, obtaining a BIN and/or DUNS number, and establishing trade lines with vendors that report to business credit bureaus.

  • Aged Shelf Companies: Some businesses choose to purchase an “aged” or “shelf” company, which is a corporation created on paper and “put on a shelf” for a period. These entities can give the appearance of an established business history, which may be beneficial in obtaining credit or winning contracts.

  • Due Diligence: When acquiring an aged shelf company, it’s important to conduct thorough due diligence. Potential buyers should check for any hidden liabilities or past activities that could negatively impact the business going forward.

  • Assistance: The process of incorporating and maintaining a corporation or LLC can be complex, involving ongoing compliance with various regulations and legal requirements. Business owners often seek the assistance of legal professionals or specialized services to ensure proper filing and compliance.

  • Verification: Obtain the photo ID of the seller of the shelf company. Always check the shelf company is in good standing and doesn’t have a history of being dissolved and reinstated. A dissolved and reinstated company is as useless as an aged shelf company.

Aged Shelf Companies

Utilizing an aged shelf company can offer certain advantages when it comes to the perception of your business, particularly in terms of credibility and longevity. Here are some of the potential benefits:

  • Perceived Stability: Companies that have been in existence for a longer time are often seen as more stable and reliable. An aged company might be perceived as having a history of operations, which can instill confidence in customers and business partners.

  • Easier Access to Credit: Lenders may be more inclined to offer financing to a business that appears to have a longer history. An aged company might have an easier time establishing a line of credit, a business loan, or trade