Shelf Corporation Purpose #1
The shelf corporation is used to assume a business history. In this way, the business owner can claim, “We’ve been in business for three years,” or for as old as the corporation has existed. This is an effective use of a shelf corporation because most people won’t ask in what capacity the corporation has existed or who owned it throughout that time period. It’s an effective means to create a perception of business stability. The use of a shelf corporation for this purpose is a marketing strategy to increase consumer confidence. Of course, only start-up businesses need a shelf corporation for this purpose.
A shelf corporation ages like wine; however, choosing the right age is important, so as to not overpay. Think in terms of your customer. Does it really mean anything? An aged corporation that’s, “been in business for three years” is important for a consulting firm but not for a card shop, in terms of dealing with customers. The core issue is whether the age of the business is a determinant factor in the customer’s criteria. Does the age of the business provide the customer a perception of stability and solvency that’s convincing to the customer? If so, then an aged shelf corporation may be in order.