businessman making thumbs up
Also known as an old company or a dormant company, a dormant company is a company that is fully incorporated but not currently active. The name of this type of trading situation comes from the idiom of being on the shelf. That is, someone took the trouble to create the business, set it up from a legal point of view, but never really decided to do anything with the business.
There are several reasons why an entrepreneur might choose to create a shelf corporation. One has to do with the idea of creating the business in anticipation of a project that is not yet ready to launch. Instead of waiting until later, the entrepreneur goes through the legal processes to establish the corporation and allow it to sit dormant until the right time to launch the project. The benefit here is that he can act quickly when the time is right, without getting caught up in the bureaucracy that sometimes slows down the legal process of starting a business.
Another reason to create a turnkey corporation has to do with appearing more attractive to potential investors. Even if the business has not actually been activated, the fact that the entrepreneur has taken the serious steps to establish the corporation sends the message that he or she is serious about the business. Investors who may be a bit hesitant to get involved when there is no real legal structure of the business may be more open to investing in something that has an established foundation but needs funding to move to the next logical step of actually producing a good. or Service.
Sometimes the entrepreneur may create a shelf business for reasons other than activating a business. With this application, the original business owner creates a business model, takes all the necessary steps to incorporate the business, and then sells the corporation to someone who really wants to use the business to start producing products. The founder of the corporation is compensated for their effort in handling all the legal activity necessary to create the business, while the new owners have the advantage of not having to deal with these processes and can quickly move on to manufacturing and selling. of your products. . .
There is some difference of opinion as to whether a turnkey corporation is really a good idea. Advocates see this as a productive way to prepare for future business now, rather than wait later and possibly miss out on opportunities created by the delay. Detractors sometimes mention that times have changed and that the laws and incorporation procedures in many nations today allow businesses to incorporate in a fraction of the time required in the past. For this reason, the effort to create a shelf company in advance may not bring the benefits that the stock once produced.