A shelf corporation is a ready-made and registered limited company that you can buy and use immediately. Many entrepreneurs choose to purchase a shelf corporation to quickly get started with their business. This way, you avoid going through the time-consuming process of registering a new company from scratch. With a shelf corporation, you still have the opportunity to customize the company according to your needs. So you can, for example, change the name, modify the business description, and appoint your own board of directors. This allows you to start your business faster when buying a shelf corporation.
What are the advantages?
One of the main advantages of buying a shelf corporation, and why so many choose it as an option, is that you avoid the initial administration that comes with starting a limited company. It saves both time and energy, especially if you haven’t gone through the process of starting a company before. It’s valuable if you’re in a hurry to sign contracts, apply for loans, or need to get your business up and running quickly. Since the shelf corporation is already registered, you can instead focus on customizing the company and begin operating your business. This also means you can buy a one regardless of the type of business you plan to run. It doesn’t matter if you plan to, for example, run a store, a consulting business, or a tech startup, as you can quickly adapt the shelf corporation to suit your needs.
And what are the disadvantages?
One of the biggest drawbacks of shelf corporations is the high cost. This is because you’re essentially paying to avoid the registration process and get a ready-to-use limited company. So you still need the 25,000 SEK required for share capital and possibly other funds needed to start your business. If you’re starting with limited capital, it can be difficult to purchase a shelf corporation, even though it saves time.
Another downside is that the corporation isn’t entirely new, even if it hasn’t conducted any business previously. The shelf corporation may have been registered for some time without being active. This means that the company’s fiscal year begins when it was first registered with the Swedish Companies Registration Office. The fiscal year doesn’t start from the date you purchase the shelf corporation. This could bring up certain financial issues that you may need to address from the outset.
It’s also important to remember that even though the process of starting a limited company is faster with a shelf corporation, it doesn’t mean you completely avoid the initial administration. You still need to spend some time setting up things like the company’s board of directors, the company name, and business description, which requires some processing time with the Swedish Companies Registration Office.
Is a shelf corporation the right choice for you?
Buying a shelf corporation can be a good option if you need a company quickly and don’t want to wait for the registration of a new limited company to be completed. It’s especially beneficial if you want to start your business immediately and need a company registration number to sign contracts or conduct business.
At the same time, it’s important to remember that a shelf corporation costs money. So, it’s a good idea to consider whether investing in one is valuable for your business. You simply need to weigh the advantages of the quick start against the higher cost. If you have time to wait and want to save money, it might be better to start a limited company from scratch instead.
