Broadly speaking, there are two ways you can start a company. You can either incorporate one from scratch or purchase a shelf company and repurpose it for your own use. Each option has advantages and disadvantages. This article will explore the advantages of buying a shelf company to help you determine whether it is the best way to start trading through a company in the UK. It will also contrast shelf companies with companies incorporated from scratch. <\/p>\n\n\n\n
You may assume that incorporating a company is the same as starting one. However, there is a subtle distinction. To appreciate this distinction, it is worth remembering that a company is a legal entity through which your business trades. It is not necessary to own a company to run a business. You can trade as a sole trader or through a partnership<\/a>. <\/p>\n\n\n\n Incorporating a company is like creating a company from scratch. In effect, you file certain paperwork with Companies House, which then registers the information and produces a certificate of incorporation. This certificate of incorporation is akin to the company\u2019s birth certificate. It contains the company\u2019s name and its unique company number. At this point, the company has corporate life. <\/p>\n\n\n\n This may intuitively seem like the only way to start a company. However, nothing is preventing you from purchasing a ready-made company and repurposing it for your own needs. These ready-made companies are commonly called shelf companies<\/a>. <\/p>\n\n\n\n Law firms and company registration agencies have dozens of self companies sitting idle, ready to be purchased. <\/p>\n<\/div>\n\n\n\n Until the shelf company is purchased, it is not a trading company. That is, while it has legal existence because it is registered with Companies House, it has no liabilities. Nor does it have any capital invested in it. <\/p>\n\n\n\n Notably, all companies must have at least one shareholder and one director. In practice, the shareholder will be the law firm or registration agency. The director will be one of the managers of the business. <\/p>\n\n\n\n Likewise, it will also have a generic name. Most shelf companies have model articles of incorporation<\/a>. However, certain law firms may incorporate the company with their bespoke articles. <\/p>\n\n\n\n Since shelf companies are intended to be bought and repurposed, once you acquire the company, you have the right to do with it what you want. In practice, you will want to:<\/p>\n\n\n\nCharacteristics of a Shelf Company<\/h2>\n\n\n\n
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