A ready made company is more commonly known a ‘Shelf Company’ the term deriving from buying something that is already in existence and is therefore ‘off the shelf’. The company has been set up usually by a Formation Agent or Accountant for the sole purpose to sell on.
Shelf Companies are already registered with Companies House and are clean companies. This means the company should have dormant live accounts, should have never traded or had bad debt. The incorporation certificate will have already been generated and openly available to view. The companies will all have a filing history with all annual requirements met on time.
We would advise that when you have found the right company you ensure you are purchasing this from a reputable seller, one that can assure you the company has never traded. If you purchase a company that has previously traded you will be taking on any past debt or bad credit rating.
So is a shelf company right for you, these are the most important questions to ask yourself:
- Do I need my company registration number now?
Like most new entrepreneurs you might have been doing the ground work of your business by building business relationships first before actually deciding to become a fully registered company. You might be working on gaining an essential contract or be just about to close a deal and your client asks for your company registration number – At this point of course you can register a new company but, how much easier would it be to use a readily available genuine company number. This is what a shelf company can provide immediately.
- Is Historic Registration important?
The number of years a company has been around is going to have some impact on the confidence future clients have in your business. Usually distributers and manufactures require companies to have been in business for a certain period of time. It can also have implications on gaining access to investment capital and corporate credit. Therefore making some business dealings easier and increasing your corporate image.
- Do I intend to deal with government contract bidding?
If the answer is yes then you need to consider that usually most governments require your company to be in business for a specific period of time.
- What about financial attainment?
You may find that banks and other financial lenders are more likely to finance companies which have been registered historically.
- How important is the company name?
By the time you are looking to purchase a shelf company you probably have thought of your own company name. As most shelf companies come with a free change of name finding a name already registered as a shelf company that suits your unique business requirements is not necessary – although if you do this is an added bonus.
When you take over the company the new name is registered with Companies House, it does not have any impact of the date of initially registration, this stays exactly the same.
So what should you expect to receive once you have purchased your shelf company?
The company should be transferred to you immediately. This is done by submitting the terminations of the current directors, appointing new directors, changing the registered office and filing a confirmation statement to change a shareholder.
Usually the following standard documents are included:
- Statement saying the Shelf Company has never traded
- Transfer of new ownership
- Certificate of Incorporation
- Memorandum of Association
- Articles of Association
- Fully Completed Company Register
- Share Certificates
- Minutes of Meeting
- Change of Name Certificate (if applicable)
Other important factors that you need to be aware of are:
A change of name if required, takes around 24 hours to be accepted with Companies House. The other changes once filed are usually accepted in around 1-3 hours. It takes around 1 day for the transfers to take place, the change of name accepted and the documents to be prepared and forwarded onto you.
Once the company has been transferred over to the new company director, you may wish to consider registering the company for VAT. If the turnover of the company is over £83,000 throughout 2016-2017 then you must register for VAT. If the turnover is below £83,000 you can still voluntary register for VAT. It takes around 14 working days from when the application is submitted to HMRC to be issued a VAT number. HMRC do occasionally ask for additional information once the application has been reviewed. The information you are required to provide is information on your company, personal information on the applicant/director, estimated turnover, where the business is trading from and what the business activities of the company are.
The legal address for every company registered in the UK must be located in the UK. The address of a company is known as a Registered Office Address. The registered office address will be shown on public records as the company address. The registered office address of a company will be the first point of contact for HMRC, Companies House and other Government bodies to forward statutory mail onto.
The registered office address of a company will determine where the company is registered, a company with a registered office address in England or Wales will be registered in England & Wales, an address in Scotland will be registered as a Scottish Company and an address in Northern Ireland will be registered as a Northern Ireland Company. If you choose an address this will give the impression that the company is trading in that specific location.
CFS Formations is a team of company formation agents, specialising in all aspects of company start-ups both in the UK and overseas.