Shell Companies get a bad rep.
They aren’t just used for hiding money offshore. Some people have many companies set up that have absolutely zero use in commerce.
Shell Companies are defined as:
Non-trading firm formed (and often listed on a stock exchange) as a vehicle to (1) raise funds before starting operations, (2) attempt a takeover, (3) for going public, or (4) as a front for an illegal business.
Read more: http://www.businessdictionary.com/definition/shell-company.html
But they are much more.
Do you value privacy?
The obvious answer is yes. But how much privacy do you have? If we get into a car accident, can I readily find your home address from the police report? If I found out your full legal name, can I find out where you live, or have lived, through a quick Google search?
Surprisingly, you can find out a lot about people that you barely know. Street addresses, phone numbers, professional history, friends and social circle.
One of the many reasons to form a shell company is to hold assets and titles with a layer of anonymity attached.
- My personal vehicle is owned by a New Mexico registered LLC.
- My rental properties are owned by a Florida LLC.
- My private residence is placed in a Nevada Trust.
- I have several businesses that are owned by other businesses.
I think like a Tycoon, despite not having 7-figures in the bank. If we get into a car accident, the police report will have my name but not my home address. If you found out my phone number or intercepted a billing statement (use e-statements, people), it would link back to a business. If you slipped and fell in my house you’d spend $1,200 of an attorneys time just trying to figure out who you have a claim against.
We live in a very litigious society, but they can’t come after you, if you don’t own it. Even if you don’t have substantial assets and think it’s no big deal – do you really want to risk the bit that you do have?
People get sued a lot, and a lot of people get sued over bogus claims. At the very least a lawsuit costs you some money or some of your time, and at the worst it cost you both your money and time. A shell company can prevent them from ever making it you, and it’s 100% legal.
Always consult with a CPA or lawyer for your personal situation.