Reasons to Form a Shell Corporation

whats a shell company

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.

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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.

For instance,

  • 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.

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