Limited Companies

[richardgreen]

Hi All,

Wondered if anyone can help with 3 questions I have about LTD companies?

1. If you buy an off the shelf ltd company, does any bad history (i.e. debt)that the former owners may have had count against you?

2. Is there any particular advantage to buying an off the shelf company?

3. Am I right in thinking that alot of company names are only bought by formation companies just to sell on (like internet domain names) and that the company may not have traded in the past?

Many thanks

Richard

[Alpha]

In answer to your questions



1. If you buy an off the shelf ltd company, does any bad history (i.e. debt)that the former owners may have had count against you?

If you buy an off the shelf company then it should not normally have a trading history. It would come with a certificate of non trading which would prove that there is no prior trading history

2. Is there any particular advantage to buying an off the shelf company?

Not often and in many cases now a disadvantage. The main advantage used to be that you would have a company set -up and able to trade very quickly.

Now you can form a company from scratch with the exact name that you want (provided that it does not already exist) with the share structure that you want by doing it online (see www.quickformations.com)

Of course there may a very specific name that you want for a company that is already taken(possibly because it was formed originally but then never traded), in which case you would have no choice but to pay for the company 'off the shelf'

3. Am I right in thinking that alot of company names are only bought by formation companies just to sell on (like internet domain names) and that the company may not have traded in the past?

Again probably not but I'm sure that Richard Osbourne (Ozzy) could give a better insight into that premise.

[Ozzy]

Hello Richard,
1. Generally speaking, off the shelf companies are dormant companies that have never traded so have no history. You can buy some companies that have some trading history but I would strongly recommend against this.
I would be amazed if a company formation agent appointed officers with a bad credit history to a shelf company! Normally speaking, they/we use dormant companies as nominees.

2. No. Its the way things used to be done before electronic filing was introduced by Companies House. I only sell shelf companies because it is what some people think is the quickest way to form a company - it is actually the slowest way now!

3. There are some formation agents who buy good names to sell at a premium. In fact there is only one formation agent that has a reputation in the industry for this, others like myself use generic names.


In all honesty, you are better of forming a "clean" company from scratch and if I can help with that (or a shelf company if that is what you really want) please get in touch and I'll be happy to help.

[richardgreen]

Hi Guys,

Thank you for your replies - it is much appreciated,

Richard - I will be in touch over the next few days.

Regards

Richard