What Is a Shelf Company and Should You Consider Buying One?

When you’re starting a business, one of the big decisions you’ll face is whether to register a brand-new company or buy an existing one. One option you might come across is the “shelf company” – a company that’s been registered but has never traded. It sounds simple, but like most things, it comes with its pros and cons. Let’s break it all down for you and help you figure out if a shelf company is the right choice for your new business.

What Exactly Is a Shelf Company?

A shelf company is basically a ready-made company. It’s been registered with ASIC (Australian Securities and Investments Commission) and is fully compliant with all the legal requirements, but it hasn’t done any business. No sales, no contracts, no debts—just sitting there, waiting for someone to take it off the “shelf.”

These companies are often created by accounting firms or company registration agencies, with the idea of selling them to entrepreneurs who need a business fast. It’s like buying a pre-built house instead of designing one from scratch.

Why Would You Buy a Shelf Company?

Shelf companies can be a convenient option if time isn’t on your side. Here are some reasons why people go for them:

1. It’s Quick

Starting a new company can take time, and if you’re itching to launch your business, buying a shelf company means you can skip the registration process and start trading almost immediately.

2. Credibility

An older registration date can sometimes make your business look more established than it actually is. If you’re applying for contracts or trying to impress investors, having a company that’s technically been around for years could give you an edge.

3. Compliance Is Sorted

All the paperwork with ASIC is already done, so you don’t need to stress about those initial steps. You’ll just need to update the details to make the company your own.

What’s the Downside?

Of course, there are a few catches to consider:

1. It’s More Expensive

Shelf companies are more costly than registering a brand-new company. You’re essentially paying for the convenience of skipping the set-up phase.

2. Customisation May Be Needed

The company might come with a generic name or structure that doesn’t quite fit your vision. Changing details like the name, directors, and shareholders can take extra time and money.

3. Hidden Risks

Even though shelf companies shouldn’t have a trading history, it’s crucial to double-check that there aren’t any undisclosed liabilities or compliance issues. Doing your homework here is non-negotiable.

Registering a New Company: The Alternative

If you’re not sold on the idea of a shelf company, registering your own company might be the better route. It gives you complete control from day one—choose the name, structure, and details that suit your goals. Plus, you avoid the higher cost and potential risks associated with buying an existing entity.

The downside? It takes time. You’ll need to wait for ASIC to process your application and handle all the compliance steps yourself.

What to Do After Buying a Shelf Company

If you do decide to buy a shelf company, here are the key steps to take to get things moving:

1. Update the Details

You’ll need to notify ASIC of any changes to directors, shareholders, and the registered address. This is a legal requirement, so don’t put it off.

2. Apply for an ABN

If the shelf company doesn’t already have an Australian Business Number (ABN), you’ll need to apply for one to start operating.

3. Register for GST

If you expect to earn more than $75,000 a year, registering for Goods and Services Tax (GST) is a must. You can do this through the Australian Taxation Office (ATO).

4. Set Up a Bank Account

Open a business bank account in the company’s name. It’s a simple step but an important one for keeping your company and personal finances separate.

5. Check Compliance

Do a thorough review of the company’s compliance status. Make sure there are no overdue ASIC fees or other issues lurking in the background.

6. Consider a Name Change

If the shelf company comes with a name that doesn’t suit your brand, you can change it—but keep in mind this requires additional paperwork and fees.

What to Look for When Buying a Shelf Company

Before you commit to buying a shelf company, make sure you tick off these checks:

• No Hidden Liabilities: Confirm there’s no trading history or outstanding debts.
• ASIC Compliance: Ensure the company is in good standing with ASIC.
• Reputation: Older companies can boost credibility, but the age may come at a higher price.
• Clear Documentation: Get access to all the legal and financial documents so there are no surprises.

Final Thoughts

Buying a shelf company can be a great option if you’re in a rush or need the appearance of an established business. However, it’s not for everyone. Registering a new company might take a little more time, but it gives you full control from the get-go and usually costs less.

Whatever path you choose, make sure you understand the steps involved and the risks to avoid. Whether it’s a shelf company or a fresh company registration, starting a business is an exciting milestone—and with the right preparation, you’ll set yourself up for success in the market.