A shell corporation is a company that can be set up for various needs — legitimate or illegitimate — without showing much financial assets or employees. Legal reasons can be for a startup using the shell company as a vehicle to store its raised capital or for a firm to conduct a hostile takeover. Shell companies can also be used to make political contributions anonymously. That said, shell companies are more often in the news for illegitimate reasons, usually tax evasion or money laundering. People often create shell companies in popular tax havens such as the Caribbean islands. But did you know it is possible to set up shell companies in the United States itself?
States like Delaware, Wyoming, and Nevada have made it easy for individuals and companies alike to form shell companies right here in the US than opting for the better-known tax havens such as the British Virgin Islands or Panama. To set up a shall company in say, Delaware, all one needs to do is contact a registered agent based in the state. The entire process can be done online or over the phone. Yes, one does not even need to be in Delaware to set up a shell company physically!
The registered agent will ask for your name, an address, a contact number, and upon paying the fees, will set up the company on your behalf. Often only the identities of the registered agent will do. One can even hire nominee directors to file the paperwork on their behalf. Contrast this with the additional paperwork, such as providing a copy of your passport that is required to set up an offshore shell company. Some registered agents can even facilitate the formation of a shell company as a subsidiary under another shell corporation. This subsidiary format allows for even more privacy (or let's face it, secrecy) for the company owner.
In terms of expenses, most Delaware-based registered agents charge a few hundred dollars to set up a shell company, and the registration process can take a little as a day to set up. Given the ease and less time needed, it makes sense for US-based individuals to set up a shell company on US soil than look at an offshore option. Of course, all this is determined by the purpose for which you are establishing a shell company.
Shell companies often help hide financial details about a company away from journalists and federal agencies. Did you know President Trump’s former lawyer Michael Cohen was outed for using a Delaware-based shell company to pay $130,000 to Stormy Daniels? The misuse of shell companies is what has led to growing scrutiny from federal agencies to crack down on anonymous shell companies. How you use a shell company is up to you, but as long as your intentions are within the law, you have little to worry about. All we’re saying is, setting up a shell company in the US is easier than you think.
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