What is a “reserve” firm and why is it worth having one? An example from the security business support practice

Our company has been providing legal support to security companies since 2006. Over the years of our practice, we have faced various situations that have happened to our Clients. Sometimes, our Clients need to suspend or even dissolve their companies. But they don’t want to terminate their security business.

In this case you may need a “reserve” shelf security company with a license and VAT.

Today we will elaborate on the case from our practice, when such a firm allowed to save the security business of our Client.

Related article: Security Services Licence is Revoked: What To Do And How To Forestall This?

Core of the subject: Frozen accounts of the security firm

In January 2020, we were contacted by a Client, the owner of a security company with the status of a VAT payer. The company faced some problems during its activity, which resulted in the fact that its business accounts were frozen until all the circumstances were clarified.

However, the Client had obligations to his clients with whom Security Services Agreements were concluded. And suspension of economic activity is one of the worst options for any business. Therefore, we were expected to solve the problem in the best possible way and within the shortest time.

So, we offered the Client to set up another security company and transfer all clients to it or buy a ready-made security company with a license and a VAT payer status, while we were addressing the issues with the existing firm. Both options have their pros and cons. But both could solve the Client’s main problem.

Related article: Why Is It So Important To Apply For Legal Assistance And Support During The Licence Inspection In Advance

Register a new company or buy a ready-made firm?

Advantages of registering a new security company with the status of a VAT payer:

  • It is cheaper than buying a ready-made company;
  • You will witness the establishment of the company and be its first owner.

The key disadvantage of such a solution is a great demand of time, because you will need:

  • To wait two weeks for the license to be issued;
  • If you managed to register the company and apply for a VAT payer status before the tenth day of the current month, this status will be assigned to the company only the next month. And if you register the company after the tenth day of the current month, you can apply for a VAT payer status only from the first day of the next month and become a VAT payer only in one month.

Advantages and disadvantages of buying a ready-made firm

In case of buying a ready-made company with a Security Services License and a VAT payer status, you do not need to undergo all of the abovementioned procedures. This means that you can significantly save your time. Thus, when choosing between starting a new company and buying a ready-made firm, you should, first of all, decide on how quickly you need to get an operating company.

The price of a ready-made company is many times more expensive than the cost of starting a new firm. But it may seem so only at first sight. If you calculate the cost of registration and all the notary services, the license state fee and the very execution of documents required for obtaining the license, rent and staff salary expenses for the period of waiting for the decision on the license issuance, you will get almost the same price.

The given Client was really in a hurry to transfer the activity from the blocked company to the new one. Therefore, having weighed all the pros and cons, he decided to purchase a ready-made security company with a VAT payer status.

If you have a similar situation, please contact our specialists for the details of cooperation. We will find a solution for you even in the most difficult situation.

Publication date: 24/01/2020

About author

Name: Marina Losenko

Position: Associate

Education: National Aviation University

Knowledge of languages: Russian, Ukrainian

Email: [email protected]

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