How to Set Up Dummy Corporations

Setting up a dummy corporation is similar to making a corporation and the only difference is that the former appears to be an actual company but in fact it is an illegal tactic to avoid bankruptcy and deceive investors. Nowadays, people commonly use dummy corporations to hide losses of their actual companies and transfer risk and other complications to safeguard the image of their real companies. A dummy corporation is not capable of doing business and is only used as a tool to hide the genuine identity of real corporations.


  • 1

    State the purpose of business

    It is very similar to setting up a real corporation as the only difference lies in the absence of operations. In order to form a dummy company of your, you will be required to state the type of business, you wish to carry with the corporation. Therefore, you must choose the type same as yours real corporation.

  • 2

    Decide a name

    After you have come up with an idea regarding the nature of your business, you must choose a name for your dummy corporation. You should be careful while choosing the name of your corporation as it depends on the scope of business you wish to show with the dummy corporation. If you want to portray a huge business, you must choose a viable name for your corporation.

  • 3

    Come up with a business plan

    As the dummy corporation is just a cover up for your actual corporation, thus making up a fake business plan will not be a problem. You can make that similar to your actual corporation but do not try to copy all of it otherwise you might arouse suspicion. Remember that a business plan includes all the necessary equipments and other expenses that are to be carried out, the required workforce and the ways through which an individual aims to earn profits. Make sure that you cover all of these aspects.

  • 4

    Find a location

    Keep in mind that setting up a dummy corporation does not necessarily means that you will not have to choose a location. It is suggested that you choose a reasonable location for your dummy corporation as you do not want others to get suspicious. Obviously, you are going to conduct businesses under the name of your dummy corporation, thus you must choose a physical location for it.

  • 5

    Register your business

    After you have planned everything, register your business.

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