• August 2019
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How much stock shares should I authorize when incorporating/forming a company for a single founder?

There is technically no wrong answer. You can issue as few as 100 shares and likely be fine for a time since you’ll be the owner, at least at first. However, since every business changes and we cannot always plan for this, I recommend issuing a large number of shares from the outset.

 

10,000,000 shares is a very common figure that you’ll see across the board. While this seems extremely high for a single founder, it’s vital to remember that founders are not the only people that may hold shares in your company. You may want to award shares to future investors or include as part of a competitive compensation package for an employee. A large number of shares just looks good, too. For instance, offering a highly sought after applicant 5,000 shares feels like a lot more than just 5 shares in your company. This can be a powerful tool, especially early on, when you might not have as much to put toward a high salary.

 

The reason for the varied responses really stems from the fact that you can authorize more shares in the future. However, this process requires agreement by the board of directors. Further, there are legal and filing fees involved with increasing shares. This is why I highly recommend 10,000,000 shares at the outset to avoid the future expense of both time and money.

 

Check out this blog for more information and assistance: How Many Shares Should I Issue When Incorporating?

 

Incorporating and officially starting your business is an exciting process – but it’s also time-consuming and expensive. LawTrades can help if you’d like to talk with an attorney skilled in incorporation.