Calculating And Issuing Shares of Stock

In order to properly complete your corporate documents, you will need to determine the number of shares of stock to be issued to the various shareholders. As a small business, most small businesses initially authorize either 1,000 or 10,000 shares of Stock. It is recommended that you do not issue all of such stock upon the initial issuance. Stock that is not issued is held in reserve. It does not determine percentage of ownership, but leaves additional stock in reserve in the event that you agree to add additional shares. You can always amend your Articles of incorporation to authorize additional shares of stock, but this requires additional state filings and related fees.

In the usual situation, where there are three shareholders for example, each who own one-third of the stock of the Corporation, you should issue each shareholder an equal number of shares, for example 100 shares each, leaving 700 shares in reserve. Where percentage of ownership is more complicated, you should use the same general principals to calculate the actual number of shares to be issued. The main point being that it is advisable to leave shares in reserve.

Normally, stating a low par value for your shares is advantageous. Especially in states where a franchise tax is calculated based upon the par value of shares. Normally you will want to state a par value of a penny per share. Input $.01 in the par value section of your Central information Template.

Our Incorporation E-Book will automatically fill in the par value and number of shares based on the information that you input into the Central information Template.

Our Corporate Kit E-Book, will automatically generate share certificates and subscription agreements based on this same Central Information Template information for up to 5 shareholders. If you have shareholders in excess of 5, you may still utilize the document package, but you will need to manually revise the share certificate portion of the package for shareholders in excess of 5. this can be easily accomplished using your word-processing program.