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 you will want to state a very low par value for your shares. Normally $0.001 par value can be used. The reason for using a low par value is that many states calculate franchise taxes or other similar taxes to be paid based upon the number of shares times the par value of shares.

Our Corporate Kit E-Book includes printable share certificates that are automatically completed for you to print out using our automated document creation system.