How many shares should I authorize in Delaware?
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A good rule of thumb is to authorize only what the corporation will need. Corporations with 5,000 or less authorized shares are considered minimum stock and will pay the minimum Delaware Franchise Tax each year.
How many shares should be authorized in the certificate of incorporation? I usually advise companies to authorize around 10 to 15 million shares of common stock. Around 8 or 9 million shares are issued to founders with a 1 million to 2 million share option pool, for a fully-diluted base of around 10 million shares.
How many shares of stock should a corporation start with?
Many experts suggest starting with 10,000, but companies can authorize as little as one share. While 10,000 may seem conservative, owners can file for more authorized stocks at a later time. Typically, business owners should choose a number that includes the stocks being issued and some for reservation.
How many shares does Delaware C Corp have?
A Delaware corporation taxed as a C-Corp is often preferred and well adapted to venture capital and angel investing over other forms of business entities. Frequently these Delaware corporations have 10,000,000 shares of common stock authorized with $0.0001 par value.
The commonly accepted standard for new companies is 10 million shares. When you build a venture-backed startup designed to scale, you will need to issue shares to an increasing number of employees. Authorizing 10 million shares means it will be unlikely you’d ever need to offer someone a fraction of a share.
It should be noted that some U.S. states do not allow corporations to issue no-par stock. Fortunately, Delaware is not one of those states. The Delaware Division of Corporations allows Delaware general corporations to hold up to to 1,500 shares of no-par stock fee-free.
How many shares do I need to register a company?
A minimum of one share must be issued during the company formation process. If you are registering a company with more than one shareholder (member), you will need to issue at least one shares per member.
How many shares of stock should my corporation have?
How Many Shares of Stock are Required? A corporation can’t be a corporation without at least one share of stock. So you must have at least one shareholder, and one share of stock. You can have (authorize) as many shares of stock as you want, however, this may increase your filing fees in some cases.
Only Authorize 5,000 Shares. By March 1st of each year you will have to file an annual report and pay a franchise tax in Delaware. The tax is calculated based on the authorized shares for the company by using either the Authorized Shares Method or the Assumed Par Value Capital Method.
If you know the number of shares issued and unissued, or those authorized but not sold to shareholders, you can calculate authorized shares: shares authorized = shares issued + shares unissued.
How do I authorize more shares in Delaware?
If you issue all your authorized shares but then need to grant more shares, you would need to authorize more shares. This requires a board and stockholder vote, and then a document to be filed in Delaware or the state of your incorporation. This costs money (legal fees and filing fees).