When forming a corporation think of your shares as dollars in your
treasury. You will "sell" these shares to investors as equity to ramp your
It can get very complex from there so you`d better do some research.
Start your "c" corp with enough shares to reflect the value of your
If your trying to raise capital please refrain from shopping your
business plan. Get some sales traction and then do a Reg A or Reg D
offering. There are enormous liability issues associated with raising
capital that most entrepreneurs don`t know about that can get you in real
A sophisticated investor will want to see a transaction not projections.
Don`t ask lawyers business questions. Lawyers are lawyers, ask them
legal questions. Talk to several CPA`s, interview them and retain one.
You will be doing yourself a heep-o-good
In any case.
For a small fee to the State you can issue additional shares and
different classes of shares that can be sold to raise growth capital and
reward founders, directors, officers, advisors etc later.
Just my 2 cents...
I have been involved in purchasing and selling companies, and have never seen the number of shares matter. All that matters is percentage of ownership. I have been involved in companies with one share (literally) and with millions of shares... it is all irrelevant.
Who owns what and at what percentage is what matters.
So I suggest pick a number you feel good with, but high enough that you can break it down to percentages that work should other people gain equity in your company.
Best of luck.
A few quick points:
1. Many states charge fees according to total number of shares authorized.(example = new york charges $.05 per share over 200)
2 In most "business friendly" states, changing the number of shares authorized is easy - file a form and pay a fee.
3. However, if you are planning to raise capital by selling shares (or other corporate securities) then it behoves you to develop a basic capital strategy before you incorporate.
4. Investors generally prefer to have a fairly low per share price on the stock they purchase. (ie less than $1.00 for seed round)
5. My final point - If you are going to raise capital by selling any type of security (stock, bond, debenture, etc) - you should seek professional guidance. For legal advice I`d go to an Attorney that specializes in securities law.
Remember, doing it "right" the first time is always faster and cheaper than "fixing" it later.
Good luck with your new business.