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When forming a corporation, two of the key decisions are the number of shares authorized and their par value. While these terms may seem technical, they play an important role in structuring your company’s ownership and financial foundation.

Par Value

Par value is the minimum price at which shares can be issued, often set as a nominal amount such as $0.01 per share. In many states, businesses set a very low par value to reduce potential tax obligations and provide flexibility when issuing shares.

Number of Shares

The number of authorized shares determines how ownership in your corporation can be divided among founders, investors, and future employees. Deciding this early helps avoid complications as your business grows. Many startups authorize a large number of shares (such as 10 million) to allow room for fundraising, stock option plans, and ownership adjustments without frequent amendments.

Can You Change These Later?

Yes. Although par value and share count are established during the initial formation process, they are not set in stone. You can file an amendment with the state to adjust these values at any time. Keep in mind that states may charge additional fees for such changes, and in some cases, legal or accounting guidance may be needed.

Bottom Line

While the number of shares and par value may seem like small details, they set the foundation for your company’s equity structure. Getting it right from the beginning can save time, money, and legal headaches later on.