Browse > Home / Incorporation / What is par value?

What is par value?

July 18, 2008

Par value is the minimum price per share that shares must be issued for in order to be fully paid. I typically recommend that par value be set at $0.001 or $0.0001 per share.  Thus, if a founder purchases 8,000,000 shares of common stock, the minimum price that the founder has to pay is $8,000 at $0.001 per share or $800 at $0.0001 per share.  Par value can even be set lower, such as $0.00001 per share, in order to minimize the amount paid for founders.  Some states, like California, allow for no par value shares.

Written by Yokum · Filed Under Incorporation 

Comments

3 Responses to “What is par value?”

  1. B on August 6th, 2008 8:18 am

    Is there an advantage/disadvantage to authorizing no par value shares (i.e. Delaware)? If no par value is selected, I am assuming that the company sets the par value in the resolutions.

  2. J on August 7th, 2008 1:14 am

    Must there be a stated authorized share capital in the articles of incorporation if there is no par value for a CA corporation?

  3. Yokum on August 17th, 2008 11:13 pm

    @B - Most companies will select a nominal par value $0.001 or lower. Having no par value shares results in franchise tax being calculated on an authorized shares basis in Delaware, which may be higher than the assumed par value capital method, which takes into account total gross assets and generally results in a significantly lower tax calculation. See post on “How do you calculate Delaware franchise taxes?” Par value is set in the certificate of incorporation.

    @J - The articles will either provide for a par value or no par value.

Leave a comment.