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I will be incorporating in Delaware. Eventually I plan to hire employees if things go well but for now it's just me; I will be providing all funding out of my own pocket.

To get things started, I estimate that my business will only require about $10,000 to get off the ground. Now here's my question. To keep taxes low, I plan to file a Certificate of Incorporation that only allows 5,000 shares to be authorized. What should I set the par value to?

Should I set the par value such that the amount of shares I plan to sell myself (1,000, for example) when the first shares are authorized are "worth" the $10,000 I plan to invest in the company? Or can I simply set the par value low (at $0.01, for example) and then voluntarily pay more for the shares?

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Since you are currently the sole owner go ahead and set it as low as you like. $0.01 would be fine. It is best to insure that the money you invest is at least equal to par value times number of shares issued. In other words, the initial shares are not sold by the company to you below par.

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Ok, so as a general rule it's ok to pay more than par, just not less than par? – Patrick Kenny Feb 23 '12 at 2:33
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Patrick - exactly. Par value is a really old concept that is pretty much obsolete. In the old days it represented actual value received by the corporation and was designed to protect investors. So if you were offered stock with $10 par value at $12 on the secondary market lets say, you would know that when the stock was originally issued the company really got $10. Today it is generally set at a really low number, far below what the company actually got, so it no longer has any real meaning. In other words multiplying the shares outstanding x par value doesn't give initial investment. – JonnyBoats Feb 23 '12 at 2:49

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