Posted 11 Oct 2008
Par value is the minimum price that a corporation can issue its shares. While I typically see par values of either $1 or “no par value” when looking at new client startups that have incorporated on their own, I typically recommend that a startup corporation’s Common Stock par value be set at $0.0001 to as low as $0.00001.
My recommendation is based on my belief that startups should authorize 10,000,000 shares of common stock upon filing the its charter. The startup will then typically issue about 6,000,000 to 8,000,000 shares to its initial set of founders.
Therefore, if your startup issues 7,000,000 shares with a $0.0001 par value to its initial founders, the minimum the founders would have to collectively pay (with cash or with cash & intellectual property) for those shares is $700.
Update: If you are looking for more information about incorporation, check out my “If I Launched a Startup” article.