How to Issue Corporate StockWe’re Just Not Annoying®
How to issue shares of corporate stock
The articles of incorporation set out how many shares the corporation is authorizing. The shareholders then decide how many shares of the stock they will issue to fund the corporation.
To issue stock in the corporation a simple bill of sale will do. This also could be called issuing shares of corporate stock.
Some corporations are not funded with cash. They could be funded with assets. If a shareholder wants to fund the issued shares of issued stock with things like business vehicles or personal tools needed to work in the business, this can be addressed on the bill of sale of issued stock.
If you are incorporating your first business, the thought of issuing stock for your company can seem daunting. Stock is a representation of ownership of your corporation, and the term “stock” is exclusive to corporations (LLCs, for example, can sell “units” of their business). Stock can also be sold in order to raise capital for your corporation.
How much stock will your company issue?
Your articles of incorporation will initially set out many shares of stock your corporation will authorize for sale—the shareholders of the stock will then decide how many shares of the stock will be issued in order to fund their corporation. To issue stock in your corporation, you can use a bill of sale. Corporations do not need to be funded with cash—they can be funded with assets. If a shareholder wishes to fund the shares of issued stock with a vehicle, this can be addressed on the bill of sale for the issued stock.
What is a bill of sale?
This simple document (which you can download for free) shows who has agreed to buy the stock, and addresses how many shares were agreed to be purchased, and at what price. If an asset (such as a vehicle, tools, or other non-monetary asset) is being used to “purchase” the stock, it should be written in the bill of sale of the stock. The bill of sale should be signed and dated by the shareholder, the director or officer of the corporation, and a witness. This shows how much stock was sold and at what price.
How shares of a company work:
Say a company chooses to offer 1000 shares of stock, with a par value of $1 per share. This company is technically worth $1000. If there are five shareholders with equal share of the corporation, and each one owns 200 shares, then each shareholder has invested $200 into this company. Let’s say a year of business goes by, and the company nets $1000 of profit. Each shareholder still has their 200 shares. But now instead of being worth $1 per share they are worth $2 per share, and each shareholder has made the same amount of money.
Certificate of stock:
Stock certificates are a physical, written representation of the issuing of shares of stock in your corporation. You do not need a certificate of stock—the bill of sale or even something less formal would suffice. A certificate of stock will have the signatures of officers, the owner of the shares of the stock certificates, the name of the corporation, and the state in which the corporation was incorporated. A free certificate of stock can be downloaded here if you wish to issue them.
The offer of purchase of issues stock shares basically sets out the price of each share, the amount of issued shares being bought, the name of the shareholder, and the name of the president of the corporation. If they are the same name, it would be ideal to have the document signed by a witness.