Maximum Number of Shares Authorized

[dunamis]

Hello,

I am about incorporating a business in BC Canada. The is a question bout Authorized Share Structure in the application i.e. "maximum Number of shares authorized" what should one indicate here. I am the only shareholder and I am incorporating the company for my Coaching business. What should also be included under "without par value" or "with a par value of" what does this mean. Do any of this have some form tax implications in BC, Canada.

I'll appreciate any response. Thank you.

[Freelancier]

Can't tell you specifics of CA, but in the USA (which should be similar):

The maximum number of shares is the number of shares held by the corporation. You can sell these shares at "par value" to capitalize the company. For example, my corporation has 500 shares at par value of $1 and I capitalized the corporation by buying these shares for $500. Later, if I were to sell these shares, the par value is the basis for determining my profits. The company then has $500 of equity and $500 in current cash assets (to get all "general ledger accounting" about it).

For more info and for "no par value" stock, look here: What is no par value stock? - Questions & Answers - AccountingTools (http://www.accountingtools.com/questions-and-answers/what-is-no-par-value-stock.html)

Since you're likely the only shareholder, worrying about not having a shareholder liability is kind of silly, but maybe your accountant will be able to provide information that is pertinent to your specific situation.

[dunamis]

Thanks Freelancier, I was actually trying to find out whether it makes a difference if the "maximum Number of shares authorized" is 500 or 10000.

[Freelancier]

For most single-person corporations, it makes no real difference. Basically, the amount of shares that are sold/transferred to someone is the equity outstanding, but the rest of the shares will need to be logged and are available for sale/transfer if the "corporation" decides to do that as part of a capitalization or stock options plan. So authorize as many as you need to accomplish the capitalization and stock option plans you intend to have.