HankM <Hank@webfeats.com> wrote:
I'm incorporating a very small company, I have a few investors who
will own maybe 5% of the company. Should I issue the remaining 95% of
the stock to myself? Or should I issue some (most?) of the stock to
myself and leave the rest with the corporation? If I get another
investor who wants, say, 1% of the company, would it make any
difference if I sold him some of my stock or had the company issue it
to him instead? I'm sure there are tax implications, I'm not thinking
about those right now, I'm just trying to figure out what the
considerations are in the decision of whether or issue 100% of the
stock or to leave some stock "un-issued." Thanks for your help!
What I normally recommend is issuing, say, one percent of the stock of
the company to the investors and 19% to you. Then you can take on
additional investors and dilute everyone's stock.
From a realistic standpoint you should end up with about 5% at the end
of the day, with investors holding the rest. If they don't, you're not
going to get serious investors.
Stu
