[epi0Bauqu]

I don't see the point of authorizing that many shares. I've always authorized 1,000 and initially issued 100 to the founders. 1,000 is enough to get the % breakdowns you need and you aren't charged for having that many shares: http://www.corp.delaware.gov/frtaxcalc.shtml

[ryanroberts]

If you use the assumed par value capital method to calculate your franchise taxes (instead of the authorized shares method), your startup's franchise tax bill isn't likely to be very much.

[epi0Bauqu]

Why pay any extra $ when you don't have to? Many scenarios will end up with you paying greater than the minimum ($75).

[CoachRufus87]

it's not.

[epi0Bauqu]

Here's his article on it: http://thestartuplawyer.com/incorporation/the-delaware-freak...

His example comes to $175.

And it may be much worse depending on specifics or if you take this specific advice but incorporate in another state.

[ryanroberts]

Well, the example assumed the startup's gross assets were $250,000. If gross assets were $100,000 the tax would be $75 (actual calculation gives you $70 but min is $75).

[gyardley]

His list implies he's raising money and issuing options.

Although only the percentage ownership should matter, many employees react very differently to getting a tiny number of options at a relatively high strike price vs. a big whopping number of options at a miniscule strike price.

[epi0Bauqu]

A 2 min conversation should fix that.

[gyardley]

I agree, but in my experience it doesn't - primarily because the candidates are getting tons of conflicting advice from friends, family, and other startups they're interviewing with. Respectable-sounding number of options = safer.

[alttab]

There is another good reason not to authorize so many: some states tax you based on the number of shares you have authorized (and not necessarily with their dilution). 10,000,000 shares is way too much if you can get by with less.

This tidbit comes from my girlfriend who is a tax specialist and consultant who also read the article.