Raising money · A term for founders abroad
What is par value?
A nominal minimum price per share set in the certificate of incorporation, such as $0.0001; it lets founders buy their shares for very little.
Checked against the IRS's instructions and the states' own rules. Reviewed by Saais Patel, compliance reviewer.
Term 73 of 105 in the glossary, filed under P.Every term, A to Z
Par value, for a founder abroad.
Par value is the lowest price a share can be issued for, set in the certificate of incorporation. Startups set it tiny, often $0.0001, so founders can buy their stock outright on day one: eight million shares at $0.0001 cost $800 in total.
Buying the shares at par, then filing an 83(b) election, means there's nothing to tax when they're issued. Par value is also part of Delaware's assumed par value capital method for franchise tax.
Read next · guide · 4 minCap table basics for founders abroad: shares, vesting, the option pool and dilutionWhat founders ask next.
- Is par value what my shares are worth?
- No. It's a legal minimum. What a share is worth depends on the company's value, which investors price separately.
03 · See also
- Raising moneyAuthorised sharesThe most shares a corporation may issue, set in its certificate of incorporation; ten million is common for a startup.Read the term
- Raising money83(b) electionA founder's choice to be taxed on restricted stock when it's granted rather than as it vests, filed with the IRS within 30 days, with no extension.Read the term
- Raising moneyCap tableThe record of who owns what share of a company, including options, SAFEs and other convertible instruments; investors read it first.Read the term
- Raising moneySAFEAn investment contract, published by Y Combinator, where an investor pays now for shares issued at a later priced round; used by US corporations.Read the term
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