Determine share price

When incorporating, the business owner has to decide how many authorized and issued shares the new corporation will have and the business owner also has to determine what price per share of stock will be.

Calculating share price of a corporation

To determine share price of the stocks of a new corporation, the business owner divides the total investment by the total number of shares to be issued to arrive at a price per share.

Price per share = Total investment ÷ total number of shares to be issued

This share price is what each stock holder will pay for a share of the corporation. Shares and share price appear on the corporation 's books and balance sheets in one of two ways.

Example of how authorized, issued, and outstanding shares work

10,000 authorized and 200 issued

John and Mary starts a printing business as a corporation. The business owners (John and Mary) decided that each of them should invest $1,000 in the corporation. When the business owners file the articles of incorporation for their corporate charter with the state they are incorporating their business, the business owners specify that the corporation should be authorized to issue 10,000 shares of stock. Then the business owners issue 100 shares to each business owner. In this case, their corporate records and the equity section of the corporation 's balance sheet show  10,000 shares of common stock authorized and 200 shares issued and outstanding: $2,000.

• Authorized shares of common stock 10,000
• Issued shares 200
• shares outstanding $2,000

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