Do I have to issue all my authorized shares?

No. Authorized shares are a ceiling, not a quota. Most corporations issue only a portion and keep the rest as authorized-but-unissued headroom for option grants and future investors.

Does authorizing more shares dilute the founders?

No. Authorizing shares changes nothing about ownership. Dilution happens only when shares are actually issued. You can authorize 10 million and own 100% of the company until you issue stock to someone else.

What if I need more shares later?

You amend the certificate of formation: board approval, shareholder approval, and a certificate of amendment filed with the Texas Secretary of State, with a filing fee. It’s doable but slower than authorizing enough up front.

Does the number of authorized shares affect my Texas franchise tax?

No. Texas franchise tax is based on revenue-derived margin, not on authorized shares or par value. The share count only affects taxes in states like Delaware that use an authorized-shares calculation. Share structure is one of a handful of formation choices that are cheap to set correctly and expensive to unwind. Reidel Law Firm forms and advises Texas corporations and LLCs on transparent flat fees — talk to a Texas business attorney before you file.

TEXAS BUSINESS LAW

How Many Shares Should You Authorize?

Schuyler 'Rocky' Reidel July 17, 2023 6 min read

Ten million shares of common stock is the standard answer for a new startup corporation — and in Texas it works cleanly, because authorized shares cost you nothing here. Authorized shares are the maximum number of shares your corporation is allowed to issue, a ceiling you set in the certificate of formation (Texas’s version of a certificate of incorporation). You don’t issue the