The number of authorized shares at the time of formation is largely arbitrary and probably won’t matter a whole lot in the end.  Nevertheless, many lawyers recommend that new corporations, particularly those that plan to award equity compensation, authorize 10 million shares of common stock.  Of that amount, 40-80% should be issued to the founder group, leaving room for an employee pool or additional stock issuances.                                  

I am a lawyer and an entrepreneur in Denver.  This is the fourth in a series of posts about legal issues affecting startups.