My own corporation's stock

[Anthony]

>> Something to ask yourself: how are you valuing the stock?  How does
>> the IRS want you to value it?
>
> I would never have suspected that would be a problem.  Perhaps I'm
> wrong, but my understanding was that if it wasn't publicly traded, the
> company would just set a fixed price per share, and that price would
> only change if the owners of the privately-held stock were to sell it
> for some other price.

The IRS wants you to use fair market value.  If the company could just
set its own price, it'd set the price at $0.01, and avoid 99% (or
more) of payroll taxes.

Determining the fair market value of the stock of a privately-held
company is hard.  You'll say one thing, the IRS will say another
thing, and you'll wind up just paying off the IRS because it's more
expensive to fight it than it is to pay it.  And if your accountant
has any sense of ethics, s/he's going to force you to come up with a
reasonable fair market value before you file your return, which in
itself is going to be expensive.

You don't mention if the stock is going to be restricted or not, but
that's a big factor as well.  You don't mention whether or not the
stock is going to be a separate class.  That's a factor.  You don't
mention whether you are interested in electing to be taxed as an
S-corporation.  Another factor.

And on the non-IRS side of things, there are all kinds of legal issues
that come into play when you have more than one shareholder, which
I'll just leave at that as it's not my area of expertise.

>> This part I'd definitely recommend getting rid of.  Open a corporate
>> checking account.  Then buy stock from the corporation, or loan money
>> to the corporation, and then let the corporation pay for its own
>> expenses.
>
> Yes, that is what I have done.  I had to pay Dulcinea's expenses out
> of my own pocket before I was able to open the account, but now that I
> have one the company will be paying its own way.  If it doesn't have
> enough money, then I'll write a personal check and deposit it in the
> corporate account.  Until I can settle the stock issues, I'll account
> for that as a loan.

If you're willing to pay your employees and directors in IOUs
denominated in dollars rather than outright stock (or promises of
stock), that would be easier to account for.  They can always choose
to buy stock with the IOUs later, after you've set things up for that.
 But this may or may not be your decision - it's a business decision
and not an accounting decision - it just happens to make the
accounting a lot easier :).