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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29774
Experience:  Taxes, Immigration, Labor Relations
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I own a business and it has debt but also potential and I

Customer Question

I own a business and it has debt but also potential and I got a financial partner. What steps must I take to issue stock certificates? Do I have to issue it at a price or I can choose not to? My partner is assuming the debts with me and injecting working capital. Thanks
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.

Can you verify how your business is currently organized?
Is that a solo proprietorship? or LLC? or a corporation?
What is your proposed business structure ? choices are - a partnership; LLC classified as a partnership, S-corporation, C-corporation.

Customer: replied 2 years ago.
I'm sorry... it's a Florida C-Corp
Expert:  Lev replied 2 years ago.

If you already have C-corporation - that would be very simple - you may sell some of shares you own to that new partner.

When the partner assume some of your personal debt - that is considered as a payment for shares.

Another option would be to issue additional shares based on ByLaws that were registered.

However - if you will sell a part of shares you own - that would be more simple and do not need to be registered.

The corporation will continue to use the same EIN - no changes.

Customer: replied 2 years ago.
Ok, instead of selling the shares, I gave % ownership of the company and registered the partner as a Director too (Articles Amendment). Now I need to know what else to do, like, issue certificate stating % of ownership, do a stock transfer minute meeting, etc.
Customer: replied 2 years ago.
Once the partner become owner of the business with me, I assumed no share/stock price was needed to be registered in the "Stock Ledger" only quantity because we will share past debts, workload and future profits. Is that correct?
Expert:  Lev replied 2 years ago.

In general - there is nothing you have to do as long as theer is NO changes in articles of incorporation.

C-corporation is design such a way that shares may be transferred / sold between shareholders and the corporation itself may sell or purchase its own shares.

Whether you want to documents any such transaction - that is between shareholders.

So you may have a sale /transfer document and may have signatures notarized - but that is not a requirement.

Correspondingly - shares may have assigned nominal value or not - that is based how the corporate was created.

Contributions of capital will be reflected on books and on the tax return.

Customer: replied 2 years ago.
I see... the only change in the articles of incorporation was an amendment listing the partner as a Director. That change counts?
Expert:  Lev replied 2 years ago.

Generally that is not listed in the articles of incorporation rather in operation agreement - and there is no need to amend the articles of incorporation.

But if you choose to put the name of the director specifically into the articles of incorporation - then - amendment must be registered and.

When you will do so - I might suggest to remove that information - so there will no need for amendment in future just because a new director will be appointed.