Small Mistake, Huge Tax Issues

When incorporating Beyondem, the papers asked me how many shares to issue myself. It made it clear that it didn’t really matter, 100, 1000, 10000, etc all meant 100% ownership. That being said, I wanted to give myself a number that looked nice on the share certificate, but also gave me room to play around with if I was to give some out to people. So thats exactly what I did, I issued myself 1 million common shares. The paper work and everything came in a week later, I was pleased:

Beyondem One Million

Looks great, one million shares in my company. Upon further review of the other documents, I come across these:

2013-04-21 13.34.09

And Lastly:

acknowledges

 

I had documents asking me to sign and acknowledge that I paid $1 million dollars in return for 1 million shares! When these documents were prepared, they made a mistake. What should have been $1 for 1 million shares, was instead $1 per share, for $1 million shares. After talking to an accountant about this, it was described as “a deathtrap” and that 65% of that in taxes would be owed.

 

After paying $50 for an amendment, everything is resolved:

onehundredcertificate Doesn’t look as nice, but definitely a lot nicer at tax season 🙂

 

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