How do I keep an S-Corporation open when it has no revenues
If you have no net income or loss, you can usually get away without filing a tax return.  In Illinois, the standard is: Filing Requirements   You must file Form IL-1120 if you are a corporation that   has net income or loss as defined under the IITA; or   is qualified to do business in the state of Illinois and is required to file a federal income tax return (regardless of net income or loss).   http://tax.illinois.gov/Businesses/TaxInformation/Income/corporate.htm Just keep your filing fee and any business licenses up to date, paying those fees personally and not out of business money (that would make for a net loss and trigger needing a tax return).  Frankly, with how easy it is to register a new corp, especially an LLC which has many simplicity advantages from an S-corp in certain cases, you might still be better off shutting it down until that time.
Since you are looking at preserving the principal, I would recommend laddered CDs and short term treasuries (TIPs/iBonds) "Watch out for PO financing. A lot of those contracts have nasty terms like ""I agree that SCAM CAPITAL will be my sole source of credit for the next 2 years."" that can get in the way of using bank debt or credit cards. They may even tell you otherwise to get you to sign, but they are the payday lenders of the business world.   It can be great when it works, but there are a lot of shark men. While you can grow your company on po financing, understand that those companies exist to suck all the profit out of small, non-innovative companies, who needed a hand and their terms reflect that.   If your business is that good maybe you can get someone to buy in instead? The second benefit to this is that if things go tits-up, then you don't have any personal guarantee. You will likely have to guarantee PO financing in most parts of the country." The value of a business without proven profits is really just a guess.  But to determine what % ownership the VC takes some measure must be used.  He is asking the OP to start the negotiations.  So you start high - higher than you will settle for. The value of the business should always be WAY more the $$ you have put into it ... because you have also invested your time (which has an opportunity cost) and assumed huge risk that you will never get those $$ back.   When you need the cash and only one person will give it to you, you are over a barrel.  You either take the terms they offer, or you let the business collapse.  So keep a show of strength and invent other funders. Or create a business plan showing that you can continue without their $$ (just at a smaller volume). How is the business organized? If as a General Partnership or LLC that reports as a partnership, you will be getting distributed to you each year your % ownership of the earnings or loss. But note, this is a paperwork transfer on the form K-1, which must then carryover to your tax return, it does not require the transfer of cash to you. If organized as an S-Corp, you should be holding shares of the company that you may sell back to the S-Corp, generally as outlined in the original articles of incorporation. The annual 'dividend' (earnings remaining after all expenses are paid) should be distributed to you in proportion to the shares you hold. If a C-Corp and there is only one class of stock that you also hold a percentage of, the only 'profits' that must be distributed proportionally to you are declared dividends by the board of directors. Most family run business are loosely formed with not much attention paid to the details of partnership agreements or articles of incorporation, and so don't handle family ownership disputes very well. From my experience, trying to find an amicable settlement is the best...and least expensive....approach to separation from the business. But if this can't be done or there is a sizable value to the business, you may have to get your own legal counsel. Sales are useless. Profit determines value.  Others made good suggestions, but make sure you don't personally guarantee anthing.  Understand your requirements to continue having the investor involved. Understand who has approval authority and decision making authority, ie are you a hired gun or the managing owner?  Finally, probability of success is low, so do your homework, bust your ass, and understand when you will wall away (ie if you aren't profitable in 3 years, or below $500k in rev, etc) The only possibility that I've seen in the past is if some of the income is for deferred services which are to be delivered in the following tax year, a portion of the income can be deferred.  Also, agree that you should be an S-corp and talk to another CPA if yours hasn't told you that yet. Here is the solution: any money made inside the United States will be taxed under US tax law.  You want to do business here, open up a US headquarters that handles all the sales tracking and reporting. No tax dollars, no operations inside the US.   The united states carries such bulk buying power that companies will be forced to abide by its rules. how can I keep my website running for posterity after I die?   If this is the real problem, incorporate a non-profit corporation or have a lawyer set up a foundation.  Those will survive after your death and their bank accounts with them.   You might even find someone willing to do this for you.  It sounds like a neat business.  Collect the ad revenue, charge a fee, pay the web hosting.  Heck, this is a decent deal for a web host.  Provide the web hosting; collect the ad revenue. "Disclaimer: I'm not a tax professional, or an expert on S-Corps. However, I do have my own S-Corp, and my decision process for taking a distribution has nothing (directly) to do with K-1 past or present, or profit and loss.  If I have ""extra"" cash in my S-Corp, I take a distribution.  Assuming I do my taxes correctly, the money will be taxed whether I take a distribution or leave it in the business. So it really comes down to how much cash the business requires to continue operating and meeting its expenses." For one, the startup doesn't exist yet, so until March I will get nothing on hand, though I have enough reserves to bridge that time. I would not take this deal unless the start-up exists in some form.  If it's just not yet profitable, then there's a risk/reward to consider.  If it doesn't exist at all, then it cannot make a legal obligation to you and it's not worth taking the deal yet.  If everything else is an acceptable risk to you, then you should be asking the other party to create the company and formalize the agreement with you. As regards reserves, if you're really getting paid in shares instead of cash, then you may need them later.  Shares in a start-up likely are not easy to sell (if you're allowed to sell them at all), so it may be a while before a paycheck given what you've described. For a second, who pays the tax? This is my first non-university job so I don't exactly know, but usually the employer has to/does pay my taxes and some other stuff from my brutto-income (that's what I understood). If brutto=netto, where is the tax? This I cannot answer for Germany.  In the U.S. it would depend in part on how the company is organized.  It's likely that some or all of the tax will be deferred until you monetize your shares, but you should get some professional advice on that before you move forward.  As an example, it's likely that you'd get taxed (in part or in whole) on what we'd call capital gains (maybe Abgeltungsteuer in German?) that would only be assessed when you sell the shares. For third, shares are a risk. If I or any other in the startup screw really, my pay might be a lot less than expected. Of course, if it works out I'm rich(er). This is the inherent risk of a start-up, so there's no getting around the fact that there's a chance that the business may fail and your shares become worthless.  Up to you if you think the risk is acceptable.  Where you can mitigate risk is in ensuring that there's a well-written and enforceable set of documents that define what rights go with the shares, who controls the company, how profits will be distributed, etc.  Don't do this by spoken agreement only.  Get it all written down, and then get it checked by a lawyer representing your interests. "I'm not personally familiar with this, but I had a look at the Companies House guidance. Unfortunately, it seems you've done things in the wrong order. You should have first got the funds out, distributed them to yourself as a dividend or salary, and then closed the account, and then wound up the company. Legally speaking, the remaining funds now belong to the government (""bona vacantia""). It's possible you could apply to have the company restored, but I think that might be difficult; I don't think the administrative restoration procedure applies in your situation. Given the amount involved, I'd suggest just forgetting about it." If you're creating an S-Corp for consulting services that you personally are going to provide, what would it give her to have 50% of the corporation when you're dead? Not to mention that you can just add it to your will that the corporation stock will go to her, and it will be much better (IMHO, talk to a professional) since she'll be getting stepped-up basis. Why aren't you talking to a professional before making decisions? It doesn't sound like a good way to conduct business. One other issue you may face is when the company announces poor financial results and begins to tank, you will not be able to sell until the US market open and could incur a lot of pain. "I'm assuming that when you say ""convert to S-Corp tax treatment"" you're not talking about actually changing your LLC to a Corporation. There are two distinct pieces of the puzzle here. First, there's your organizational form. Your state, which is where the business is legally formed and recognized, creates the LLC or Corporation. ""S-Corp"" doesn't come into play here: your company is either an LLC or a Corporation. (There are a handful of other organizational types your state might have, e.g. PLLC, Limited Partnership, etc.; none of these are immediately relevant to this discussion). Second, there's the tax treatment you receive by the IRS. If your company was created by the state as an LLC, note that the IRS doesn't recognize LLCs as a distinct organizational type: you elect to be taxed as an individual (for single member LLCs), a partnership (for multiple member LLCs), or as a corporation. The former two elections are ""pass through"" -- there's no additional level of taxation on corporate profits, everything just passes through to the owners. The latter election introduces a tax on corporate profits. When you elect pass-through treatment, a single-member LLC files on Schedule C; a multiple-member LLC will prepare a form K-1 which you will include on your 1040. If your company was created by the state as a Corporation (not an LLC), you could still elect pass-through taxation if your company qualifies under the rules in Subchapter S (i.e. ""an S-Corp""). States do not recognize ""S-Corp"" as part of the organizational process -- that's just a tax distinction used by the IRS (and possibly your state's tax authorities). In your case, if you are a single-member LLC (and assuming there are no other reasons to organize as a corporation), talking about ""S-Corp tax treatment"" doesn't make any sense. You'll just file your schedule C; in my experience it's fairly simple. (Note that this is based on my experience of single- and multiple-member LLCs in just two states. Your state may have different rules that affect state-level taxation; and the rules may change from year to year. I've found that hiring a good CPA to prepare the forms saves a good bit of stress and time that can be better applied to the business.)" Company was founded as a co-op.  If the company has a loss, you get negative patronage. Basically, it is a paper loss until the company can erase it with profits. However, you would have to pay it off you left the company before it was positive. That's my understanding. The company has only been profitable since I have been here.  If the company were to go bankrupt and didn't have enough assets to pay everyone, first it would pay taxes, then (if there was money) it would pay secured lenders, then unsecured lenders, then preferred shareholders, and finally, in the unlikely event that there was any money left, the workers would get paid back the value of their common stock.