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However I have one question in your proposed schema. Germany Holding UG ... it owns the Delaware C-Corp right ? how would you deal with the paperwork and taxes of that Holding UG ? isn't it also time consuming and painful ?
> It still baffles me, that you need to buy your own shares in Germany, in order to receive the “status” and protection of being a fully incorporated company.
It depends on how you read it, but it isn't true that you have to put in 25.000 in cash on the table. A GmbH is a Limited, which needs to have a value of at least 25.000EUR, so anyone trading with you knows, you are at least good for that amount.
The easiest way is to put the money in cash into the account of the company.
But it can also be done via transferring the ownership of either tangible or intangible assets into the company. The problem here is, especially with software, that the evaluation of assets is not for free and difficult.
> Now, you don’t need to convert the UG to a GmbH but if you want to be taken seriously in Germany by customers and investors, it can be a huge factor doing business. For our investor, it was a must-have.
The feedback I got from institutional investors was the following:
- If you are not willing to put down 25k, while asking for millions, it doesn't send much of signal of confidence in your proposal from your side.
Maybe it is a matter of German risk averseness, but I think it is reasonable, especially paired with the next advice:
- You will take a top level management position in your new company, your salary should reflect that. You have to strike a balance of not asking too much (you are after all a startup), but also not asking enough (you need to know the market value of your position). But chances are, the increase in your salary by your "promotion" should pay your initial investment in two years time.
In Germany, composition is much more salary based.
> I don’t know what to tell you, other than this process can take up to 3–4 weeks to get finished. Even most challenger banks (neo banks) are not really faster.
> How do I know? We’ve incorporated another holding company UG and wanted to use a Berlin based challenger bank — it took us almost a month to get done.
> Choose your bank provider wisely or at least switch early. We went with a 0$/month neo bank and it was horrible.
Yeah, we went with a traditional physical bank. Costs a fair bit more than 0€/month, but it took a couple of days, maybe?
> A mail popped up along the lines of: “We would like to do a 10 minute interview in Mountain View with you. We compensate your travel expenses”
And I think, that is the most striking difference in culture between the US (or at least SV) and Germany. Those guys where trying to safe a couple (granted couple of thousands) Euros, and a couple of Euros per month for the bank, and the investor is paying the travel costs probably coming close to the founding costs for a 10 minute interview.
Oh God, this thread will be the usual Germany bashing. There is nothing fundamentally wrong with how Germany handles corporations. The German corporate law is actually pretty good. If I could change two things, I would make IHK membership optional and allow free filings of the financial reports. These are changes that a willing government could implement in a heartbeat. And I think no country should handle corporatio…
I've started a UG in Germany. It is one of the worst professional experiences I've ever had. It's extremely cumbersome, bureaucracy heavy, slow and expensive. In addition I've never encountered as many scummy companies (GmbH or otherwise) as in Germany. Corporate rules and culture are both complete trash. For reference I've started companies in Sweden, and I can do the full process online in an afternoon. Probably le…
A lot of people in Germany founded a British Limited with a captial of 1 Euro. Then came Brexit ...
Earlier quoted context omitted.
It is stupidly easy to create a GmbH or UG, especially the UG. Also very cheap, if you push it two days are enough, will cost you around 100 bucks. And if you just want to run a side business, one that doesn't have the potential to ruin you, just run it as an independent income. You can even have your employees participate in your GmbH, either in enquity or profit. That most German start-ups don't simply means they w…
Filings will cost you at least 100/year for nothing. And you have to keep 25% of your profits you have 25k€. All unnecessarily complex.
I'd be more than interested in hearing your opinions about what the best jurisdiction for internationally distributed teams actually is: https://news.ycombinator.com/item?id=31620700
Earlier quoted context omitted.
Also you „only“ need 12500€ to start. Though you’re still liable for the full 25000€ if things go sideways.
Or you choose an UG, eith a stagerring capital requirement of 1, one, Euro. Having had both, a GmbH is easier when it comes to the everyday B2B stuff, people simply trust an GmbH more.
The whole process of registering a UG or GmbH is ... not so straightforward while registering a Gewerbe (especially if using the Kleingewerberegelung) sounds like a good starting point. Not sure if you can raise money that way though.
Does anyone know if having a Gewerbe would be just as difficult to transition to a C-Corp? The whole process of registering a UG or GmbH is ... not so straightforward while registering a Gewerbe (especially if using the Kleingewerberegelung) sounds like a good starting point. Not sure if you can raise money that way though.
I think this is one of the reasons why Germany doesn't have a startup ecosystem. People who are loosely playing with the idea of running their own tiny company (e.g. as a student side gig, not with the "I'm planning this like a businessperson and here's my plan how to turn it into a unicorn and how to exit" approach) take a look at the system and bureaucracy, and simply give up and forever write off the concept of ru…
As a student sidegig you can easily just found a small businesses for like 35 EUR and do business. There’s also GbRs that can theoretically be formed on a paper towel. Thought, it will probably not be easy to raise money this way.
There is also the UK Ltd as an option. Can also be done from home. It’s a possible replacement for a UG or even GmbH. AFAIK SoundCloud initially used this model.
Not longer useful as with Brexit the Limited will not enjoy Limited protection in Germany.