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How I would start my next startup in Germany without a GmbH (2020)

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Re: How I would start my next startup in Germany without a GmbH (2020)

#81

Post by robert_foss »

hef19898 wrote: post #55
robert_foss wrote: post #39

Earlier quoted context omitted.

Doing the notary/banking/incorporation/tax-agency dance took a while. But that's only one part of the process. The continuous level of bureaucracy is really high too, and during the years I ran my corporation it never seemed to diminish.

Like what? Notary and bank, sure, that's a requirement. Tax consultabt? Unless you want to do your own accounting you need one, easy enough to send invoices and bank statements once per month. Every company needs accountants to keep the books. I do it once per quarter now for the basically dead UG, it just exists as an empty shell for now. Regardless of jurisdiction, the bureaucracy will be there. Someone would want…

Speaking of paying taxes, that's much harder than it needs to be too. I did my corporate Swedish taxes between sets at the gym (no exaggeration).

Would reply below, but reached thread max depth.

That tax advisor I got was really scummy and way over charged in addition to being an ongoing headache to deal with.

Re: How I would start my next startup in Germany without a GmbH (2020)

#82

Post by tobilg »

hef19898 wrote: post #28
tgsovlerkhgsel wrote: post #6

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…

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…

That’s not correct. Creating a UG will set you back hundreds of EUR for notary fees, commerce registry entries etc. And you have to prepare your annual accounts, which, if you let a professional handle it, will easily cost you hundreds more

Re: How I would start my next startup in Germany without a GmbH (2020)

#83

Post by SkyAndSand »

gyulai wrote: post #69

It's a clusterfck regardless of which way you do it. There are 3 problems with the structure he describes: (1) In the early days, you might find yourself being a 1-person business, with that 1 person living in Germany and all the business partners you might end up interacting with in real life would be in Germany (especially banks, regulators, etc.) In that situation, it's a bad look if you make your business partner…

I couldn't agree more. The whole situation is extremely complicated, especially if founders from multiple countries become involved.

If you had to do it again, how would you incorporate in the future (basically what I am trying to figure out here https://news.ycombinator.com/item?id=31620700)?

Re: How I would start my next startup in Germany without a GmbH (2020)

#84

Post by [deleted] »

hef19898 wrote: post #58
SkyAndSand wrote: post #56

Earlier quoted context omitted.

While you can quickly set up the legal entity, getting a tax number can take months ( https://www.selbststaendig.de/wissen/steuernummer-beantragen ). The last time we set up a company in Germany it took more than 6 weeks to get a tax number.

Oh, forgot about that... VAT numbers as well. Go through a tax cobsutancy and it is faster, did that twice. I see this as being seperate from incorporating so, as everyone is affected by slow tax authorities.

[deleted]

Re: How I would start my next startup in Germany without a GmbH (2020)

#85

Post by jokethrowaway »

gyulai wrote: post #26
cloogshicer wrote: post #3

Thanks for the post. Reading this made me quite angry - politicians here in Germany always talk out of their asses about improving the situation for startups, but when it comes to removing these ridiculous administrative hurdles, absolutely nothing happens. In Austria, where I live, it's even worse. It's not even possible to start a limited liability company without at least 35k starting capital in the bank.

The loophole I've successfully used in the past in Austria was to incorporate a Ltd in the UK and operate it in Austria (similarly to how, in the U.S. The free movement provision, which is one of the central pilhars of the E.U., extends to free movement of legal persons, and does not end with free movement of natural persons. The UK is no longer in the EU, but you could go with the Republic of Ireland or Malta.

Couldn't Austria come after you and say you're running an Austrian company, given you're an Austrian business with no ties to the UK? I'd recommend talking to an accountant.

In Italy or Spain this wouldn't fly 100%, it would even be a criminal charge (foreign dressed companies).

Re: How I would start my next startup in Germany without a GmbH (2020)

#86

Post by hef19898 »

SkyAndSand wrote: post #74
hef19898 wrote: post #68

Earlier quoted context omitted.

If you want to avoid tax problems, and problems around social security, you would need a local legal entity in every country you have employees. At least in Europe. You also need, in cases you move e.g. inventory, local VAT numbers. Those can be had without incorporating. All that is just usuall incorporation and emoloyer stuff so. Solved hundred of thousands of times every day.

> If you want to avoid tax problems, and problems around social security, you would need a local legal entity in every country you have employees. My understanding is that we could work around this issue by using https://www.letsdeel.com/ or https://remote.com/ ?

Or skip the "digital" shit and do it the proper way. If you get VC money we talk millions just do it professionally. If it's not VC money chancesvare you won't need any of it. And if you di, kudos, your business is viable enough to go international. Which brings us back to point one, do it professionally.

Re: How I would start my next startup in Germany without a GmbH (2020)

#88

Post by wewxjfq »

robert_foss wrote: post #27
wewxjfq wrote: post #22

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…

> In addition I've never encountered as many scummy companies (GmbH or otherwise) as in Germany. Corporate rules and culture are both complete trash.

That's the quintessential HN comment I'm talking about. Just hasty generalizations and accusations. Tiresome.

Re: How I would start my next startup in Germany without a GmbH (2020)

#89

Post by hef19898 »

robert_foss wrote: post #81
hef19898 wrote: post #55

Earlier quoted context omitted.

Like what? Notary and bank, sure, that's a requirement. Tax consultabt? Unless you want to do your own accounting you need one, easy enough to send invoices and bank statements once per month. Every company needs accountants to keep the books. I do it once per quarter now for the basically dead UG, it just exists as an empty shell for now. Regardless of jurisdiction, the bureaucracy will be there. Someone would want…

Speaking of paying taxes, that's much harder than it needs to be too. I did my corporate Swedish taxes between sets at the gym (no exaggeration). Would reply below, but reached thread max depth. That tax advisor I got was really scummy and way over charged in addition to being an ongoing headache to deal with.

See, that's why I never filed taxes in Germany in my live so far. Tax advisories are cheap ebough and so much better at doing it.

Re: How I would start my next startup in Germany without a GmbH (2020)

#90

Post by SkyAndSand »

mishaker wrote: post #41

great post! having been through it I can confirm that it is a really bad idea to start your startup business in Germany with a GmbH. You end up doing more paperwork than your own business. 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 ?

I am asking myself the same question - how would you actually solve this issue? https://news.ycombinator.com/item?id=31620700
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