151–160 of 238 posts
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Can't you work around this by using https://www.letsdeel.com/ or https://remote.com/ ?
In theory, you can't employ someone in Germany for longer than 18 months via an employer of record. If you want to employ someone for longer than that, you must have a German legal presence. This is one of the ways that Germany ensures that employee rights are actually enforceable.
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…
Having gone through the process (and a rather smooth one at that), I can say with absolute confidence that this is not true at all.
1) Talking to the notary alone and arranging the details (articles of organization, fees – as the notary might try to rip you off –, and the notary appointment) will take several email round trips, aside from the actual appointment to sign the paperwork and the required self-study to understand what you're doing.
2) Opening a bank account as a UG/GmbH that's in the process of being founded is not difficult but it's not exactly easy, either, because you will have to do it before you sign the documents at the notary, i.e. before you are incorporated, because the notary wants to see a bank statement as confirmation that all shareholders have paid their share. The bank, however, wants to see your founding documents which of course you won't have before you've gone to the notary and received the other paperwork from the local company registry (Amtsgericht / court) confirming the existence of your company. Resolving this catch 22 means several more email round trips and even more paperwork.
3) The fees of the notary alone are in the range of 100€. Add to that the fees at the Amtsgericht for incorporating and the fees for the local government (for registering your business / official company address) and you're looking at a few hundred euros in total founding costs. (I forgot how much exactly; I would have to look it up.)
4) The bank account requirement alone means that you'll probably be paying ~15€ every month to the bank. On top of that, unless you want to do the bookkeeping on paper (i.e. by hand), you'll need proper (tamper-resistant!) double-entry bookkeeping software, which (last time I looked) is not free, either. (Excel is no longer allowed!)
5) Every year you'll be paying ~60€ to hand in your balance sheet (Handelsbilanz) to the Bundesanzeiger and your "electronic tax balance sheet" (Elektronische Steuerbilanz) to the tax authorities. You'll also pay ~150-200€ to the local IHK (Chamber of Commerce and Industry) just because your company… exists(?!)
6) Speaking of bookkeeping & balance sheets, you'll also be handing in tax declarations for the different taxes your company will be subject to (USt, KSt, GewSt). Learning how to do all that is a proper time sink. Unless you want to pay an accountant, you're looking at dozens if not hundreds of hours of self-study and paperwork every year.
7) The second you want to hire anyone, social security and employee wellfare laws will mean even more work for you (at which point you'll probably hire someone just to take care of all of that paperwork for you).
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If you never make any profit, you don't need to set aside 25 % of your profits.
>If you never make any profit Sure but then that's not really anyone's goal starting a company in Germany. So ultimately you will have to deal with this issues if you don't fancy being homeless.
Wait until you need to dissolve a UG, that’s a long painful and expensive process
I did it with a GmbH. You can always merge it with you as solo-entrepreneur. You need a balance sheet (don't ask me about the time limits, there was a Covid exception when I did it), a notary for paper work and of you go. Fast, easy and painless. Needs some additional paper work if there a more than one share holders. There are some loss carry forward limits and liability aspects to consider, the act itslef is quite…
Also German post won’t properly forward mail anyway and to me it’s a foreign country to which I don’t intend to return, so I’ll probably just let it go and treat it as resolved.
Great post, fully agree. Also, if you plan on leaving Germany you can save a lot on taxes if you do it before 100k profits/year and as a Personengesellschaft (without limited liability, so no UG/GmbH). Basically because the Wegzugsbesteuerung (moving away tax) only affects limited liability entities and Personengesellschaften are only affected by the Steuerentstrickung, which can be minimized by saying your profits a…
Or keep the GmbH / UG and create a sperarate entity in an other country that has full or partial ownership. Either way, paying some tax law expert, even if expensive is the best advice. And not having a limited liability entity is actually pretty stupid, for a full catalogue of reasons.
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Surely the requirement that a limited liability company has some minimum assets is reasonable for exactly that reason. You wouldn’t want someone to be able to form a company whose liability was limited to couple hundred Euros of assets the company was formed with.
That’s exactly what the UG (haftungsbeschränkt) does, you can set one up with (theoretically) 1€ (though in practice it’s more like 250€), and you then have a GmbH with lower liability
UG is a massive scam in that sense, definitely not what’s advertised.
Also if you are in the EU you can just start an Estonian company and run that in Germany
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Shops have assets, small startups often don't. That makes the thousands of euros you need for reserves kinda pointless.
Ok, my one person start up had assets: My laptop, office gear, etc... Now imagine you have an office to pay. Or you are multiple people. Or you need some fancy hardware. All of that can be assets owned by the corp. And the exoebses, software etc..., can be paid of those 12.5/25 k as well. This discussion proofs one point so, a GmbH shows that someone is serious about it.
I founded a start-up with a friend and we had zero assets - just Office 365, AWS, managed office and personal devices.
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Well, I had a UG as holding company in Germany and even though the company was basically dormant (besides holding shares in another entity) I still had file yearly accounts which cost about 1000€ / year. Plus another 200€+ for IHK, 100€ for Bundesanzeiger, GEZ / Rundfunkbeitrag etc. All for a company that didn't really do anything. Would you really argue that this is easy / good practice? Because in my understanding…
I never filed yearly accounts for the UG so afr, the first two years you don't have to. IHK sucks, I agree. GEZ isn't mandatory if you register your UG where you live, after all you pay already. All in all, I'd say cost of doing business. What's next, do we atart complaining that Lenovo isn't providong free laptops? Or that office space costs money?
Could you provide a source for this claim?
In a best-case scenario, where you have founded your company on Jan 1 2021, you so far would have still had to
- hand in your initial balance sheet at the time of founding
- hand in your Umsatzsteuervoranmeldung every month.
Moreover, you will definitely have to
- hand in your Umsatzsteuererklärung, Körperschaftsteuererklärung, Gewerbesteuererklärung (all for 2021) by 31.07.2022
- send your "electronic tax balance sheet" (Elektronische Steuerbilanz / eBilanz) for 2021 to the tax authorities by 31.07.22
- set up your balance sheet for 2021 by 31.06.22 and send it to Bundesanzeiger by 31.12.22