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How to found a company in Germany: 14 "easy" steps and lots of pain

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Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#31

Post by jFriedensreich »

fl7305 wrote: post #27
jFriedensreich wrote: post #7

Earlier quoted context omitted.

its one to 2 years of pain. my gmbh shut down also cost 15 000 and ultimately led to me leaving the country.

That sucks. I can see how it costs thousands of euros per year to do the annual financial statements, but 15 000? Is that common, or were there special circumstances?

nothing special i think this is on the cheap side, does not even include lawyers or any huge fights, just a "normal" shut down. Remember you have to include work time of founders that would be spend earning money otherwise. If germany forces you to do 2 hours filling out forms for bullshit you have to include your hourly wage to get the total costs. Usually everything in germany assumes "work to deal with government bs" is free and does not exist, which is of course absurd.

Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#32

Post by fl7305 »

jFriedensreich wrote: post #31
fl7305 wrote: post #27

Earlier quoted context omitted.

That sucks. I can see how it costs thousands of euros per year to do the annual financial statements, but 15 000? Is that common, or were there special circumstances?

nothing special i think this is on the cheap side, does not even include lawyers or any huge fights, just a "normal" shut down. Remember you have to include work time of founders that would be spend earning money otherwise. If germany forces you to do 2 hours filling out forms for bullshit you have to include your hourly wage to get the total costs. Usually everything in germany assumes "work to deal with government…

Thanks. How much of the 15 000 was external costs to an accountant, public notaries, authorities, etc, and how much was the internal wages?

The numbers I have seen for external costs range in the low thousands, but maybe that is wrong?

Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#33

Post by awesomeMilou »

blablabla123 wrote: post #26

Fun fact, GmbH is not about protection of getting sued. (Because there's "Durchgriffshaftung") It's useful for companies that trade physical goods and e.g. when a vendor that was already paid got bankrupt it won't affect the finances of the founders. Although it shows to the outside world that 25 k€ have been paid and it's not a 1€ company. But in case of impeding bankruptcy it must either be resolved or declared oth…

> ("Insolvenzverschleppung" - the punishments are a little draconic)

The concept of declaring bankruptcy is well known in most western jurisdiction, as is the criminal practice of delaying bankruptcy. Believe it or not, in most of the developed world you can't just have a company go tits up and expect to go out of there scot-free.

> Durchgriffshaftung

I've never heard of this concept before, but from what I can gather it's a rarely applied legal practice that's defined by case law (case law is is pretty rare to encounter in Germany) and it essentially just sounds like what happens in the case of gross neglience / large scale fraud.

Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#34

Post by awesomeMilou »

OtherShrezzing wrote: post #15

Minimum initial share capital of €12,500 to found a company where liability is limited to the firm seems like a very regressive impediment to business. For comparison in the UK, there's a £12 registration fee, and a £1 (one pound) minimum initial share capital. It must put limited liability out of reach of so many people.

> It must put limited liability out of reach of so many people.

That's the entire point. The concept that any idiot can start an LLC with no collateral (which the 25k are) is completely, absolutely, mind bogglingly bonkers to us Germans. Sounds like a scam imo.

Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#35

Post by Scarblac »

bouncing wrote: post #25
yau8edq12i wrote: post #8

Earlier quoted context omitted.

If you have 25k€ of capital but get flustered because the state wants to make sure that you are not opening a shell company for someone else and that your articles of incorporation are legally valid, then maybe you need to rethink something.

I had my first LLC in grade school over a summer. I didn’t make a ton of money, but I did earn enough for my first real computer, which launched my interest in programming. When my wife started her current business as a consultant, she was living off her savings from teaching high school. If you think every entrepreneur has €25k of capital, you need to reevaluate what your country thinks of entrepreneurship.

Why did that need limited liability though? In Germany you'd just become an entrepreneur with a simpler company type without limited liability.

Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#36

Post by vidarh »

intelVISA wrote: post #19
bradhe wrote: post #12

Earlier quoted context omitted.

Bingo. I live in Berlin. I know loads of folks who found Delaware corporations, use deel.com to work for them, and eventually found a GmbH when they need to.

Nice strategy, isn't it tough to get an LLC's bank setup without residency?

It might be tough, but even 25 years ago, my worst case (in Norway) to get a US bank account was to find one that'd let me have the paperwork notarized at the US consulate. The next step up in difficulty was flying to the US and open it in person. It still limits your choice, but last time I was involved in it it was easier (we found a bank that had a branch in the country my then cofounder was in)

Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#37

Post by yau8edq12i »

bouncing wrote: post #25
yau8edq12i wrote: post #8

Earlier quoted context omitted.

If you have 25k€ of capital but get flustered because the state wants to make sure that you are not opening a shell company for someone else and that your articles of incorporation are legally valid, then maybe you need to rethink something.

I had my first LLC in grade school over a summer. I didn’t make a ton of money, but I did earn enough for my first real computer, which launched my interest in programming. When my wife started her current business as a consultant, she was living off her savings from teaching high school. If you think every entrepreneur has €25k of capital, you need to reevaluate what your country thinks of entrepreneurship.

As explained in the article, if you don't have 25k€ of capital, then you open an Einzelunternehmen (sole proprietorship), not a GmbH (LLC). It's a much simpler process.

Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#38

Post by throwaway11460 »

RicoElectrico wrote: post #20

I wonder: why EU did not try to somewhat harmonize company law? I can understand that things like tax code, penal code would not benefit from unification across disparate societies, but companies seem like a ripe target. This should have begun 20 or so years ago.

Given the domination of Germany and France in EU, thank the universe it didn't.

Signed, a citizen of an EU state where you can create a company by digitally signing one form and paying the equivalent of $300.

Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#39

Post by yau8edq12i »

_dain_ wrote: post #11
yau8edq12i wrote: post #8

Earlier quoted context omitted.

If you have 25k€ of capital but get flustered because the state wants to make sure that you are not opening a shell company for someone else and that your articles of incorporation are legally valid, then maybe you need to rethink something.

I disagree. 25k euro is simultaneously a large and not a large amount of money. It's big enough to lock out many potential small business founders. But also many ordinary inexperienced people can have that amount of money up front, yet still be deterred by the complexity of a 6 week long incorporation process as described in this article. Especially in the early days of a company when your stress level is already thr…

> It's big enough to lock out many potential small business founders.

They can open an Einzelunternehmen (sole proprietorship) instead. You shouldn't (and cannot) go all the way to the complexities of a GmbH (LLC) if your company is that tiny.

> But also many ordinary inexperienced people can have that amount of money up front, yet still be deterred by the complexity of a 6 week long incorporation process as described in this article.

Back to my point then. If they're not ready to put up with okay-ish bureaucratic friction in the founding phase, they're not ready to open a company. Because if you think opening the company is hard, wait until payroll or tax season is upon you.

> I am generally suspicious of rhetoric like "you're a little well off, so we can heap arbitrary amounts of bullshit on you and you shouldn't complain".

You're completely mischaracterizing what I said. Don't do that.

Re: How to found a company in Germany: 14 "easy" steps and lots of pain

#40

Post by bouncing »

yau8edq12i wrote: post #37
bouncing wrote: post #25

Earlier quoted context omitted.

I had my first LLC in grade school over a summer. I didn’t make a ton of money, but I did earn enough for my first real computer, which launched my interest in programming. When my wife started her current business as a consultant, she was living off her savings from teaching high school. If you think every entrepreneur has €25k of capital, you need to reevaluate what your country thinks of entrepreneurship.

As explained in the article, if you don't have 25k€ of capital, then you open an Einzelunternehmen (sole proprietorship), not a GmbH (LLC). It's a much simpler process.

There are a lot of reasons not to form a sole proprietorship. You have personal liability, for one.
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