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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

#41

Post by yau8edq12i »

shaism wrote: post #14
yau8edq12i wrote: post #4

Earlier quoted context omitted.

Unless you're opening companies on a daily basis to evade taxes or whatever, I fail to see why you would need the process to be that fast. Because with such short delays, nobody will have actually checked anything, so the only winners are fraudsters, in the end.

I think the time is not necessarily the issue. The issue is that everything is very manual and “analog” in Germany. You have to find a notary, register the “Gewerbe” at the Gewerbeamt, get a tax ID, and so forth. All are different processes with different institutions. In theory, you can do the notarization online, but when I attempted to do it, the first notary did not even reply, and the second one told me: “The sy…

The friction is precisely the point.

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

#42

Post by bouncing »

Scarblac wrote: post #35
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.

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

So your liability is limited. That’s like asking why you need a seatbelt.

You can get the simple company type (disregarded entity) and all the advantages of limited liability with an LLC.

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

#43

Post by yau8edq12i »

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.

Even the USA does not have harmonized company law. Pretty much anything except what concerns the IRS says is in the hand of the individual states. Why would you expect the EU to do so?

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

#44

Post by paleotrope »

Scarblac wrote: post #35
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.

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

Do you want to take the risk of losing your home just to start a business?

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

#45

Post by awesomeMilou »

yau8edq12i wrote: post #41
shaism wrote: post #14

Earlier quoted context omitted.

I think the time is not necessarily the issue. The issue is that everything is very manual and “analog” in Germany. You have to find a notary, register the “Gewerbe” at the Gewerbeamt, get a tax ID, and so forth. All are different processes with different institutions. In theory, you can do the notarization online, but when I attempted to do it, the first notary did not even reply, and the second one told me: “The sy…

The friction is precisely the point.

It is and it isn't. The IHK registration is a sham, since they're a government protected cartel that don't even act in the interests of those they're supposed to guard (like Azubis).

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

#46

Post by tdullien »

I have founded a company in Germany in 2004 and sold it to Google in 2011. I started an AG in Switzerland in 2019 and organized a Delaware-Flip therafter.

Most of the described steps are also necessary for a Delaware incorporation, and I found the process of incorporating a nothingburger.

1) The choice between a limited liability construct or a pass-through construct exists everywhere. My advice was always: Separate the biz from you personally, always use the non-pass-through option unless you really know what you're doing. Complexity and pain of a GmbH is identical to Delaware corp.

2) picking a new name that isn't in any dictionary is generally good advice, no matter what your jurisdiction is. We originally incorporated as SABRE Security, then years late got into a trademark dispute and had to change names. The fact that the Handelsregister can reject particularly poor names shouldn't be an obstacle.

3) I find getting riled up about the share capital a bit weird. I have never seen anyone struggle with that.

4) we can debate the utility of the notary public system in Germany, but this is hardly an obstacle.

5) Setting up a bank account with a GmbH iG in Germany is easy and quick with any of your local savings banks. These are non-profit banks with the explicit charter to help local businesses. Not sure what the author did wrong.

6/7/8) yes you need to pay in the share capital and prove you've done so, and get the reply from the Handelsregister.

9ff) yes you need tax and VAT IDs. Yes you need someone to do your books and taxes. True in Delaware, true in Germany, true in Switzerland.

All in all, the article reads super-whiny. I mean the author even complains that the notary uses your passport to authenticate you (?!).

I have been through a German GmbH, a Swiss AG, and a Delaware C-Corp with VCs, and I can tell you: The bureaucracy is pretty similar. And you will need help with taxes, accounting, legal compliance etc. And yes, it'd be nicer if all of this was simpler, fewer middlemen and lawyers involved, etc. - but this article paints things that are the absolute basics in any of the big jurisdictions as nefarious obstacles.

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

#47

Post by _a_a_a_ »

throwaway11460 wrote: post #38
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.

Create a company, or do you mean buy it 'off the shelf'?

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

#48

Post by Scarblac »

paleotrope wrote: post #44
Scarblac wrote: post #35

Earlier quoted context omitted.

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

Do you want to take the risk of losing your home just to start a business?

Maybe the real difference is that such things might be possible in the US, but sound laughable in Europe?

What would you need to mess up to be liable for huge sums as a single consultant company?

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

#49

Post by tdullien »

bouncing wrote: post #2

Not to brag, but there are so few things to actually feel some civic pride for in America, and business registration is one of them, so I guess we have that. I can get an IRS EIN (tax ID), register an LLC, obtain a sales tax license (only required for selling stuff), and open a business checking account in about 2 hours in Colorado. Someone who knows what they’re doing and doesn’t spend time researching banking optio…

Important to realize: A GmbH is much closer to a Delaware C-Corp than to an LLC.

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

#50

Post by tdullien »

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.

A GmbH is not like an LLC, it's more like a Delaware C-Corp. People forget this all the time.
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