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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

#91

Post by twixfel »

raverbashing wrote: post #78
tdullien wrote: post #46

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…

Thanks for this reality check Yes the process in Germany can be improved a lot. But a lot of it is similar or equivalent to process in other places > I mean the author even complains that the notary uses your passport to authenticate you (?!). Yeah I had skipped this when reading the article, sorry it really sounds like the author doesn't know much about the basics of gov processes "Don’t forget your ID or passport b…

I mean he established a GmbH in Germany so it sounds very much like they do know what they're talking about.

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

#92

Post by OtherShrezzing »

awesomeMilou wrote: post #34
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.

I don't fully understand the comment you've made. Why do you believe it to be bonkers or a scam to allow no-capital limited liability firms?

It effectively puts the entire country into a position where unless a citizen is born relatively wealthy, they have to perform labour for someone else for several years while they save up enough to start their own business. Who does the system benefit? What is it preventing? Why has the sky not fallen in on the UK with a near identical economy, but near-zero cost ltd company startup fees?

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

#93

Post by lttlrck »

bildung wrote: post #10
_dain_ wrote: post #5

Earlier quoted context omitted.

Every little speed bump you put in the way will deter some people on the margin.

And yet the self-employment rate in Germany seems to be higher than in the US: https://genderdata.worldbank.org/indicators/sl-emp-self-zs/?...

That depends how they defined self-employed. It could vary widely based on which vehicle was used, LLC, LTD, sole-proprietor. And LLC and LTD is ambiguous, yet easy to attain outside Germany.

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

#95

Post by StefanWestfal »

alphager wrote: post #79
xxmarkuski wrote: post #18

To be honest, I don't think much of notaries and believe that they stifle innovation and harm the German economy, especially SMEs, but also clubs and citizens. For example, the purchase or sale of a property can only be carried out with a notary who reads the purchase contract for both parties. For this service, he charges a fee of around 1.5% of the sale price. The entire profession is strictly protected by law and…

The Notar does much more than just read the contract; he is liable for the correct administration of the transfer of ownership (done by a three phase process which guarantees that the seller cannot get the money without transferring the property and the buyer cannot get the property without selling the money). The concept of title insurance doesn't exist in Germany as the Notar eliminates the risk.

There are ways to ensure the correct transfer of ownership without involving a third party. You can see these principles at work on some trading platforms already, be it for Magic cards or something else where parties cannot trust each other because they do not know each other.

Next, you would expect that the notary would educate participants and act as a source of trust, an actor in your best interest, but that is not the case. Notaries can change contracts until the last minute, and unless agreed upon, the common 14-day withdrawal period for contracts does not apply to things like buying property. Furthermore, if you are inexperienced, you can easily fall into traps.

As a concrete example, when buying a part of a shared property, it is commonly believed that the "Hausordnung" (house rules) is the owners' agreement for house rules. However, that is not the case, as there can be more, and in our case, it forbade us to keep dogs. Now, you could argue that we should have made ourselves more familiar with the law, and I would agree that is true. However, it begs the question, why do we need a notary?

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

#96

Post by StefanWestfal »

nickff wrote: post #86
alphager wrote: post #79

Earlier quoted context omitted.

The Notar does much more than just read the contract; he is liable for the correct administration of the transfer of ownership (done by a three phase process which guarantees that the seller cannot get the money without transferring the property and the buyer cannot get the property without selling the money). The concept of title insurance doesn't exist in Germany as the Notar eliminates the risk.

From a brief search, title insurance often costs around 0.1% of the purchase price of a property; it seems the Notars are collecting a monopoly rent in Germany.

Common in practice is 0.5%

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

#97

Post by robocat »

almostnormal wrote: post #73
pintxo wrote: post #54

Earlier quoted context omitted.

Technically, there is competition. You are free to choose whichever notary you want. But pricing is legally regulated, so you will pay the same price everywhere.

The solution is easy: Create a small company to own the property. That company can be sold much more easily than the property itself. It also avoids the tax on propery purchase.

Companies have other issues like VAT/GST and reporting. I had a friend use a company in New Zealand and it cost him multiple % of property price due to an issue he didn't forsee.

New Zealand doesn't have notiaries or special insurance but you do need to use a lawyer to transfer ownership and I think it costs about NZD1500 each for vendor and buyer.

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

#98

Post by multjoy »

intelVISA wrote: post #17
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.

Is running under a limited enough to limit liability? I'm no lawyer but thought you'd have to establish all the corporate infra (bank, tools, etc) to avoid piercing the veil in your daily ops.

Yes. The corporate veil isn't a literal one - you own the company in your real name, registered to your real address, but the company is the entity that is at risk from legal action unless you've explicitly offered a personal guarantee.

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

#99

Post by blackhawkC17 »

awesomeMilou wrote: post #34
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.

If we follow your logic, only the rich will be able to create LLCs then..

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

#100

Post by [deleted] »

awesomeMilou wrote: post #34
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.

[deleted]
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