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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

#621

Post by ImPleadThe5th »

nickpp wrote: post #473
zettabomb wrote: post #223

Earlier quoted context omitted.

A very good summary. There's also more Nazis in America than in Germany, and more far-right hatred in general.

Thanks for your reply. Care to be more specific? I guess I am more curious about how you were personally affected than generic sweeping statements. I live in the EU and I used to live in USA for a while so I am always looking for similar experiences and comparisons. Thanks again!

Hey! I am a different American living in Germany.

For me (and I didn't fully appreciate this until I moved here) there is an incredible amount of mental overhead in the US.

Questions you don't have to ask yourself in Germany:

- What happens if I get very sick? Do I have enough savings for cancer?

- What happens if I lose my job? Do I have enough savings to get by if my job fires me?

- What happens if something happens to ny car? How will I get to work? How will I get my groceries?

- What happens if someone has a gun in this crowd? How will I get out? How can I protect people? Is that sound just a car backfiring or is that a gunshot?

- Am I saving enough for retirement? How will I get healthcare when I'm old? How do stocks in my retirement account work? Is this person trying to help me retire or trying to make money off of me?

Naturally most of these problems can be resolved with enough money.And you can have a comfortable life in the USA with enough money. And if we're being honest there are European counties that struggle with similar but maybe not all at once.

There are many things I miss about the US, and maybe someday I'll return. But there is much less financial/life planning related stress for me here

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

#622

Post by column »

amonavis wrote: post #447
niemandhier wrote: post #387

Earlier quoted context omitted.

I accompanied several friends through the process. My observation was that by simply changing the view on what is happening and extrapolating how to act based on that one can achieve quite a lot. I told people the following: 1. The person dealing with you is not there to help you, they are simply executing an act of governance. Rather than wanting them to help you, try to help them close their tickt. 2. You are the t…

To me this is a weird view of government services. I'm paying taxes to have a system serve me, and to have processes support my life not the other way around. Leaving all emotions out of the equation, the job of the jurisdiction under which I fall is so facilitate my legality so I can pursue a productive and enjoyable life. If I'm paying taxes and I'm expected to pitch in the governmental effort, then that's not wher…

When you pay for a service, public or private, you are still dealing with humans that are not your slaves.So be kind and you'll get a better time or be entitled and you'll go to the bottom of the pile.

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

#623

Post by throw__away7391 »

theshrike79 wrote: post #369
ProjectArcturis wrote: post #313

Earlier quoted context omitted.

> a customer (UK Ltd) who declared bankruptcy owing us a money and then then next day founded a new Ltd company and tried to act like he didn't owe us the money because it was a new entity. That is... how bankruptcy works? He literally didn't owe you money anymore. Obviously you shouldn't extend his new company credit, but extinguishing old debts is the exact purpose of bankruptcy.

I think the idea here is that you can't just "declare bankruptcy" in Germany, it's a Process with checks and balances.

The US concept of bankruptcy is basically unimaginable in most (all?) of Europe.

There's an old movie, The Edukators, where one of the protagonist is effectively broke and working a low wage job but has spent years already and has many years more left to pay off a debt she incurred by accidentally crashing into an expensive car without insurance.

This situation is basically impossible in the US where the term "uncollectible" is used to describe such debts.

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

#624

Post by welterde »

data_maan wrote: post #482
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.

Reading a lot on Germany business culture, my takeaway is that Germany is not made for lean founders who start small but aim big, i.e. your typical startup. It seems to be aimed either at well established business magnates who want to open yet another business (and 25k€ is nothing in that case) or small bakery-on-the-corner businesses who will go for GmbH anyways (and hence no reason to cough up 25k€). There's no pat…

There are 2M sole proprietorships in Germany and around 0.4M partnership type companies (Personengesellschaft; GbR, etc.) and aside from the aspect of trying to appear like a large corporation while actually being a small start-up, they are perfectly adequate for many businesses.

There is also no limit on how large a sole proprietorship can grow. While mostly held up as example for why one might not want to keep the company form a sole proprietorship forever, Schlecker scaled from a single shop to over 14000 stores near the end and a couple billion euro revenue per year.

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

#625

Post by rad_gruchalski »

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.

They still have to read the deed!

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

#626

Post by julian_t »

hariharan_uno wrote: post #160
nicbou wrote: post #114

I document German bureaucracy for a living,[0] and everything is like that. Every life event - immigrating, getting a job, getting married, having a child, buying a car - is mired in slow, paper-based bureaucracy. It is a constant, significant impediment to life in the country. Just last week, I was telling people that the best way to get married in Germany is to get married in Denmark. I cannot overstate how terribl…

I completely agree. I have been living here for 8 years, and recently applied for a permanent settlement permit. My application went into a blackhole for more than 4 months, while my existing permit expired, essentially making me a prisoner here (I can stay and work in Germany but if I travel internationally, I won't be allowed entry back). Meanwhile, my applications for a temporary travel permit were unanswered for…

The same kind of thing happens in the US. A relative (a Brit) needed to renew his visa, put in the application and heard nothing for months, and a immigration lawyer told him that it could take over a year to process.

But the lawyer also said that it would be worth trying a consulate overseas, as they were often a lot more efficient. So (as his wife had business in Berlin) he made an appointment with the consulate in Frankfurt. From interview to getting his passport back with visa - five days.

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

#627

Post by egorfine »

nixass wrote: post #463
nicbou wrote: post #171

Earlier quoted context omitted.

Mine too! My residence permit expired in February, and my appointment is in July. I expect to have a valid residence title again by end of August. Mind you, I applied in December. I will not be able to travel out of the country for most of the summer as I wouldn't be allowed to reenter. They refused multiple times to issue the temporary permit that I'm legally entitled to. I'm having a lawyer ask again, this time wit…

Folks, you can travel outside of Germany for sure, as long as you stay inside Schengen.

Theoretically, yes.

Practically, not anymore: there are block posts on main roads into Germany and they check passports.

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

#628

Post by fl7305 »

awesomeMilou wrote: post #532
fl7305 wrote: post #268

Earlier quoted context omitted.

That sounds unlike anything I've ever read about it? Where have you seen this? Here is the law that regulates GmbHs, with the paragraph specific to UGs: https://www.gesetze-im-internet.de/gmbhg/__5a.html Where in the GmbH-law do you find anything to support your claim?

My understanding was so far, that if the initial Stammkapital for an UG is too low, it then is seen under constant thread of insolvency under the law. Meaning that you're effectively always delaying insolvency, which is a crime. So if you then actually go bankrupt, assuming you're both Gesellschafter and Geschäftsführer, you're pretty much guaranteed to be convicted. Though I have to admit this was 10 years ago when…

I'm not an expert, especially not on the German law. But here's my understanding:

If a UG with 1 euro in share capital has a large equity, low expenses, and is run prudently, then I don't think the CEO/shareholders are personally liable if the UG is sued for a million euros and must pay that?

Both a GmbH and a UG have a "share capital" (Stammkapital). It is at least 25 000 euros for a GmbH, and 1 euro for a UG. On day 1, this is also the equity (Eigenkapital).

If the company makes profits, that will increase the equity. The equity makes it possible to keep spending money for a while even if the cash flow is negative. A 1 euro UG can in theory have 1 million euros in equity.

In both cases, the CEO is legally obligated to start insolvency proceedings immediately if it looks like the company can't pay its bills or loans any more. This is also required if the equity goes below half the share capital (same as in Sweden, "kontrollbalansräkning").

> if the initial Stammkapital for an UG is too low, it then is seen under constant thread of insolvency under the law

I don't think it's that simple? To begin with, it's the equity and the cash flow that matters, not just the Stammkapital (share capital) by itself. A UG can start out with a very low share capital, but if it has no expenses and a positive cash flow, then insolvency is not a risk, right?

If the cash flow suddenly becomes negative, for instance by losing a big client, or the main product suddenly can't be sold any more, then even a GmbH can be under immediate threat of insolvency. The 25 000 euro in share capital is nothing compared to salaries for a bunch of people, plus an office lease agreement that runs for another couple of years, etc.

So if you're operating a GmbH with employees and an office, then I'd say that it can be "seen under constant threat of insolvency" if it only has the share capital available as equity (or worse, just half of it), and the future income is very uncertain. So both a GmbH and a UG can put the CEO in jail if he plays it fast and loose.

I can definitely see how it is easier for a UG to get into insolvency territory, and above all, people running UGs aren't as familiar with the rules and pitfalls.

I could be wrong on some things? I'm interested to learn more in that case.

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

#629

Post by formerly_proven »

miohtama wrote: post #191
AndroTux wrote: post #164

Earlier quoted context omitted.

No, you don’t necessarily. Estonia has an e-Residency program targeted exactly at this scenario: Having a company in Estonia but living abroad. However, Germany being Germany, you will still have to deal with the Finanzamt and all the nice stuff that comes with it. So while you can run an Estonian company from Germany and be employed by it, I doubt you will gain much freedom from it. There’s really no escaping German…

In theory, it should be possible for any EU citizen to work in any EU country. In practice, it is not possible because you need to register to a local tax office of the worker. Spanish employee -> need to register your company with the Spanish tax office. Good luck unless you can afford expensive legal services that do this for you. Does not make a sense unless you are planning to hire in quantity (>20 workers). The…

> The alternative is that every remote worker is a subcontractor and takes care of their own taxes.

In Germany the pension insurance (DRV) will come around after a few years and demand a six digit figure from both your company and the employee, plus interest. You can also end up with criminal charges filed against you.

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

#630

Post by welterde »

martin_a wrote: post #606
data_maan wrote: post #482

Earlier quoted context omitted.

Reading a lot on Germany business culture, my takeaway is that Germany is not made for lean founders who start small but aim big, i.e. your typical startup. It seems to be aimed either at well established business magnates who want to open yet another business (and 25k€ is nothing in that case) or small bakery-on-the-corner businesses who will go for GmbH anyways (and hence no reason to cough up 25k€). There's no pat…

Start with a "Einzelunternehmung". Registering that takes 15 to 30 minutes at your local mayors office and costs 30 Euro. From there on you can make something like 20k Euro turnover per year, if you grow out of that, you can still "invest" in a GmbH or whatever suits your needs best. On the other hand, if you are sure that you're building the next Facebook, getting the money for a GmbH together on day -1 should be no…

That 22k limit is only for the small business rule, which allows the choice of not collecting VAT on sales (but on the flip side cannot deduct it on purchases). Up to a yearly revenue of 0.6M one can also use a simplified profit calculation method for taxes.
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