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Founding a company in Germany: €9600, 152 days and I still can't send an invoice

paolino.me

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Re: Founding a company in Germany: €9600, 152 days and I still can't send an invoice

#671

Post by m_fayer »

nish1500 wrote: post #104

I've run a tech business on three continents, and nothing comes close to the Kafkaesque labyrinth of the German world. Everything is unbelievably complicated and over-engineered, and every layer is immune to change. Every rule was rational when it was added, and now everyone has a financial stake in continued complexity. The German notary is the highest-paid notary in the world, and the highest-earning professional i…

Hit the nail on the head. These bureaucratic obstacles are also a manifestation of a culture. A culture that will, in a subconscious and subtle manner, sneer bristle and balk at you, who dared to start a company. What’s wrong with you and who do you think you are, comes the message. Why isn’t what we all do good enough for you, comes the demand.

Re: Founding a company in Germany: €9600, 152 days and I still can't send an invoice

#672

Post by FLHerne »

nradov wrote: post #635
t0mas88 wrote: post #611

Earlier quoted context omitted.

That's the American viewpoint, right of the strongest, sue if they wronged you. European systems typically have a different philosophy where the counterparties are more protected. It's expressed in stronger consumer protection laws, but also these German things where you can't start a GmbH/LLC with zero capital and wish the counterparties good luck suing you if you never pay them.

You're missing the point. Strong or weak has nothing to do with it. If you want to be protected then don't do business with undercapitalized counterparties. Everyone can make their own decision on acceptable level of financial risk. It's stupid for governments to dictate this.

So the OP can create a UG with €1 capitalization.

They can be cheerfully undercapitalized and counterparties, seeing that it's an undercapitalized UG rather than a GmbH, can make their own decision on financial risk.

> And the cheap door has a price of its own: to some clients, “UG” reads as “not serious,” and they would rather deal with a GmbH.

...turns out the OP doesn't like that.

Re: Founding a company in Germany: €9600, 152 days and I still can't send an invoice

#673

Post by ghaff »

glad_duck wrote: post #664
ghaff wrote: post #625

Earlier quoted context omitted.

MA was going to be quite a bit more expensive. I did the transaction through Stripe and they use Delaware.

Since my business is in MA it doesn't matter where my LLC is, I would have had to pay registration fee for "Foreign LLC" in MA to stay legal. That is in addition to fees I would have paid to DE. Not sure if MA is so unique, but I don't think it is.

Situations have changed in tech so I'll probably keep my LLC for a while but when things come up for renewal probably no reason to. Associated with another company and not beating bushes for big time-consuming contracts.

Re: Founding a company in Germany: €9600, 152 days and I still can't send an invoice

#674

Post by pentacent_hq »

As someone who as founded companies in Germany, I can understand a lot of the frustration with some parts of the process. It does indeed feel archaic that the notary has to read everything out aloud and the process for opening a bank account is maybe not terribly compicated but still more complicated than it needs to. The fact that getting a VAT number can take so long is also really infuriating.

With that being said, it seems like the author received some poor advice from their law firm:

1) If the author mostly does consulting and contract work, a sole proprietorship would have been the better option as many others here have already pointed out.

2) The UG & Co. KG construct is unnecessarily complex for a small company; it does have some advantages but if they really wanted a limited liability company, they should have used the "Musterprotokoll" (standard protocol) for setting up a UG; that would probably have cost less than €500. Lawyers love to suggest GmbH/UG & Co KG though because it means more fees for them.

3) The advice they got regarding the name was almost certainly incorrect. First of all, "case law" is not really a thing in civil law countries like Germany. The company name usually gets checked by the local chamber of commerce (IHK) and while there are some rules (you're not allowed to just call your company the equivalent of "Supermarket Co", "Plenty UG" would have almost certainly been fine. And if the IHK says it's fine, the court will accept it too.

Anyways, now that you have your company, I wish you all the best with it. You have exciting times ahead and the frustrating bit is (almost) over :-)

Re: Founding a company in Germany: €9600, 152 days and I still can't send an invoice

#675

Post by notanormalnerd »

slopinthebag wrote: post #492
notanormalnerd wrote: post #468

Earlier quoted context omitted.

> Someone wanted to turn a winery into a eco-tourism boutique hotel with a winery tour and experience. Because a agricultural business and a hotel business are two different things, and Spain has, rightfully so, their thumb on the spread of tourism, because it affects local communities negatively. Otherwise investors could just come in, buy a random agriculture business and then turn it into luxury hotels/lodging. >…

I cannot believe there are people defending this.

What? So you should just be allowed to do as you please? Start with an eco-retreat on your winery. Then build out luxury apartments? Then where to go from here? Maybe get rid of the winery for a golf course? Creep your way into a luxury resort?

Where is the line?

Re: Founding a company in Germany: €9600, 152 days and I still can't send an invoice

#676

Post by [deleted] »

jeroenhd wrote: post #406
weinzierl wrote: post #172

Earlier quoted context omitted.

Yes, my suspicion is that OP went to a lawyer and said: "I want to minimize my risk as much as possible, what do I do?" And of course, lawyers being lawyers, answered you need to wear both a belt and suspenders. This is the answer you'd expect from a lawyer. It is your responsibility as a founder to do the risk assessment. The fact that almost no one wears both a belt and suspenders might have been a hint.

> went to a lawyer They studied AI and are building an AI company. I doubt the idea for the business structure come from a lawyer, to be honest. Especially such an overcomplicated setup with so many real-world issues that they're running into right now.

[deleted]

Re: Founding a company in Germany: €9600, 152 days and I still can't send an invoice

#677

Post by lazyasciiart »

procaryote wrote: post #554
lazyasciiart wrote: post #543

Earlier quoted context omitted.

Yes - the value of your company is the gain. It is the money you would have if you sold the whole thing.

It's only a gain if you sell. Selling a company and paying tax on the profit in tax is a completely different proposition from paying tax on hypothetical profit you haven't made (and might never make) just because you want to move.

That's what unrealized means. Gains you haven't got because you haven't sold.

Re: Founding a company in Germany: €9600, 152 days and I still can't send an invoice

#678

Post by lazyasciiart »

DANmode wrote: post #573
lazyasciiart wrote: post #539

Earlier quoted context omitted.

If that’s what they wanted to do, they would have to realize those gains. The state is doing the opposite of preventing this.

Are we reading the same story? How do you realize anything without being able to send an invoice and collect?

We are in a thread about how someone can't even just move the company assets to another country without being taxed on them.

Re: Founding a company in Germany: €9600, 152 days and I still can't send an invoice

#679

Post by woodpanel »

As AI makes it feasible to build good things with tiny teams I recently am finding myself repeatedly in discussions with friends about starting a business. It would be the first time in 20 years for me to be founding a GmbH.

The thought of all that regulatory hassle you have to go through in Germany compared to those superniche ideas you would try out in our AI days, makes me weep [1].

I wonder if the gap we‘ve already saw in the last 20 years between EU and US in terms of tech success stories is just the tip of the iceberg of what’s to come.

[1] notary costs (every visit ~400€ like changing your address or business scope), registry costs (also for every address and business scope change), hiring a tax attorney to produce compliant balance sheets (2,000 - 3,000 € /year), multiple types of yearly, quarterly, and monthly tax filings (tax attorney 150-300€/ month), different taxes which will be collected federally and locally, mandatory membership in Commerce Chambers (~350€/year), legal requirement to have a „business bank account“ (here at least today there are some startups making this easier and somewhat cheaper), mandatory membership at a trade-coop (yes it costs money), public health insurers in your neck nagging you to find some legal trap you stumbled into to extract bankrupting amounts of premiums from you, same with the state pension program. And just because you close down, it doesn’t just stop (you have operate the GmbH for years after before it gets deleted, so you pay money for years after still). Then there is the Exit Tax, which on the rare case you were successful locks you into Germany forever (unless again you pay professionals insane amounts of money).

So this leaves you and your kindergarten-Management-slash-Single-parent-CRM vibe coding idea easily with effectively 500-1000 €/month just to deal with red tape.

But it’s not just the money, each of these points I listed are just sources of endless amounts of paperwork with people/Organisations that know they don’t have to respect you or care about you at all to extract money from you.

And no, UG is not helping at all because still exactly the same GmbH red tape applies. And I am 65% certain the proposed EU Incs will - in Germany - be not exempt from this.

Re: Founding a company in Germany: €9600, 152 days and I still can't send an invoice

#680

Post by lazyasciiart »

TulliusCicero wrote: post #595
lazyasciiart wrote: post #535

Earlier quoted context omitted.

I haven’t seen it manifest any differently elsewhere?

Americans on the Internet will often heartily agree with foreigners about all kinds of things that are shit in America and need to be changed: public transit, walkability, health care costs, university costs, money in politics, lack of basic geographic knowledge, etc. Of course there are some more conservative folks who may be more resistant to those critiques, but the average American will just nod along. If you men…

Americans on the internet don't have confederate flags up and vote for Trump either. If you wanted to talk about how patriotism manifests on the internet, say so.
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