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I don't know much about the startup landscape in France (or anywhere in the EU), but I've always heard that it is difficult to incorporate a small company and h

I don't know much about the startup landscape in France (or anywhere in the EU), but I've always heard that it is difficult to incorporate a small company and hire employees due to large regulatory/bureaucracy hurdles. The "move fast, break things" pattern of setting up a Delaware LLC and getting an angel seed in a matter of days/weeks really just doesn't work. Can anyone comment on this? Is this way off base?

JumpCrisscross 8y ago
Recently helped a friend launch a French subsidiary. It is a pain. First, you must pay a lawyer or formation agent to write and register your by-laws. Next, you must seek an introduction to a bank manager. With that secured, you get to draft a book report of a business plan. This is tedious and pointless. Once completed, the bank manager reviews it. (They will also ask for lots of personal documents, each requiring expensive notarization.) If they approve, you get a business bank account. Into this account you must deposit no less than €4,000. Unfortunately, these funds are frozen until you get your extrait Kbis. That won't happen for at least two weeks. Now you have to buy an ad in a French newspaper. These are expensive. After a week or two, papers will arrive in the mail. You take these to the Commercial Court, where a bunch of agencies on different floors will stamp them. With those stamped papers in hand, your €4,000 will be unfrozen. (Usually. On the next business day.) Finally, you have to appoint a French accountant. They continually monitor your business and continually charge you fees. Now you can business! Meanwhile, in Delaware, 24 hours and a few hundred dollars buys you an LLC. A bank account, set up online or in person, can get you going the next day.
- rdm_blackhole 8y ago
  And that is not the worst part. When you sell your company, you may have to wait between 6 to 9 months to get your money! Basically, taxes are always delayed and to calculate the exact amount that you owe to the diverse government agencies, it takes an army of accountants. Even sometimes the accountants do not know what is going on as the tax laws are always changing, sometimes at the last minutes. Meanwhile, you have sold your asset, your money is stuck in escrow for more than 6 months, you have no revenue and no money. Welcome to France! Source: my parents sold their business in October last year and just got their money a week ago.
  - JumpCrisscross 8y ago
    The advice I was given, by a competent European lawyer, was to set up a Luxembourg S.A. which, in turn, was to hold asset-light subsidiaries in each country. (This is how Spotify is structured.)
    - JeanMarcS 8y ago
      The problem is, when you're resident, it looks like you try to avoid taxes. And government doesn't like that. At all. So if you're small, they won't miss you when they backfire at you :-)
- psergeant 8y ago
  > Meanwhile, in Delaware More worryingly for the French, it’s as easy as it is in Delaware in other nearby EU countries, and cross-border EU commerce is easier than cross-state commerce in the US
  - chimeracoder 8y ago
    > and cross-border EU commerce is easier than cross-state commerce in the US I'm curious where you get this impression. Cross-border commerce is very lightly regulated in the US. For most industries, you literally have to put zero thought into the matter.
    - psergeant 8y ago
      Don’t bank transfers take 3-4 days?
      - chimeracoder 8y ago
        > Don’t bank transfers take 3-4 days? Uh, what? What does this have to do with interstate commerce? ACH doesn't operate on a state by state basis. ACH can take a couple of days to clear (usually 2), but that's not really relevant, because most business isn't done through bank transfers. And for invoices that are due net 30 or 90, having a two day latency for the final transaction doesn't make a difference. Interstate commerce in the US is generally trivial, mostly because the Constitution makes it very clear that states have next to no ability to regulate or prevent it. The only main exceptions are industries that are heavily regulated within a state (ie, if you want to set up a new health insurer in a state, most states require you to get a license from that state - which isn't really regulating interstate commerce, but having state-specific regulations you need to be aware of. This is uncommon). For general businesses like we usually talk about on HN, there are very few barriers to interstate commerce in the US, especially compared to the EU.
      - JumpCrisscross 8y ago
        Fedwires clear instantly between banks; for the end user, within about thirty minutes (to give time for approvals). (Some banks bulk wires to the end of the day, but that is a cost-speed trade-off.)
- fermigier 8y ago
  1. No need for a lawyer to draft the bylaws, you can copy-paste from various resources. 2. The newspaper ad thing still exists, is a reminiscence of the past but only adds 100 euros or something to the overall cost. 3. "Into this account you must deposit no less than €4,000." = probably if your company's capital is $4000. You can start with 1 euro of capital if you wish (but that's probably not the greatest idea). 4. Overall, the easiest way is to first find a good accountant, and let them deal with the administrative side of things for ~1000 euros or less. If you do everything by yourself, you're probably good with 250-300 euros of expenses. See https://www.service-public.fr/professionnels-entreprises/vosdroits/F23282 https://www.service-public.fr/professionnels-entreprises/vos...
  - JumpCrisscross 8y ago
    Even taking your lowest-cost professional estimate, which deviates from experience and ignores several practical, if not official, costs, we’re talking about 2 weeks versus 24 hours and 4x the cost, with reference to Delaware. It’s a shockingly messy process compared with the U.S., U.K., Hong Kong or even Luxembourg.
- dest 8y ago
  My experience is not as painful as yours, but I do not know the Delaware process. I incorporated a "SAS" in France with the help of an online accounting service. It cost 500€ in fees, required a few hours of paperwork and the company was ready 2 weeks afterwards (KBis, bank account…). Now I pay 90€ / mo for the accounting service, and 10€ / mo for the (online-only) bank account. That's it. Note that you do business alone, with not too much volume, you can opt-in for the easier "microentrepreneur" status. It has low taxes, easy accounting and is straightforward to set up.
  - jchampem 8y ago
    May I ask what is that online accounting service?
    - dest 8y ago
      Here it is: https://www.dougs.fr/ https://www.dougs.fr/ (there may be referal bonuses if you want to subscribe, we can PM each other)
      - jchampem 8y ago
        Thanks a lot! I don't plan to subscribe right now, maybe I will in the next 6 months or so.
jedisct1 8y ago
Get a French accountant to do it for you. It costs virtually nothing, and they will take care of all the paperwork for you.
- briandear 8y ago
  Costs virtually nothing? I had to pay an accountant almost €1500 just to set up an SAS for a small bed and breakfast business. And it took months.
LoSboccacc 8y ago
speaking from italy here, but I think the experience can relate. even before getting your idea down you'll have to handle a monstrous bureaucracy. incorporating is easy given enough money but you'll need some expert to handle all the paperwork for getting your tax exemptions properly. also handling vat moss requires some specialized knowledge, which as a specialized programmer one is likely missing. hiring is quite complex too, and even if you don't want to dive into payrolls contract works are quite the paper generators too, so you're looking at a huge overhead - garage startup are basically nonexistant. there are venues by which you can get seed funding for your ideas. you start, you get traction, and then there's the second issue: your market is way smaller and more fragmented than the american. each country expects being serviced in each language, with a large upfront cost if you aim to reach a wide audience. say you grow, you reach a point where your idea is out there, the model is valid and your leverage positive, so you could really start pushing the growth. there's the third issue: private ventures are way smaller than american, the one that are here almost inaccessible and quite risk averse. so you'll have a very hard time to get that critical first round to push your growth. and then, after all the effort and sweat, an american startup comes to realize that the same need exists (because startup aren't generated in the void) do all the same but with 10x the seed and an easy first round and you'll find yourself competing with a company that has twenty times the employees and a monthly adword budget that's your yearly revenue.
- deleted 8y ago
  [deleted]
auganov 8y ago
Well, many private European VCs are pretty willing to have you incorporate as a Delaware C-Corp or a UK company (don't remember what's the most popular structure for these). I say private VCs, because there are quite a few pseudo-VCs funded by public money. They're usually pretty constrained in how they can deploy the funds. People will often end up with pretty unfundable structures (amongst many other issues). I can't speak for all countries, but in Poland it's an absolute scourge on the startup industry.
zaarn 8y ago
In germany it has gotten a lot easier over the years. There is the so called small entrepeneur, which costs about 25€ (depending on which commune you live in) and require relatively little paper work (taxes are a simple Profit-Costs calculation). You're also liable for stuff which some people don't like. There is also the entrepeneur association with limited liability (also called "UG (haftungsbeschränkt)", you can't omit the word in the parens). It requires a base capital of usually 1000€ but atleast 1€. Atleast 25% of all yearly profits must be held back and added to the base capital until you reach 25k€ after which you can in future years spend the 25% otherwise, increase the base capital or convert to a regular LLC (GmbH). Both are largely simply a case of "walk into your local people record office (Meldeamt) and deposit whatever money necessary" until you can do business. (And of course filing taxes)

JumpCrisscross 8y ago

Recently helped a friend launch a French subsidiary. It is a pain. First, you must pay a lawyer or formation agent to write and register your by-laws. Next, you must seek an introduction to a bank manager. With that secured, you get to draft a book report of a business plan. This is tedious and pointless. Once completed, the bank manager reviews it. (They will also ask for lots of personal documents, each requiring expensive notarization.) If they approve, you get a business bank account. Into this account you must deposit no less than €4,000. Unfortunately, these funds are frozen until you get your extrait Kbis. That won't happen for at least two weeks. Now you have to buy an ad in a French newspaper. These are expensive. After a week or two, papers will arrive in the mail. You take these to the Commercial Court, where a bunch of agencies on different floors will stamp them. With those stamped papers in hand, your €4,000 will be unfrozen. (Usually. On the next business day.) Finally, you have to appoint a French accountant. They continually monitor your business and continually charge you fees. Now you can business! Meanwhile, in Delaware, 24 hours and a few hundred dollars buys you an LLC. A bank account, set up online or in person, can get you going the next day.

rdm_blackhole 8y ago
And that is not the worst part. When you sell your company, you may have to wait between 6 to 9 months to get your money! Basically, taxes are always delayed and to calculate the exact amount that you owe to the diverse government agencies, it takes an army of accountants. Even sometimes the accountants do not know what is going on as the tax laws are always changing, sometimes at the last minutes. Meanwhile, you have sold your asset, your money is stuck in escrow for more than 6 months, you have no revenue and no money. Welcome to France! Source: my parents sold their business in October last year and just got their money a week ago.
- JumpCrisscross 8y ago
  The advice I was given, by a competent European lawyer, was to set up a Luxembourg S.A. which, in turn, was to hold asset-light subsidiaries in each country. (This is how Spotify is structured.)
  - JeanMarcS 8y ago
    The problem is, when you're resident, it looks like you try to avoid taxes. And government doesn't like that. At all. So if you're small, they won't miss you when they backfire at you :-)
psergeant 8y ago
> Meanwhile, in Delaware More worryingly for the French, it’s as easy as it is in Delaware in other nearby EU countries, and cross-border EU commerce is easier than cross-state commerce in the US
- chimeracoder 8y ago
  > and cross-border EU commerce is easier than cross-state commerce in the US I'm curious where you get this impression. Cross-border commerce is very lightly regulated in the US. For most industries, you literally have to put zero thought into the matter.
  - psergeant 8y ago
    Don’t bank transfers take 3-4 days?
    - chimeracoder 8y ago
      > Don’t bank transfers take 3-4 days? Uh, what? What does this have to do with interstate commerce? ACH doesn't operate on a state by state basis. ACH can take a couple of days to clear (usually 2), but that's not really relevant, because most business isn't done through bank transfers. And for invoices that are due net 30 or 90, having a two day latency for the final transaction doesn't make a difference. Interstate commerce in the US is generally trivial, mostly because the Constitution makes it very clear that states have next to no ability to regulate or prevent it. The only main exceptions are industries that are heavily regulated within a state (ie, if you want to set up a new health insurer in a state, most states require you to get a license from that state - which isn't really regulating interstate commerce, but having state-specific regulations you need to be aware of. This is uncommon). For general businesses like we usually talk about on HN, there are very few barriers to interstate commerce in the US, especially compared to the EU.
    - JumpCrisscross 8y ago
      Fedwires clear instantly between banks; for the end user, within about thirty minutes (to give time for approvals). (Some banks bulk wires to the end of the day, but that is a cost-speed trade-off.)
fermigier 8y ago
1. No need for a lawyer to draft the bylaws, you can copy-paste from various resources. 2. The newspaper ad thing still exists, is a reminiscence of the past but only adds 100 euros or something to the overall cost. 3. "Into this account you must deposit no less than €4,000." = probably if your company's capital is $4000. You can start with 1 euro of capital if you wish (but that's probably not the greatest idea). 4. Overall, the easiest way is to first find a good accountant, and let them deal with the administrative side of things for ~1000 euros or less. If you do everything by yourself, you're probably good with 250-300 euros of expenses. See https://www.service-public.fr/professionnels-entreprises/vosdroits/F23282 https://www.service-public.fr/professionnels-entreprises/vos...
- JumpCrisscross 8y ago
  Even taking your lowest-cost professional estimate, which deviates from experience and ignores several practical, if not official, costs, we’re talking about 2 weeks versus 24 hours and 4x the cost, with reference to Delaware. It’s a shockingly messy process compared with the U.S., U.K., Hong Kong or even Luxembourg.
dest 8y ago
My experience is not as painful as yours, but I do not know the Delaware process. I incorporated a "SAS" in France with the help of an online accounting service. It cost 500€ in fees, required a few hours of paperwork and the company was ready 2 weeks afterwards (KBis, bank account…). Now I pay 90€ / mo for the accounting service, and 10€ / mo for the (online-only) bank account. That's it. Note that you do business alone, with not too much volume, you can opt-in for the easier "microentrepreneur" status. It has low taxes, easy accounting and is straightforward to set up.
- jchampem 8y ago
  May I ask what is that online accounting service?
  - dest 8y ago
    Here it is: https://www.dougs.fr/ https://www.dougs.fr/ (there may be referal bonuses if you want to subscribe, we can PM each other)
    - jchampem 8y ago
      Thanks a lot! I don't plan to subscribe right now, maybe I will in the next 6 months or so.

jedisct1 8y ago

Get a French accountant to do it for you. It costs virtually nothing, and they will take care of all the paperwork for you.

briandear 8y ago
Costs virtually nothing? I had to pay an accountant almost €1500 just to set up an SAS for a small bed and breakfast business. And it took months.

LoSboccacc 8y ago

speaking from italy here, but I think the experience can relate. even before getting your idea down you'll have to handle a monstrous bureaucracy. incorporating is easy given enough money but you'll need some expert to handle all the paperwork for getting your tax exemptions properly. also handling vat moss requires some specialized knowledge, which as a specialized programmer one is likely missing. hiring is quite complex too, and even if you don't want to dive into payrolls contract works are quite the paper generators too, so you're looking at a huge overhead - garage startup are basically nonexistant. there are venues by which you can get seed funding for your ideas. you start, you get traction, and then there's the second issue: your market is way smaller and more fragmented than the american. each country expects being serviced in each language, with a large upfront cost if you aim to reach a wide audience. say you grow, you reach a point where your idea is out there, the model is valid and your leverage positive, so you could really start pushing the growth. there's the third issue: private ventures are way smaller than american, the one that are here almost inaccessible and quite risk averse. so you'll have a very hard time to get that critical first round to push your growth. and then, after all the effort and sweat, an american startup comes to realize that the same need exists (because startup aren't generated in the void) do all the same but with 10x the seed and an easy first round and you'll find yourself competing with a company that has twenty times the employees and a monthly adword budget that's your yearly revenue.

deleted 8y ago
[deleted]

auganov 8y ago

Well, many private European VCs are pretty willing to have you incorporate as a Delaware C-Corp or a UK company (don't remember what's the most popular structure for these). I say private VCs, because there are quite a few pseudo-VCs funded by public money. They're usually pretty constrained in how they can deploy the funds. People will often end up with pretty unfundable structures (amongst many other issues). I can't speak for all countries, but in Poland it's an absolute scourge on the startup industry.

zaarn 8y ago

In germany it has gotten a lot easier over the years. There is the so called small entrepeneur, which costs about 25€ (depending on which commune you live in) and require relatively little paper work (taxes are a simple Profit-Costs calculation). You're also liable for stuff which some people don't like. There is also the entrepeneur association with limited liability (also called "UG (haftungsbeschränkt)", you can't omit the word in the parens). It requires a base capital of usually 1000€ but atleast 1€. Atleast 25% of all yearly profits must be held back and added to the base capital until you reach 25k€ after which you can in future years spend the 25% otherwise, increase the base capital or convert to a regular LLC (GmbH). Both are largely simply a case of "walk into your local people record office (Meldeamt) and deposit whatever money necessary" until you can do business. (And of course filing taxes)