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British limited companies have been tremendously popular across the EU because they are so simple and cheap to setup and manage. The UK is really hurting itsel
by ElBarto 8y ago
British limited companies have been tremendously popular across the EU because they are so simple and cheap to setup and manage.
The UK is really hurting itself with Brexit here.
Of course, why other EU countries make it so onerous to setup a company is another issue...
> It would require a far lower initial investment (300 GBP vs. 25,000 EURO)
The minimum capital investment to setup a limited company is £1. Perhaps they are including other fees to get to £300.
Effectively the only cash that has to be paid is the fee (about £20) and it can be done in minutes online...
- detaro 8y agoSince they founded in 2012, they could also have created a German Unternehmergesellschaft, which starts with 1€ capital too, and "grows" into a GmbH (25% of net income have to be added to the company investment, until the 25k€ threshold is reached, at which point the company can convert). Since those were introduced, Ltd. has become a lot less common for German founders.
- ElBarto 8y agoI still don't understand this complexity. Be bold. Slash requirements and red tape instead of adding another layer.
- detaro 8y agoGmbH is a limited company: it protects the owners legally, in exchange it's required to actually have some assets that can be used to pay claims, and some investment from the owners into it. The UG was added as an easier path into that: you don't need the capital right now, but already gain the protection, in exchange the different label broadcasts that to everyone you're doing business with. Unlimited companies come without those restrictions on founding them. It's a tradeoff: harder requirements in exchange for protection.
- ElBarto 8y agoThat does not explain the reason for making things complicated. British limited companies are extremely simple and cheap: Minimal capital requirements (£1), protection, and minimal red tape and fees (as said, minutes to create one online and £20). I fail to find a valid reason to have it differently.
- detaro 8y agoThe assumption that limited companies without requirements make it to easy to abuse that protection (decreasing trust in companies with that status), and that thus there's value in signaling through the company status that it has at least something backing it up. Clearly only having GmbHs didn't meet demand, since quite a few people went for british Ltds despite them having a bad reputation, so a native replacement for those was created.
- ElBarto 8y agoIn the real world nothing guarantees that a company is solvent. > went for british Ltds despite them having a bad reputation Cheap shot there. They don't have a bad reputation, assuming that claiming that companies from one of the main economies in the world have "bad reputation" makes any sense at all. The reason people go for them is that most other European countries make it onerous to setup a company, while the UK does not see any reason to make it difficult. Requiring €25k shuts the door to many people who would like to setup their own small business, for example.
- detaro 8y agoIt's not a cheap shot, it was reality, especially in B2B contexts, that if your new, clearly German, company was a foreign limited instead one of the native ones that was seen as problematic by some customers (obviously depending on the field etc. too) And again, the rates of German Ltds. have gone down massively with the creation of the UG, so clearly that policy correction is working and not seen as overly onerous. (although lots of small companies also operate as unlimited companies)