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I registered a basic company - but without limited liability - around 5 years ago in Germany. I put my name, address, and the company name onto a 1 page PDF (fo

by lqet 4y ago

I registered a basic company - but without limited liability - around 5 years ago in Germany. I put my name, address, and the company name onto a 1 page PDF (form GewA1 [0]), sent it via email to town hall and received a confirmation and an invoice (I think it was 30 EUR?) a few days later. I was then owner of a company. The whole process took 10 minutes in total. The registration with the IHK was done automatically (the IHK is a kind of business lobby organization, and the required membership ensures that it does not only represent large companies). The tax office was also informed automatically. This article is a strange rant by someone who seems to be infinitely surprised that: 1) You have to register your company with some authority. 2) Business is conducted in the countries official language. ("The whole process should be in English. I don't care that it is Germany. English. English. English.") 3) Legal documents should be notarized ("What is a Notary? I’m not sure") 4) Diverting company money into your private pocket is a crime ("Really, no joke, only use it for your company. Our notary did emphasise to us quite strongly that to do otherwise with that €300, would basically be fraud, and we could go to prison. Cool.") 5) Storing company money on a bank account is usually a good idea ("Do you really need a bank account? I have no idea. Theoretically not, but if you dare suggest that to anyone that you won’t bother with a company bank account they foretell doom and catastrophe, so I just shut up set up a bank account.") 6) You have to pay taxes, and it might be more complicated to do taxes for a limited liability company than for a private person. Also: > Find a Steuerberater (Tax consultant) Yeah, you need one of these to do the tax return for your not-really-doing-anything personal holding company. This will be expensive. No. You don't need a tax consultant. You can do the taxes yourself if you want. [0] https://www.gewerbeanmeldung.de/formular-gewerbeanmeldung https://www.gewerbeanmeldung.de/formular-gewerbeanmeldung

quonn 4y ago
Exactly. It seems like the complaint here is that creating a limited is more involved. And it is - but not much. Yes, there is a cost for the notary and accountant and that makes it a bit expensive if you want to create subsidies later. But the paper work is not the hard part.
- deleted 4y ago
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Archelaos 4y ago
Just to make it clearer for other readers: The difference between setting up a limited liability company (GmbH), which is mentioned in the article, and a simple company, as you describe it, is crucial here. It is indeed very easy to start such a business in Germany. A simple registration is typically (there are exceptions) all one has to do to start one. If one works as a real freelancer, ie. if the work is primarily a personal service of oneself (in contrast to delegating the work to an employee) or if the "business" is only occasionally or non-substantial, one does not even need to register. But in all this cases there is no split between business and private assets. In other words: One is liable for the business also with all private assets and even all future personal earnings (one may file personal bankruptcy, though and get rid of all liabilities after three years). The idea behind the effort regarding the registration of a GmbH (needing a police clearance certificate, a minimum of capital, a notary to confirm the correctness of everything, etc.) and its disclosure and documentation obligations is to allow for a certain level of supervision in exchange for limited liability. A GmbH has also a fuctional separation between the owners of the GmbH and the CEO. In the special case of a one-person GmbH these are in the sense of a personal union identical. But since this is not necessarily the case, it is quite easy to change it when the company grows or the owner wants to retire as the CEO. Typically even a one-person GmbH is established with a certain number of "shares". So if you want to sell a part of your GmbH, you can just sell a certain number of this shares (you need to notify the registration authorities via a notary about it, though). This is why even a one-person GmbH needs a charter (and one important job of the notary is to make sure that the charter conforms to the law). My main complaint is that some of the procedures are still very redundant because the digital exchange of data between the various authorities involved is still in its infancy and in many cases does not even exist. For example, when I changed the location of my one-person GmbH in 2019, I had, after some paperwork with the notary via (snail) mail, to go in person to the town hall of the old location to deregister with a paper form and then go in person to the town hall of the new location within two weeks to re-register with the new location.
rdsubhas 4y ago
By "basic company" – you mean sole proprietorship (aka as a sole trader). There is a similar formation called partnership, but since you did this yourself as a solo person, I would assume you did a sole proprietorship. It is not an entity by itself, it's completely tied to you as an individual. It doesn't need a bank account or separate taxes. You use your bank account. When you file taxes as an individual you also declare taxes for your propretorship on your name. There is no corporate tax filing. You are just expected to maintain books (just like freelancers do) and file taxes on your name. Not to belittle – but a sole proprietorship is almost like registering a "brand name" to a freelance business. It does not have any legal requirements, it's all on you as an individual. GmbH (LLC or limited liability company) is a completely different beast than sole proprietorship or partnerships.

by lqet 4y ago

quonn 4y ago

Exactly. It seems like the complaint here is that creating a limited is more involved. And it is - but not much. Yes, there is a cost for the notary and accountant and that makes it a bit expensive if you want to create subsidies later. But the paper work is not the hard part.

deleted 4y ago
[deleted]

Archelaos 4y ago

Just to make it clearer for other readers: The difference between setting up a limited liability company (GmbH), which is mentioned in the article, and a simple company, as you describe it, is crucial here. It is indeed very easy to start such a business in Germany. A simple registration is typically (there are exceptions) all one has to do to start one. If one works as a real freelancer, ie. if the work is primarily a personal service of oneself (in contrast to delegating the work to an employee) or if the "business" is only occasionally or non-substantial, one does not even need to register. But in all this cases there is no split between business and private assets. In other words: One is liable for the business also with all private assets and even all future personal earnings (one may file personal bankruptcy, though and get rid of all liabilities after three years). The idea behind the effort regarding the registration of a GmbH (needing a police clearance certificate, a minimum of capital, a notary to confirm the correctness of everything, etc.) and its disclosure and documentation obligations is to allow for a certain level of supervision in exchange for limited liability. A GmbH has also a fuctional separation between the owners of the GmbH and the CEO. In the special case of a one-person GmbH these are in the sense of a personal union identical. But since this is not necessarily the case, it is quite easy to change it when the company grows or the owner wants to retire as the CEO. Typically even a one-person GmbH is established with a certain number of "shares". So if you want to sell a part of your GmbH, you can just sell a certain number of this shares (you need to notify the registration authorities via a notary about it, though). This is why even a one-person GmbH needs a charter (and one important job of the notary is to make sure that the charter conforms to the law). My main complaint is that some of the procedures are still very redundant because the digital exchange of data between the various authorities involved is still in its infancy and in many cases does not even exist. For example, when I changed the location of my one-person GmbH in 2019, I had, after some paperwork with the notary via (snail) mail, to go in person to the town hall of the old location to deregister with a paper form and then go in person to the town hall of the new location within two weeks to re-register with the new location.

rdsubhas 4y ago

By "basic company" – you mean sole proprietorship (aka as a sole trader). There is a similar formation called partnership, but since you did this yourself as a solo person, I would assume you did a sole proprietorship. It is not an entity by itself, it's completely tied to you as an individual. It doesn't need a bank account or separate taxes. You use your bank account. When you file taxes as an individual you also declare taxes for your propretorship on your name. There is no corporate tax filing. You are just expected to maintain books (just like freelancers do) and file taxes on your name. Not to belittle – but a sole proprietorship is almost like registering a "brand name" to a freelance business. It does not have any legal requirements, it's all on you as an individual. GmbH (LLC or limited liability company) is a completely different beast than sole proprietorship or partnerships.