7 ms·

Setting up is still the easy part, managing (the bureaucracy part, not the actual business) and getting rid of it is much more involved. I don’t see any positi

by harha 4y ago

Setting up is still the easy part, managing (the bureaucracy part, not the actual business) and getting rid of it is much more involved. I don’t see any positive factors to being in Germany as an entrepreneur, only reason to be there is if the business can’t do otherwise (eg serving something physical to a German customer) or you already inherited something and the cost of moving would massively outweigh the benefits. Edit: note on the inheriting part, afaik if it’s a company they tax you for the sale if you move your tax residency away (in the EU you have a few years to pay, otherwise right away). That’s also another risk when setting something up in Germany.

rad_gruchalski 4y ago
Yeah, managing is some work. The best is to find one of those Steuerberatungsgesellschaft and let them guide you through everything. Filing taxes will cost you €2500+ per year for a GmbH, €1300 for an UG. Getting rid of it is easy. You file an Auflösung, sign it at the notary, ask them to notify agencies on your behalf. Then you have one year to liquidate. Not sure what’s difficult about it.
- harha 4y ago
  Getting to a notary when not in Germany, all the agencies, getting to the notary a second time when it’s done, all the things you need to file (3 tax filings, 2 different accounting statements, etc), getting the letters from the agencies - all when the company is essentially dead and doesn’t have any extra 2500€ per year left for filing. Could all be done with a small number of forms and online or for a small fee in many other countries. What’s the benefit of doing all that?
  - rad_gruchalski 4y ago
    > all when the company is essentially dead and doesn’t have any extra 2500€ per year left for filing That’s bankruptcy. > Could all be done with a small number of forms and online or for a small fee in many other countries. > What’s the benefit of doing all that? Frankly, I have no idea. Maybe they do want to make sure that the process stays legitimate. I believe you can do all of this without having to show up in the country by giving a lawyer a power of attorney. But you better have the money to close all financial matters. When I was shutting down the Ltd, I did it via my tax accountant. And yes, I did tax filings for the last year too. The only difference was that there was no grace period for liquidation.
    - harha 4y ago
      > That's bankruptcy. So you're saying for a small UG you should always spare 1-2 years (most likely more than 1) in case you decide not to pursue the business anymore? I'd rather spend 2-5k on other things. Apart from being an absurdly high amount for something that can be read out easily from any sane accounting system (thanks Germany for basically forcing everyone to use Datev, which they obviously only sell to professionals, so that's how a simple task becomes 2k+ per year [0]). > Maybe they do want to make sure that the process stays legitimate That doesn't really solve the problem, I've had clients with GmBHs who ended up not paying what they owed me - just because they pay a lot to accountants, notary, the state etc. doesn't make the business more sound. Conversely, you can handle a legitimate business (e.g. selling expertise in form of consulting projects) much cheaper and with less time invested elsewhere. Maybe if everyone weren't wasting so much manpower on inefficient systems, things would actually work. The added burden of dealing with personal tax, the high price tag for it along with social welfare (which only helps in highly rare circumstances, e.g. when I literally don't have anything anymore - which I don't need because of what I've invested) and the time lost just don't add up. I've lived in many countries, small, large, rich, poor, and I think Germany is the worst among them to start a business (and also to live, but everyone has their preferences) unless you have a really good reason to be there. To start something you need flexibility, low overhead, and not to waste time you could be using to talk to customers and build something, rather than deal with bureaucracy. Germany offers neither. [0]: one quick note on the side, I've used Collmex to do my own accounting back then after I had to fire my tax accountant for absurd things I was being charged and to wrap up the business that I wasn't working on anymore. For me it worked out - in principle what is accounting: you want to track receipts and transform them into a balance sheet and P&L statement + a few of the extras you need in Germany, like VAT reporting. Still a massive pain to transform it into what the tax agency wants and get the info what that actually is, I think it's hard on purpose to waste people's time and direct them to tax accountants that overcharge. Anyway, time invested vs. paying someone to do it probably doesn't fully add up but I learned a bit more about accounting which is nice to have in any business context.
      - sooyoo 4y ago
        > I've lived in many countries, small, large, rich, poor, and I think Ger many is the worst among them to start a business (and also to live, but everyone has their preferences) unless you have a really good reason to be there. Try India. There was an HN post the other day about a guy who tried to set up some manufacturing and 2 years in he was still far away from all the permits. One thing the article we are discussing notably lacks is the mention of bribes. Obviously, you'd add, those would be illegal. Haha. True! They are illegal in India too. And in all other countries. But compared to some forms that are (outrageously!) in German, those re a real PITA. I'm living in Germany now, by choice, and it's a lovely country with lovely people. Not everything is perfect, but many of the imperfections contribute to the loveliness. Just like in many other countries, rich and poor.
- dsnr 4y ago
  > Then you have one year to liquidate. Not sure what’s difficult about it. What is funny is that germans don’t even realize how absurd this looks for the rest of the world. Compare this to closing a company in two weeks in the United States.
  - Xylakant 4y ago
    Funny how the Americans don’t even realize how absurd that looks for the rest of the world. The reason for this is that the company must pay any outstanding debt before it can shut down - and you need to give creditors a window to write their invoices. And you’re legally allowed to write and collect on invoices for work (or deliveries) that date back up to three years. So what happens when you liquidate a GmbH is that a notice is placed in the register for all your creditors to see if you have an outstanding debt with them - and then you just have to wait.
    - harha 4y ago
      Well in theory that is. Who actually reads the notice and if the company hasn’t paid yet, how do you know they still have money? It’s a bureaucratic exercise that most countries manage to avoid.
      - Xylakant 4y ago
        The register is electronic and it’s common that people monitor it, especially if you have large sums outstanding. I have done so in the past. I know of multiple other cases where people monitored the register. If they don’t have money and outstanding debt, they can’t liquidate the company - they’ll need to file for bankruptcy, which is an entirely different thing.
      - nosianu 4y ago
        I closed a GmbH. How is this complicated? You don't have to do anything for or during that closing period! The only thing that happens is that you get the final "it's been closed for good now" after that period. I let the "Steuerberater" handle everything while the GmbH was active anyway, the fee was not that much. I just gave them all my receipts and they handled accounting completely. I was a bit pissed at the Steuerberater fees accumulating during closing, which were a bit much, but I negotiated that down significantly. But again, the least complicated part of it was having that waiting period. It had no impact on me whatsoever, not for taxes, not for anything. I just got a message after that time was over, and another one even later from the tax authorities that they are satisfied and would never retroactively look at the company again, so that I knew I would not get any tax surprises from them. Which I did get from the US IRS - years after leaving the US they wanted money from me. When you close the GmbH it's not like you have to keep anything. You really close it, bank account and all too. The waiting period has nothing to do with you, unless creditors show up. The only thing that happened was that that very final message about the final closing only comes after that period, without any creditors showing up it has no impact on you and you don't have to do or pay anything. I had had an "offene Handelsgesellschaft" (OHG) with someone before I had the GmbH. The limited liability company forms, GmbH and AG, are much worse than the ones with a fully liable owner. Those are much easier to set up, and they too can become quite big companies and are quite commonly in use in Germany even for established firms. But it's true, the effort around the liability corporation forms is enormous, and lots and lots of fees everywhere. You can shield yourself easily and outsource it all, but the got-to company form that Germany aimed for historically for the "common man" to quickly and easily set up a company was one of the two where one person or a group own the company and are liable. Limited liability was (still is) deliberately kept to be much more demanding. https://www.ihk.de/stuttgart/english/services2/business-support/legal-forms-of-doing-business-in-germany-3977966 https://www.ihk.de/stuttgart/english/services2/business-supp... Forms 3 and 4, and 5 in that list, sole proprietorships and general and limited partnerships. Here is a table with some numbers, how many firms of each form there are in three size categories by nr. of employees: https://www.destatis.de/DE/Themen/Branchen-Unternehmen/Unternehmen/Unternehmensregister/Tabellen/unternehmen-rechtsformen-wz08.html https://www.destatis.de/DE/Themen/Branchen-Unternehmen/Unter... (and just for comparison, the data for the US, scroll down for the table: https://tingen.law/2022/business-structure-statistics/54443/ https://tingen.law/2022/business-structure-statistics/54443/) Maybe too many people go for a GmbH too quickly? A KG with one main owner and partners only liable with their share and they can be any legal entity, so businesses instead of people can be a partner, would probably work just as well. I know I went for the GmbH form out of such stupidity, because it was "cool" and internationally it was the form everybody was talking about (limited liability. hey!) but I would have been better off with another form. The "limited liability" has very limited benefits if you are a new founder anyway, nobody is going to give the new company any credit without someone being liable in addition because creditors are not stupid.

by harha 4y ago

rad_gruchalski 4y ago

Yeah, managing is some work. The best is to find one of those Steuerberatungsgesellschaft and let them guide you through everything. Filing taxes will cost you €2500+ per year for a GmbH, €1300 for an UG. Getting rid of it is easy. You file an Auflösung, sign it at the notary, ask them to notify agencies on your behalf. Then you have one year to liquidate. Not sure what’s difficult about it.

harha 4y ago
Getting to a notary when not in Germany, all the agencies, getting to the notary a second time when it’s done, all the things you need to file (3 tax filings, 2 different accounting statements, etc), getting the letters from the agencies - all when the company is essentially dead and doesn’t have any extra 2500€ per year left for filing. Could all be done with a small number of forms and online or for a small fee in many other countries. What’s the benefit of doing all that?
- rad_gruchalski 4y ago
  > all when the company is essentially dead and doesn’t have any extra 2500€ per year left for filing That’s bankruptcy. > Could all be done with a small number of forms and online or for a small fee in many other countries. > What’s the benefit of doing all that? Frankly, I have no idea. Maybe they do want to make sure that the process stays legitimate. I believe you can do all of this without having to show up in the country by giving a lawyer a power of attorney. But you better have the money to close all financial matters. When I was shutting down the Ltd, I did it via my tax accountant. And yes, I did tax filings for the last year too. The only difference was that there was no grace period for liquidation.
  - harha 4y ago
    > That's bankruptcy. So you're saying for a small UG you should always spare 1-2 years (most likely more than 1) in case you decide not to pursue the business anymore? I'd rather spend 2-5k on other things. Apart from being an absurdly high amount for something that can be read out easily from any sane accounting system (thanks Germany for basically forcing everyone to use Datev, which they obviously only sell to professionals, so that's how a simple task becomes 2k+ per year [0]). > Maybe they do want to make sure that the process stays legitimate That doesn't really solve the problem, I've had clients with GmBHs who ended up not paying what they owed me - just because they pay a lot to accountants, notary, the state etc. doesn't make the business more sound. Conversely, you can handle a legitimate business (e.g. selling expertise in form of consulting projects) much cheaper and with less time invested elsewhere. Maybe if everyone weren't wasting so much manpower on inefficient systems, things would actually work. The added burden of dealing with personal tax, the high price tag for it along with social welfare (which only helps in highly rare circumstances, e.g. when I literally don't have anything anymore - which I don't need because of what I've invested) and the time lost just don't add up. I've lived in many countries, small, large, rich, poor, and I think Germany is the worst among them to start a business (and also to live, but everyone has their preferences) unless you have a really good reason to be there. To start something you need flexibility, low overhead, and not to waste time you could be using to talk to customers and build something, rather than deal with bureaucracy. Germany offers neither. [0]: one quick note on the side, I've used Collmex to do my own accounting back then after I had to fire my tax accountant for absurd things I was being charged and to wrap up the business that I wasn't working on anymore. For me it worked out - in principle what is accounting: you want to track receipts and transform them into a balance sheet and P&L statement + a few of the extras you need in Germany, like VAT reporting. Still a massive pain to transform it into what the tax agency wants and get the info what that actually is, I think it's hard on purpose to waste people's time and direct them to tax accountants that overcharge. Anyway, time invested vs. paying someone to do it probably doesn't fully add up but I learned a bit more about accounting which is nice to have in any business context.
    - sooyoo 4y ago
      > I've lived in many countries, small, large, rich, poor, and I think Ger many is the worst among them to start a business (and also to live, but everyone has their preferences) unless you have a really good reason to be there. Try India. There was an HN post the other day about a guy who tried to set up some manufacturing and 2 years in he was still far away from all the permits. One thing the article we are discussing notably lacks is the mention of bribes. Obviously, you'd add, those would be illegal. Haha. True! They are illegal in India too. And in all other countries. But compared to some forms that are (outrageously!) in German, those re a real PITA. I'm living in Germany now, by choice, and it's a lovely country with lovely people. Not everything is perfect, but many of the imperfections contribute to the loveliness. Just like in many other countries, rich and poor.
dsnr 4y ago
> Then you have one year to liquidate. Not sure what’s difficult about it. What is funny is that germans don’t even realize how absurd this looks for the rest of the world. Compare this to closing a company in two weeks in the United States.
- Xylakant 4y ago
  Funny how the Americans don’t even realize how absurd that looks for the rest of the world. The reason for this is that the company must pay any outstanding debt before it can shut down - and you need to give creditors a window to write their invoices. And you’re legally allowed to write and collect on invoices for work (or deliveries) that date back up to three years. So what happens when you liquidate a GmbH is that a notice is placed in the register for all your creditors to see if you have an outstanding debt with them - and then you just have to wait.
  - harha 4y ago
    Well in theory that is. Who actually reads the notice and if the company hasn’t paid yet, how do you know they still have money? It’s a bureaucratic exercise that most countries manage to avoid.
    - Xylakant 4y ago
      The register is electronic and it’s common that people monitor it, especially if you have large sums outstanding. I have done so in the past. I know of multiple other cases where people monitored the register. If they don’t have money and outstanding debt, they can’t liquidate the company - they’ll need to file for bankruptcy, which is an entirely different thing.
    - nosianu 4y ago
      I closed a GmbH. How is this complicated? You don't have to do anything for or during that closing period! The only thing that happens is that you get the final "it's been closed for good now" after that period. I let the "Steuerberater" handle everything while the GmbH was active anyway, the fee was not that much. I just gave them all my receipts and they handled accounting completely. I was a bit pissed at the Steuerberater fees accumulating during closing, which were a bit much, but I negotiated that down significantly. But again, the least complicated part of it was having that waiting period. It had no impact on me whatsoever, not for taxes, not for anything. I just got a message after that time was over, and another one even later from the tax authorities that they are satisfied and would never retroactively look at the company again, so that I knew I would not get any tax surprises from them. Which I did get from the US IRS - years after leaving the US they wanted money from me. When you close the GmbH it's not like you have to keep anything. You really close it, bank account and all too. The waiting period has nothing to do with you, unless creditors show up. The only thing that happened was that that very final message about the final closing only comes after that period, without any creditors showing up it has no impact on you and you don't have to do or pay anything. I had had an "offene Handelsgesellschaft" (OHG) with someone before I had the GmbH. The limited liability company forms, GmbH and AG, are much worse than the ones with a fully liable owner. Those are much easier to set up, and they too can become quite big companies and are quite commonly in use in Germany even for established firms. But it's true, the effort around the liability corporation forms is enormous, and lots and lots of fees everywhere. You can shield yourself easily and outsource it all, but the got-to company form that Germany aimed for historically for the "common man" to quickly and easily set up a company was one of the two where one person or a group own the company and are liable. Limited liability was (still is) deliberately kept to be much more demanding. https://www.ihk.de/stuttgart/english/services2/business-support/legal-forms-of-doing-business-in-germany-3977966 https://www.ihk.de/stuttgart/english/services2/business-supp... Forms 3 and 4, and 5 in that list, sole proprietorships and general and limited partnerships. Here is a table with some numbers, how many firms of each form there are in three size categories by nr. of employees: https://www.destatis.de/DE/Themen/Branchen-Unternehmen/Unternehmen/Unternehmensregister/Tabellen/unternehmen-rechtsformen-wz08.html https://www.destatis.de/DE/Themen/Branchen-Unternehmen/Unter... (and just for comparison, the data for the US, scroll down for the table: https://tingen.law/2022/business-structure-statistics/54443/ https://tingen.law/2022/business-structure-statistics/54443/) Maybe too many people go for a GmbH too quickly? A KG with one main owner and partners only liable with their share and they can be any legal entity, so businesses instead of people can be a partner, would probably work just as well. I know I went for the GmbH form out of such stupidity, because it was "cool" and internationally it was the form everybody was talking about (limited liability. hey!) but I would have been better off with another form. The "limited liability" has very limited benefits if you are a new founder anyway, nobody is going to give the new company any credit without someone being liable in addition because creditors are not stupid.