21 ms·

Bootstrapping a SaaS Business in Germany: How I did it

148 points by alexzeitler 3y ago

OnlyMortal 3y ago
Nice write up. I wish the guy the best.
gumballindie 3y ago
This is such a european startup story - where most energy is spent setting up a company and navigating bureaucracy rather than building a product. If anyone wonders why europe has such a lower number of startups this is why. And it’s not the government at fault. It’s the culture. Like seriously just pay someone 200€ to do this on your behalf and focus on stuff that matters not the “legal gray area” of earning pocket change.
- mbrain 3y ago
  > where most energy is spent setting up a company and navigating bureaucracy maybe that's the goal of the system? Small players end up dying so big corps who can afford an army of accountants and lawyers prevail.
- dommer 3y ago
  [flagged]
- 1231112315123 3y ago
  Serious question: who would I hire for these kind of stuff? In a couple of situations, I decided to give software away for free to avoid the hassle. If there's a simple solution to get advice, I'd really appreciate that.
  - mtmail 3y ago
    An accountant can walk you though the steps. The author writes "The best approach is to start as an “Einzelunternehmer” (sole proprietor). You can register this at your local town hall for a nominal fee, and you’ll typically receive confirmation within a few days." When I did it the cost was 35 Euro, I think it depends on city. One can argue why this step can't be done online but until 2023 it wasn't possible to register a car online in Germany either. Then a letter to the local tax office (in Germany they're by city or region, not central. Then as the author says ignore VAT until you're over the threshold.
    - Makanantaa 3y ago
      The difference is that a GmbH projects your personal assets. The risk for a software engineere is small, much smaller than for a lot of other business but still it protects you. It also makes you a better business partner (in theory) as you have crossed a certain amount of effort to create a GmbH
- ThePhysicist 3y ago
  Not sure if it's so much easier in the US. If you sell things you e.g. have different sales tax requirements in every state, and if you have a Delaware C Corp you still need to do you taxes which usually requires an accountant. Overall the system isn't very different in Germany, I'd even say VAT tax rules for Europe are probably a bit easier than sales tax rules in the US. Founding a limited liability company takes 2-3 weeks here BTW, costs are around 2000 T€ I think. Maybe more expensive than opening a C Corp but not by much.
- mattmanser 3y ago
  In the UK you pay £12 online, fill in an address and it's done. So that's not true. It completely depends on the European country. And given the Germany is the economic powerhouse of the EU, their bureaucracy doesn't seem to be hurting them much.
  - FirmwareBurner 3y ago
    >And given the Germany is the economic powerhouse of the EU, their bureaucracy doesn't seem to be hurting them much. Germany is the "powerhouse of Europe", not because of start-ups and business friendly environment, but because of giant 100-year old dinosaurs like Siemens, Bosch, Daimler, VW, etc, who were innovative in the post-WW2 times and can afford all the lawyers and tax consultants the state could ever require them. But with US and China hot on their heels on areas that the German dinosaurs were champions like motor vehicles, and dominating all things internet related, they might not be a powerhouse 100 years from now if they don't improve and modernize their mentality and keep leaving bureaucracy and innovation to the retired boomers who grew up with "world powerhouse Germany".
  - nforgerit 3y ago
    German here. Germany's economy is mainly based on - 100y old inventions (automobile, chemistry). - Then some more diverse set of so-called "hidden champions" (German name for world-leaders of some very special physical engineering products) which will sooner or later be fed to some US or Chinese companies. - Some heavy industry which is currently leaving the country because of shenanigans in energy politics over the last two decades. - Some of the dinosaurs the sibling comment already stated - and finally lots of service businesses driven by MBAs and Legals who profit from the jungle German tax and law system is. They have zero interest in change and have been squeezing out the middle class in last 2-3 decades. Germany is in recession right now as the only of the G7 countries. This is because the cheap Russian energy cannot cover the structural problems anymore but business, taxation and bureaucratic mentality is putting the whole country down. Can't recommend anymore.
- alfonsodev 3y ago
  Yeah I think all you need to know about the "gray area" is the threshold of "tax evasion" or "tax fraud" in your country, and don't get even close to it, for me I'd still be worried to make a mistake and it would be on the back of my mind, so as you are saying, if you want to make things right and easy, incorporate a mini-GmbH, use professional help, and focus on your product.
- PedroBatista 3y ago
  This varies wildly from country to country and Germany is known for their anal retentive bureaucracy and obsession with paper. In many other countries who didn't have the mental anesthetics of "we are Germans, we are the best" and had to make a living and get competitive the process is much simpler ( not all, far from it ). Also, "in the US is very easy and cheap" is a fallacy. First companies don't exist "in the US", they exist in states and the amount of shenanigans also varies. Don't forget the US has a very adversarial culture and if you don't be careful and pay a significant amount of money ( when you have some traction ) to a decent lawyer/accountant it's all fine and good until you get yourself in hot water with the IRS mixed with some kind of Better call Saul episode. I have the general feeling the downside of things is much more lower in the US than in Europe, but I might be wrong.
  - jraby3 3y ago
    I’ve opened dozens of companies (ok about a dozen) in the US. I can’t speak for every state, but in Florida and Wyoming it’s really simple. Can be done online and you absolutely do not need a lawyer, not at the beginning and not years later.
  - jandrewrogers 3y ago
    The experience does vary widely with the State, but the process in the US is generally pretty easy and forgiving when you are a small company in my experience. In some States they were friendly, helpful, and accommodating when I made mistakes or didn't file some form I didn't know I needed, they understand that happens. California is the only State where I found the process to be consistently hostile.
  - paxys 3y ago
    You can get a business registered in Delaware in under 30 minutes by filling out a handful of forms online. If you don't want to do even that pay some service like Stripe Atlas $200-500 and the entire process will be down to minutes. There are still plenty of hurdles in running a tech startup in the US but bureaucracy is not one of them.
- jononor 3y ago
  Germany has a huge burocracy problem, but not all countries in Europe do. In Norway company registration is done online in around 15 minutes, for a 370 EUR fee. I am pretty sure Denmark, Sweden and Finland are the same. I have registered companied both in Germany and Norway, the processes are very different in terms of hurdles.
- gingerlime 3y ago
  pay who 200€? in Germany? just the notary fee is in the hundreds and you probably need a lawyer and an accountant for a UG/GmbH. I’m trying this now with a new venture. Already have an accountant. But they’re slow and nonresponsive. I tried shopping around and literally got turned down left and right with these types of messages: “Unfortunately we do not have the capacity to take on any new clients at the moment.” Lawyers can’t seem to advise on tax issues or how to best structure your business(es). Tax advisors cannot seem to actually create a company. It’s a total mess. At least for anything nontrivial and for me as a non-German. I thought maybe Estonia or someplace else in Europe, but the tax rules are such that if your center of operation is in Germany, you still need to do taxes here. If anyone has tips or good contacts (accountants lawyers etc), I’d love to hear.
  - FirmwareBurner 3y ago
    > but the tax rules are such that if your center of operation is in Germany, you still need to do taxes here. Then don't have the center of operations in Germany when there are lower-tax EU countries.
    - gingerlime 3y ago
      Not so easy when you have a family. To be clear, I don’t have a problem paying taxes in Germany. The problem for me is primarily how hard it is to set up a company and deal with bureaucracy here. And even though there are great alternatives like Estonia, they sadly don’t really solve the problem. In contrast, and I don’t know the US but how many people live in Delaware? :)
      - FirmwareBurner 3y ago
        >Not so easy when you have a family. Then you have to choose between entrepreneurship and family. Germany is the country to have a family and work for a company your whole life, not for business ventures.
epups 3y ago
This is a great resource, thank you very much! I have friends who opened small tech companies in Germany, and the prevalent feeling is fear. Fear of doing something wrong, not declaring the correct taxes, misunderstanding profitability, etc. This type of article makes the process much more understandable. I like the strategy of detailing which problems to ignore or push for later, this is very useful advice.
reneberlin 3y ago
Thank you for sharing and documenting your path! It's very, very interesting to me right now and came at the right time.
muhaaa 3y ago
Why a GmbH in Germany? Sorry, that was not a good idea and will costs you money and nerves to fix that. Now you are locked into Germany even if your business can be operated from everywhere around the globe. If you move the GmbH out of Germany you have to pay GmbH fair value ; fair value according to German Tax Authority! Do a Holding GmbH + Operative GmbH to accumulate wealth tax efficiently. You could have your company on your name (Personengesellschaft) and operate from across the globe, especially with cheaper taxes and living expenses OR even found a GmbH-like company in a cheap tax haven and do vacation in Germany.
- p00dles 3y ago
  You seem very knowledgeable about this… do you have any resources that you could point me to, or a Steuerberater that you would recommend?
  - muhaaa 3y ago
    I will write you an email to support@stagetimer.io later tonight.
- pudo 3y ago
  I think the days when you could just set up a company in some random country and run it from Germany are pretty over, the Finanzamt will just treat it as a domestic entity unless you can prove you've gone full nomad.
  - throwaway60722 3y ago
    You don't need to go full nomad, just spend half a year + 1 day out of Germany.
    - dappermanneke 3y ago
      the center of life criterion is much more encompassing than that if you get a serious audit
deleted 3y ago
[deleted]
jacomoRodriguez 3y ago
Question regarding the "Einzelunternehmer" vs "GmbH" topic: in terms of liability, going for the former seems a bit "optimistic" as you are personally liable, no? Depending on your business it might vary how high the dangers in this regards are, but for a SaaS business, DSGVO fines immediately come to mind.
- pudo 3y ago
  I worry that Lukas is about to find out about the business end of the Umwandlungssteuergesetz: converting a Einzelunternehmen to a GmbH is a surprising amount of faff, and once you've done it you (normally) end up with a company you can't easily sell for 7 years without paying some pretty hard-core taxes. I got to do this whole dance early this year, and it took a big bite of momentum out of the little bootstrap I was trying to pull. As weird as it sounds: German founders, consider just biting the bullet and doing a GmbH straight away. Conversion is no fun. And even worse, UGs are hated by everyone with a law degree for absolutely no reason, but they will try to make your life as difficult as they can just to show who is boss.
  - _antix 3y ago
    Author here. I appreciate your points. I started the business as a learning experience without any thought of the end game. Now that I am wiser and with some money a GmbH is the way to go for the next business.
  - slow_typist 3y ago
    While bootstrapping, you do not know whether you would ever want to go full GmbH. So biting the bullet is a little bit like betting on the future. You have considerably higher cost and hassle from day one on and would need a tax consultant for doing your yearly balances. Of course all the cool kids have GmbHs but do you really need it? Its main advantage is that you can sell it at once or in pieces if you need financing, but even that is manageable with an Einzelunternehmen. With regard to risk, the CEO of a GmbH is still personally liable for a lot of risks and liabilities including the social insurance payments of employees. Also, all risks you can get insurance for you should get insurance for regardless of the form of the enterprise. Agree that the UG is the worst choice since you are basically announcing you have zero savings behind and can generally not be trusted. If you want to get more serious with your Einzelunternehmen, you could also consider becoming an „e.K.“ (eingetragener Kaufmann). Same tax rules but full HGB (Handelsgesetzbuch, special law that governs interactions between companies) applies.
karim79 3y ago
As a bootstrapper of a German-based SaaS company myself, I've gotta say that I quite enjoyed the article. I would like to weigh in on specific parts of the article with some quick, if not exhaustive, comments: > Bootstrapping is tough, especially in the beginning. This couldn't be more true. Once the operation begins, that's when things start to get real. Cash starts to burn once the product moves from your laptop to its first production environment, and that usually happens well before the commercial go-live. Unless you have significant savings parachute should things go really badly, you are faced with the very real possibility of having to fully bail out once personal finances get to a critical point (e.g. not being able to cover rent, bills, food). Much bravery and faith is required to get through this very stressful phase. Expect to spend the early days and months praying for break-even. > One of the benefits of running a SaaS business is the low operational costs. For Stagetimer, I spent barely €20 per month on tech infrastructure. This really depends on what it is you're doing. If your service is computationally intensive and works on larger chunks of data as part of its offering, then it gets way more expensive. Bandwidth costs, compute costs (# of VMs/Cores/Threads, RAM, storage) all become pretty expensive. Costs will get more difficult to estimate as time progresses - for a few reasons: 1. Growth is hard to estimate, always, but especially when nCustomers == 0. 2. With increased load comes increased utilization of the infrastructure, which necessitates the need to know how much extra capacity should be available and what usage peaks look like. During the phase of winning your first customers and then some, you don't want to be in a position of getting frequent complaints about degraded performance, or worse, outages. Those things can kill you right at the start. Additionally, you probably shouldn't spend too much time solving scaling issues from the get-go before you have any reasonable traction. Finding a reasonable balance is tricky. 3. With scaling and spare capacity taken care of, you'll then start to see what your gross revenue really looks like and will likely start exploring ways to reduce your operational costs and squeeze out more margin by reducing the TCO, and ideally calculating the COGS for your product to get insights into how to reduce your fixed costs. > Pricing is a huge challenge in the SaaS space Oh God, yes. Good luck with this, especially if there's no precedent for the business type. If you're competing in a pre-existing product category then you can just spreadsheet the other offerings out there. If not, then you're basically guessing. In my opinion, you should always start with prices higher than what you think people will pay for. It's easy to go from higher to lower, but not vice-versa, especially at the very early stages. If there is an interest in the product and the pricing is on the high side, you'll likely get a lot of feedback. Be prepared to adjust your pricing and find a harmonious price point, but never rush this process. Don't forget, you can also negotiate prices directly with people who reach out to you. > Legal, taxes bureaucracy, company founding All of it is a pain. I'm quite sure that it's much easier in 2023 to explain what a SaaS is, to notars and tax accountants, than it was in 2013. Most tax accountancy firms will want to know stuff about your business before they agree to enrol you. In 2013 it was way more difficult to explain "customers send signals to our computers over the Internet and we send back signals containing the information their signals were asking for, and yes people will pay for this and mostly by credit card". Fun stuff. (There's a lot more I want to type but I have to step away for now) EDIT: Formatting
nforgerit 3y ago
German here. Congrats to your success. Now run away from Germany as fast as possible. It's not for evading taxes but for evading the crumbling German bureaucracy. I recommend having a look at Estonia's e-residency.

148 points by alexzeitler 3y ago

Nice write up. I wish the guy the best.

This is such a european startup story - where most energy is spent setting up a company and navigating bureaucracy rather than building a product. If anyone wonders why europe has such a lower number of startups this is why. And it’s not the government at fault. It’s the culture. Like seriously just pay someone 200€ to do this on your behalf and focus on stuff that matters not the “legal gray area” of earning pocket change.

mbrain 3y ago
> where most energy is spent setting up a company and navigating bureaucracy maybe that's the goal of the system? Small players end up dying so big corps who can afford an army of accountants and lawyers prevail.
dommer 3y ago
[flagged]
1231112315123 3y ago
Serious question: who would I hire for these kind of stuff? In a couple of situations, I decided to give software away for free to avoid the hassle. If there's a simple solution to get advice, I'd really appreciate that.
- mtmail 3y ago
  An accountant can walk you though the steps. The author writes "The best approach is to start as an “Einzelunternehmer” (sole proprietor). You can register this at your local town hall for a nominal fee, and you’ll typically receive confirmation within a few days." When I did it the cost was 35 Euro, I think it depends on city. One can argue why this step can't be done online but until 2023 it wasn't possible to register a car online in Germany either. Then a letter to the local tax office (in Germany they're by city or region, not central. Then as the author says ignore VAT until you're over the threshold.
  - Makanantaa 3y ago
    The difference is that a GmbH projects your personal assets. The risk for a software engineere is small, much smaller than for a lot of other business but still it protects you. It also makes you a better business partner (in theory) as you have crossed a certain amount of effort to create a GmbH
ThePhysicist 3y ago
Not sure if it's so much easier in the US. If you sell things you e.g. have different sales tax requirements in every state, and if you have a Delaware C Corp you still need to do you taxes which usually requires an accountant. Overall the system isn't very different in Germany, I'd even say VAT tax rules for Europe are probably a bit easier than sales tax rules in the US. Founding a limited liability company takes 2-3 weeks here BTW, costs are around 2000 T€ I think. Maybe more expensive than opening a C Corp but not by much.
mattmanser 3y ago
In the UK you pay £12 online, fill in an address and it's done. So that's not true. It completely depends on the European country. And given the Germany is the economic powerhouse of the EU, their bureaucracy doesn't seem to be hurting them much.
- FirmwareBurner 3y ago
  >And given the Germany is the economic powerhouse of the EU, their bureaucracy doesn't seem to be hurting them much. Germany is the "powerhouse of Europe", not because of start-ups and business friendly environment, but because of giant 100-year old dinosaurs like Siemens, Bosch, Daimler, VW, etc, who were innovative in the post-WW2 times and can afford all the lawyers and tax consultants the state could ever require them. But with US and China hot on their heels on areas that the German dinosaurs were champions like motor vehicles, and dominating all things internet related, they might not be a powerhouse 100 years from now if they don't improve and modernize their mentality and keep leaving bureaucracy and innovation to the retired boomers who grew up with "world powerhouse Germany".
- nforgerit 3y ago
  German here. Germany's economy is mainly based on - 100y old inventions (automobile, chemistry). - Then some more diverse set of so-called "hidden champions" (German name for world-leaders of some very special physical engineering products) which will sooner or later be fed to some US or Chinese companies. - Some heavy industry which is currently leaving the country because of shenanigans in energy politics over the last two decades. - Some of the dinosaurs the sibling comment already stated - and finally lots of service businesses driven by MBAs and Legals who profit from the jungle German tax and law system is. They have zero interest in change and have been squeezing out the middle class in last 2-3 decades. Germany is in recession right now as the only of the G7 countries. This is because the cheap Russian energy cannot cover the structural problems anymore but business, taxation and bureaucratic mentality is putting the whole country down. Can't recommend anymore.
alfonsodev 3y ago
Yeah I think all you need to know about the "gray area" is the threshold of "tax evasion" or "tax fraud" in your country, and don't get even close to it, for me I'd still be worried to make a mistake and it would be on the back of my mind, so as you are saying, if you want to make things right and easy, incorporate a mini-GmbH, use professional help, and focus on your product.
PedroBatista 3y ago
This varies wildly from country to country and Germany is known for their anal retentive bureaucracy and obsession with paper. In many other countries who didn't have the mental anesthetics of "we are Germans, we are the best" and had to make a living and get competitive the process is much simpler ( not all, far from it ). Also, "in the US is very easy and cheap" is a fallacy. First companies don't exist "in the US", they exist in states and the amount of shenanigans also varies. Don't forget the US has a very adversarial culture and if you don't be careful and pay a significant amount of money ( when you have some traction ) to a decent lawyer/accountant it's all fine and good until you get yourself in hot water with the IRS mixed with some kind of Better call Saul episode. I have the general feeling the downside of things is much more lower in the US than in Europe, but I might be wrong.
- jraby3 3y ago
  I’ve opened dozens of companies (ok about a dozen) in the US. I can’t speak for every state, but in Florida and Wyoming it’s really simple. Can be done online and you absolutely do not need a lawyer, not at the beginning and not years later.
- jandrewrogers 3y ago
  The experience does vary widely with the State, but the process in the US is generally pretty easy and forgiving when you are a small company in my experience. In some States they were friendly, helpful, and accommodating when I made mistakes or didn't file some form I didn't know I needed, they understand that happens. California is the only State where I found the process to be consistently hostile.
- paxys 3y ago
  You can get a business registered in Delaware in under 30 minutes by filling out a handful of forms online. If you don't want to do even that pay some service like Stripe Atlas $200-500 and the entire process will be down to minutes. There are still plenty of hurdles in running a tech startup in the US but bureaucracy is not one of them.
jononor 3y ago
Germany has a huge burocracy problem, but not all countries in Europe do. In Norway company registration is done online in around 15 minutes, for a 370 EUR fee. I am pretty sure Denmark, Sweden and Finland are the same. I have registered companied both in Germany and Norway, the processes are very different in terms of hurdles.
gingerlime 3y ago
pay who 200€? in Germany? just the notary fee is in the hundreds and you probably need a lawyer and an accountant for a UG/GmbH. I’m trying this now with a new venture. Already have an accountant. But they’re slow and nonresponsive. I tried shopping around and literally got turned down left and right with these types of messages: “Unfortunately we do not have the capacity to take on any new clients at the moment.” Lawyers can’t seem to advise on tax issues or how to best structure your business(es). Tax advisors cannot seem to actually create a company. It’s a total mess. At least for anything nontrivial and for me as a non-German. I thought maybe Estonia or someplace else in Europe, but the tax rules are such that if your center of operation is in Germany, you still need to do taxes here. If anyone has tips or good contacts (accountants lawyers etc), I’d love to hear.
- FirmwareBurner 3y ago
  > but the tax rules are such that if your center of operation is in Germany, you still need to do taxes here. Then don't have the center of operations in Germany when there are lower-tax EU countries.
  - gingerlime 3y ago
    Not so easy when you have a family. To be clear, I don’t have a problem paying taxes in Germany. The problem for me is primarily how hard it is to set up a company and deal with bureaucracy here. And even though there are great alternatives like Estonia, they sadly don’t really solve the problem. In contrast, and I don’t know the US but how many people live in Delaware? :)
    - FirmwareBurner 3y ago
      >Not so easy when you have a family. Then you have to choose between entrepreneurship and family. Germany is the country to have a family and work for a company your whole life, not for business ventures.

epups 3y ago

This is a great resource, thank you very much! I have friends who opened small tech companies in Germany, and the prevalent feeling is fear. Fear of doing something wrong, not declaring the correct taxes, misunderstanding profitability, etc. This type of article makes the process much more understandable. I like the strategy of detailing which problems to ignore or push for later, this is very useful advice.

reneberlin 3y ago

Thank you for sharing and documenting your path! It's very, very interesting to me right now and came at the right time.

muhaaa 3y ago

Why a GmbH in Germany? Sorry, that was not a good idea and will costs you money and nerves to fix that. Now you are locked into Germany even if your business can be operated from everywhere around the globe. If you move the GmbH out of Germany you have to pay GmbH fair value ; fair value according to German Tax Authority! Do a Holding GmbH + Operative GmbH to accumulate wealth tax efficiently. You could have your company on your name (Personengesellschaft) and operate from across the globe, especially with cheaper taxes and living expenses OR even found a GmbH-like company in a cheap tax haven and do vacation in Germany.

p00dles 3y ago
You seem very knowledgeable about this… do you have any resources that you could point me to, or a Steuerberater that you would recommend?
- muhaaa 3y ago
  I will write you an email to support@stagetimer.io later tonight.
pudo 3y ago
I think the days when you could just set up a company in some random country and run it from Germany are pretty over, the Finanzamt will just treat it as a domestic entity unless you can prove you've gone full nomad.
- throwaway60722 3y ago
  You don't need to go full nomad, just spend half a year + 1 day out of Germany.
  - dappermanneke 3y ago
    the center of life criterion is much more encompassing than that if you get a serious audit

deleted 3y ago

[deleted]

jacomoRodriguez 3y ago

Question regarding the "Einzelunternehmer" vs "GmbH" topic: in terms of liability, going for the former seems a bit "optimistic" as you are personally liable, no? Depending on your business it might vary how high the dangers in this regards are, but for a SaaS business, DSGVO fines immediately come to mind.

pudo 3y ago
I worry that Lukas is about to find out about the business end of the Umwandlungssteuergesetz: converting a Einzelunternehmen to a GmbH is a surprising amount of faff, and once you've done it you (normally) end up with a company you can't easily sell for 7 years without paying some pretty hard-core taxes. I got to do this whole dance early this year, and it took a big bite of momentum out of the little bootstrap I was trying to pull. As weird as it sounds: German founders, consider just biting the bullet and doing a GmbH straight away. Conversion is no fun. And even worse, UGs are hated by everyone with a law degree for absolutely no reason, but they will try to make your life as difficult as they can just to show who is boss.
- _antix 3y ago
  Author here. I appreciate your points. I started the business as a learning experience without any thought of the end game. Now that I am wiser and with some money a GmbH is the way to go for the next business.
- slow_typist 3y ago
  While bootstrapping, you do not know whether you would ever want to go full GmbH. So biting the bullet is a little bit like betting on the future. You have considerably higher cost and hassle from day one on and would need a tax consultant for doing your yearly balances. Of course all the cool kids have GmbHs but do you really need it? Its main advantage is that you can sell it at once or in pieces if you need financing, but even that is manageable with an Einzelunternehmen. With regard to risk, the CEO of a GmbH is still personally liable for a lot of risks and liabilities including the social insurance payments of employees. Also, all risks you can get insurance for you should get insurance for regardless of the form of the enterprise. Agree that the UG is the worst choice since you are basically announcing you have zero savings behind and can generally not be trusted. If you want to get more serious with your Einzelunternehmen, you could also consider becoming an „e.K.“ (eingetragener Kaufmann). Same tax rules but full HGB (Handelsgesetzbuch, special law that governs interactions between companies) applies.

karim79 3y ago

As a bootstrapper of a German-based SaaS company myself, I've gotta say that I quite enjoyed the article. I would like to weigh in on specific parts of the article with some quick, if not exhaustive, comments: > Bootstrapping is tough, especially in the beginning. This couldn't be more true. Once the operation begins, that's when things start to get real. Cash starts to burn once the product moves from your laptop to its first production environment, and that usually happens well before the commercial go-live. Unless you have significant savings parachute should things go really badly, you are faced with the very real possibility of having to fully bail out once personal finances get to a critical point (e.g. not being able to cover rent, bills, food). Much bravery and faith is required to get through this very stressful phase. Expect to spend the early days and months praying for break-even. > One of the benefits of running a SaaS business is the low operational costs. For Stagetimer, I spent barely €20 per month on tech infrastructure. This really depends on what it is you're doing. If your service is computationally intensive and works on larger chunks of data as part of its offering, then it gets way more expensive. Bandwidth costs, compute costs (# of VMs/Cores/Threads, RAM, storage) all become pretty expensive. Costs will get more difficult to estimate as time progresses - for a few reasons: 1. Growth is hard to estimate, always, but especially when nCustomers == 0. 2. With increased load comes increased utilization of the infrastructure, which necessitates the need to know how much extra capacity should be available and what usage peaks look like. During the phase of winning your first customers and then some, you don't want to be in a position of getting frequent complaints about degraded performance, or worse, outages. Those things can kill you right at the start. Additionally, you probably shouldn't spend too much time solving scaling issues from the get-go before you have any reasonable traction. Finding a reasonable balance is tricky. 3. With scaling and spare capacity taken care of, you'll then start to see what your gross revenue really looks like and will likely start exploring ways to reduce your operational costs and squeeze out more margin by reducing the TCO, and ideally calculating the COGS for your product to get insights into how to reduce your fixed costs. > Pricing is a huge challenge in the SaaS space Oh God, yes. Good luck with this, especially if there's no precedent for the business type. If you're competing in a pre-existing product category then you can just spreadsheet the other offerings out there. If not, then you're basically guessing. In my opinion, you should always start with prices higher than what you think people will pay for. It's easy to go from higher to lower, but not vice-versa, especially at the very early stages. If there is an interest in the product and the pricing is on the high side, you'll likely get a lot of feedback. Be prepared to adjust your pricing and find a harmonious price point, but never rush this process. Don't forget, you can also negotiate prices directly with people who reach out to you. > Legal, taxes bureaucracy, company founding All of it is a pain. I'm quite sure that it's much easier in 2023 to explain what a SaaS is, to notars and tax accountants, than it was in 2013. Most tax accountancy firms will want to know stuff about your business before they agree to enrol you. In 2013 it was way more difficult to explain "customers send signals to our computers over the Internet and we send back signals containing the information their signals were asking for, and yes people will pay for this and mostly by credit card". Fun stuff. (There's a lot more I want to type but I have to step away for now) EDIT: Formatting

nforgerit 3y ago

German here. Congrats to your success. Now run away from Germany as fast as possible. It's not for evading taxes but for evading the crumbling German bureaucracy. I recommend having a look at Estonia's e-residency.