7 ms·

Unless you're opening companies on a daily basis to evade taxes or whatever, I fail to see why you would need the process to be that fast. Because with such sho

Unless you're opening companies on a daily basis to evade taxes or whatever, I fail to see why you would need the process to be that fast. Because with such short delays, nobody will have actually checked anything, so the only winners are fraudsters, in the end.

blackhawkC17 3y ago
Ease of doing business is one of the top things to look at in any country. It’s on law enforcement and regulators to counter fraudsters. Ordinary citizens should not bear pain because of them.
_dain_ 3y ago
Every little speed bump you put in the way will deter some people on the margin.
- yau8edq12i 3y ago
  If you have 25k€ of capital but get flustered because the state wants to make sure that you are not opening a shell company for someone else and that your articles of incorporation are legally valid, then maybe you need to rethink something.
  - _dain_ 3y ago
    I disagree. 25k euro is simultaneously a large and not a large amount of money. It's big enough to lock out many potential small business founders. But also many ordinary inexperienced people can have that amount of money up front, yet still be deterred by the complexity of a 6 week long incorporation process as described in this article. Especially in the early days of a company when your stress level is already through the roof dealing with the actual problems of your new business. I am generally suspicious of rhetoric like "you're a little well off, so we can heap arbitrary amounts of bullshit on you and you shouldn't complain".
    - yau8edq12i 3y ago
      > It's big enough to lock out many potential small business founders. They can open an Einzelunternehmen (sole proprietorship) instead. You shouldn't (and cannot) go all the way to the complexities of a GmbH (LLC) if your company is that tiny. > But also many ordinary inexperienced people can have that amount of money up front, yet still be deterred by the complexity of a 6 week long incorporation process as described in this article. Back to my point then. If they're not ready to put up with okay-ish bureaucratic friction in the founding phase, they're not ready to open a company. Because if you think opening the company is hard, wait until payroll or tax season is upon you. > I am generally suspicious of rhetoric like "you're a little well off, so we can heap arbitrary amounts of bullshit on you and you shouldn't complain". You're completely mischaracterizing what I said. Don't do that.
      - _dain_ 3y ago
        >They can open an Einzelunternehmen (sole proprietorship) instead. Sole proprietorship doesn't have liability protection. That's not a small thing. >You shouldn't (and cannot) go all the way to the complexities of a GmbH (LLC) if your company is that tiny. "[Thing] is too complex, don't bother with it" is not an argument against making [thing] less complex. It's actually just a restatement of the problem! Other countries make it easy to set up a limited company. UK, US, Singapore, they're all just a token fee and a handful of forms. I see no reason for Germany to make it so difficult as described in the article. A lot of successful companies were started by broke college grads out of their dorms; they would never have gotten off the ground if they had to scrounge together the equivalent 25k euros before even getting started. Hell, I don't have a spare 25k lying around and I've been working full time for 4 years.
        pantalaimon 3y ago
        You can create a UG (haftungsbeschränkt) with all the lability protection of a GmbH with 1€ capital.
        rad_gruchalski 3y ago
  - bouncing 3y ago
    I had my first LLC in grade school over a summer. I didn’t make a ton of money, but I did earn enough for my first real computer, which launched my interest in programming. When my wife started her current business as a consultant, she was living off her savings from teaching high school. If you think every entrepreneur has €25k of capital, you need to reevaluate what your country thinks of entrepreneurship.
    - Scarblac 3y ago
      Why did that need limited liability though? In Germany you'd just become an entrepreneur with a simpler company type without limited liability.
      - bouncing 3y ago
        So your liability is limited. That’s like asking why you need a seatbelt. You can get the simple company type (disregarded entity) and all the advantages of limited liability with an LLC.
      - paleotrope 3y ago
        Do you want to take the risk of losing your home just to start a business?
        Scarblac 3y ago
        Maybe the real difference is that such things might be possible in the US, but sound laughable in Europe? What would you need to mess up to be liable for huge sums as a single consultant company?
        xenospn 3y ago
        There’s tax benefits and other business-only products that require a business entity. Imagine if you’re a consultant and for whatever reason, you get sued or worse. That’s what the LLC is for.
        3y ago
- bildung 3y ago
  And yet the self-employment rate in Germany seems to be higher than in the US: https://genderdata.worldbank.org/indicators/sl-emp-self-zs/?gender=total https://genderdata.worldbank.org/indicators/sl-emp-self-zs/?...
  - tticvs 3y ago
    Most self-employed people in Germany operate as "Kleinunternehmer" and therefore lack the liability protections provided by the LLC equivalent discussed in the article. It's apples to oranges.
  - lttlrck 3y ago
    That depends how they defined self-employed. It could vary widely based on which vehicle was used, LLC, LTD, sole-proprietor. And LLC and LTD is ambiguous, yet easy to attain outside Germany.
shaism 3y ago
I think the time is not necessarily the issue. The issue is that everything is very manual and “analog” in Germany. You have to find a notary, register the “Gewerbe” at the Gewerbeamt, get a tax ID, and so forth. All are different processes with different institutions. In theory, you can do the notarization online, but when I attempted to do it, the first notary did not even reply, and the second one told me: “The system is currently down. I would need to come to the office.” In the US, you can just use Stripe Atlas or similar services, and get everything done for $500 in a nice digital interface within 2 or 3 days. But even if it took 2 weeks, it wouldn’t matter much because one doesn’t have to put time and energy into it whereas in Germany you have to contact people, coordinate, etc…
- yau8edq12i 3y ago
  The friction is precisely the point.
  - awesomeMilou 3y ago
    It is and it isn't. The IHK registration is a sham, since they're a government protected cartel that don't even act in the interests of those they're supposed to guard (like Azubis).
  - tverbeure 3y ago
    These kind of frictions are typically not an exception. When I read this blog post about the steps to just start a business, I immediately assume that there'll be similar frictions during other steps. And indeed, the comments here talk about the difficulty to own a home when the money was already paid in October, how it can take up to 2 years to close down a company, or how there's a 30% exit tax even if you leave the country only for a few years. The friction that you seem to like has almost certainly cost Germany a good deal of jobs from people who decides that the hassle just wasn't worth it.
  - Aerbil313 3y ago
    Security through friction is not an ideal security model at all.
bouncing 3y ago
Your individual identity is tied to the EIN, LLC, and bank account. I doubt it’s that useful for tax evasion. Each little step of friction discourages some entrepreneurs and adds barriers to entry for incumbents to prevent competition. And just in general, not doing something very often is not a valid reason for making it needlessly expensive and time consuming.
logicchains 3y ago
When you have hundreds of millions of people in a country, there's a lot of companies being opened on a daily basis, and the time wasted on bureaucracy quickly adds up to a dent in overall national productivity.
arp242 3y ago
It doesn't need to be that fast, but the process in some (or maybe even many?) EU countries is rather ridiculous, as described here. Anyone should be able to start a business, reasonably easily and cheaply – I feel it's a matter of basic freedom and liberty: you should be able to do what you bloody well want with your life, including starting a business. Basic protections to prevent the most egregious of abuse is fine, but mostly it's just about registration and paperwork. Having to pay tens of thousands of euros for limited liability so you don't risk getting completely assraped if your business fails is how you keep the poor plebs in their place. All of this is classic "one set of rules for the poor, another set of rules for the rich" type of stuff.
anaidenov 3y ago
A seasoned fraudster or tax evader have all the experience, time, and resources to navigate and exploit the system regardless of the measures in place. On the other hand, an ordinary individual considering starting a new business, perhaps only a few times in their lifetime, may indeed be dissuaded from pursuing this venture. This issue mirrors the inefficacy of anti-money laundering policies, which, while intended to curb criminal activities, have a negligible impact estimated at merely 0.1%; but the global cost of implementing these policies exceeds their benefits of two orders of magnitude (see DOI:10.1080/25741292.2020.1725366 for details).
- nickpsecurity 3y ago
  For anyone reading, here’s a URL for the paper they are taking about: https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1725366 https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1...
- redrove 3y ago
  Excellently put, I couldn’t agree more! If you’re an entrepreneur AML will cause you nothing but harm while the rich avoid it through the caribbean, Luxembourg, Monaco, Switzerland, etc.
paulddraper 3y ago
Do you actually need to do it in 2 hours? No, of course not. And you probably won't do it that fast anyway. But that figure demonstrates the small amount of red tape.
nickpsecurity 3y ago
What you are actually saying is that speed is only for criminals and anything honest must drag out for a long time. Neither are true. Starting this process should only require that they know their responsibilities, have identified themselves, and have fulfilled any obligations like payment. With government having our ID’s and login/sig/payment tech, each step should be done in seconds. Then, some fraud prevention spotting obvious issues might add a bit more time. It should still be quick.
matchbok 3y ago
There is not less fraud in Germany. Time does not equal quality or validity. It just means time.
benced 3y ago
I don’t like this mindset that just because an individual can see why something needs to be better, it shouldn’t be.
data_maan 3y ago
Process is too fast... Are you a German? :D :D
rad_gruchalski 3y ago
WireCard GmbH AG, thanks commenter from below.
- nolist_policy 3y ago
  Come on. WireCard AG
  - rad_gruchalski 3y ago
    Even better heh.
mNovak 3y ago
Just because something is important doesn't mean it has to be inconvenient. A lot of people conflate opening a business with a major life event and embarking on a career, where a few weeks of admin is some kind of minimum commitment. But the whole idea is that we should allow for small organic "side hustles" and growth. Here in the US (at least in entrepreneurial circles) it's common advice to wrap an LLC around anything that involves money. Hobby website starting to get some traffic? LLC. Selling earrings at the craft fair? LLC. I own a small building with my brother--you bet there's an LLC there. I started a $0 capital consulting company while a post-doc, just to try. It's not a daily occurrence, but often enough that I don't want to waste time.
geraldhh 3y ago
some ppl want to have good data, others are scrambling to get anything

blackhawkC17 3y ago

Ease of doing business is one of the top things to look at in any country. It’s on law enforcement and regulators to counter fraudsters. Ordinary citizens should not bear pain because of them.

_dain_ 3y ago

Every little speed bump you put in the way will deter some people on the margin.

yau8edq12i 3y ago
If you have 25k€ of capital but get flustered because the state wants to make sure that you are not opening a shell company for someone else and that your articles of incorporation are legally valid, then maybe you need to rethink something.
- _dain_ 3y ago
  I disagree. 25k euro is simultaneously a large and not a large amount of money. It's big enough to lock out many potential small business founders. But also many ordinary inexperienced people can have that amount of money up front, yet still be deterred by the complexity of a 6 week long incorporation process as described in this article. Especially in the early days of a company when your stress level is already through the roof dealing with the actual problems of your new business. I am generally suspicious of rhetoric like "you're a little well off, so we can heap arbitrary amounts of bullshit on you and you shouldn't complain".
  - yau8edq12i 3y ago
    > It's big enough to lock out many potential small business founders. They can open an Einzelunternehmen (sole proprietorship) instead. You shouldn't (and cannot) go all the way to the complexities of a GmbH (LLC) if your company is that tiny. > But also many ordinary inexperienced people can have that amount of money up front, yet still be deterred by the complexity of a 6 week long incorporation process as described in this article. Back to my point then. If they're not ready to put up with okay-ish bureaucratic friction in the founding phase, they're not ready to open a company. Because if you think opening the company is hard, wait until payroll or tax season is upon you. > I am generally suspicious of rhetoric like "you're a little well off, so we can heap arbitrary amounts of bullshit on you and you shouldn't complain". You're completely mischaracterizing what I said. Don't do that.
    - _dain_ 3y ago
      >They can open an Einzelunternehmen (sole proprietorship) instead. Sole proprietorship doesn't have liability protection. That's not a small thing. >You shouldn't (and cannot) go all the way to the complexities of a GmbH (LLC) if your company is that tiny. "[Thing] is too complex, don't bother with it" is not an argument against making [thing] less complex. It's actually just a restatement of the problem! Other countries make it easy to set up a limited company. UK, US, Singapore, they're all just a token fee and a handful of forms. I see no reason for Germany to make it so difficult as described in the article. A lot of successful companies were started by broke college grads out of their dorms; they would never have gotten off the ground if they had to scrounge together the equivalent 25k euros before even getting started. Hell, I don't have a spare 25k lying around and I've been working full time for 4 years.
      - pantalaimon 3y ago
        You can create a UG (haftungsbeschränkt) with all the lability protection of a GmbH with 1€ capital.
        rad_gruchalski 3y ago
- bouncing 3y ago
  I had my first LLC in grade school over a summer. I didn’t make a ton of money, but I did earn enough for my first real computer, which launched my interest in programming. When my wife started her current business as a consultant, she was living off her savings from teaching high school. If you think every entrepreneur has €25k of capital, you need to reevaluate what your country thinks of entrepreneurship.
  - Scarblac 3y ago
    Why did that need limited liability though? In Germany you'd just become an entrepreneur with a simpler company type without limited liability.
    - bouncing 3y ago
      So your liability is limited. That’s like asking why you need a seatbelt. You can get the simple company type (disregarded entity) and all the advantages of limited liability with an LLC.
    - paleotrope 3y ago
      Do you want to take the risk of losing your home just to start a business?
      - Scarblac 3y ago
        Maybe the real difference is that such things might be possible in the US, but sound laughable in Europe? What would you need to mess up to be liable for huge sums as a single consultant company?
        xenospn 3y ago
        There’s tax benefits and other business-only products that require a business entity. Imagine if you’re a consultant and for whatever reason, you get sued or worse. That’s what the LLC is for.
        3y ago
bildung 3y ago
And yet the self-employment rate in Germany seems to be higher than in the US: https://genderdata.worldbank.org/indicators/sl-emp-self-zs/?gender=total https://genderdata.worldbank.org/indicators/sl-emp-self-zs/?...
- tticvs 3y ago
  Most self-employed people in Germany operate as "Kleinunternehmer" and therefore lack the liability protections provided by the LLC equivalent discussed in the article. It's apples to oranges.
- lttlrck 3y ago
  That depends how they defined self-employed. It could vary widely based on which vehicle was used, LLC, LTD, sole-proprietor. And LLC and LTD is ambiguous, yet easy to attain outside Germany.

shaism 3y ago

I think the time is not necessarily the issue. The issue is that everything is very manual and “analog” in Germany. You have to find a notary, register the “Gewerbe” at the Gewerbeamt, get a tax ID, and so forth. All are different processes with different institutions. In theory, you can do the notarization online, but when I attempted to do it, the first notary did not even reply, and the second one told me: “The system is currently down. I would need to come to the office.” In the US, you can just use Stripe Atlas or similar services, and get everything done for $500 in a nice digital interface within 2 or 3 days. But even if it took 2 weeks, it wouldn’t matter much because one doesn’t have to put time and energy into it whereas in Germany you have to contact people, coordinate, etc…

yau8edq12i 3y ago
The friction is precisely the point.
- awesomeMilou 3y ago
  It is and it isn't. The IHK registration is a sham, since they're a government protected cartel that don't even act in the interests of those they're supposed to guard (like Azubis).
- tverbeure 3y ago
  These kind of frictions are typically not an exception. When I read this blog post about the steps to just start a business, I immediately assume that there'll be similar frictions during other steps. And indeed, the comments here talk about the difficulty to own a home when the money was already paid in October, how it can take up to 2 years to close down a company, or how there's a 30% exit tax even if you leave the country only for a few years. The friction that you seem to like has almost certainly cost Germany a good deal of jobs from people who decides that the hassle just wasn't worth it.
- Aerbil313 3y ago
  Security through friction is not an ideal security model at all.

bouncing 3y ago

Your individual identity is tied to the EIN, LLC, and bank account. I doubt it’s that useful for tax evasion. Each little step of friction discourages some entrepreneurs and adds barriers to entry for incumbents to prevent competition. And just in general, not doing something very often is not a valid reason for making it needlessly expensive and time consuming.

logicchains 3y ago

When you have hundreds of millions of people in a country, there's a lot of companies being opened on a daily basis, and the time wasted on bureaucracy quickly adds up to a dent in overall national productivity.

arp242 3y ago

It doesn't need to be that fast, but the process in some (or maybe even many?) EU countries is rather ridiculous, as described here. Anyone should be able to start a business, reasonably easily and cheaply – I feel it's a matter of basic freedom and liberty: you should be able to do what you bloody well want with your life, including starting a business. Basic protections to prevent the most egregious of abuse is fine, but mostly it's just about registration and paperwork. Having to pay tens of thousands of euros for limited liability so you don't risk getting completely assraped if your business fails is how you keep the poor plebs in their place. All of this is classic "one set of rules for the poor, another set of rules for the rich" type of stuff.

anaidenov 3y ago

A seasoned fraudster or tax evader have all the experience, time, and resources to navigate and exploit the system regardless of the measures in place. On the other hand, an ordinary individual considering starting a new business, perhaps only a few times in their lifetime, may indeed be dissuaded from pursuing this venture. This issue mirrors the inefficacy of anti-money laundering policies, which, while intended to curb criminal activities, have a negligible impact estimated at merely 0.1%; but the global cost of implementing these policies exceeds their benefits of two orders of magnitude (see DOI:10.1080/25741292.2020.1725366 for details).

nickpsecurity 3y ago
For anyone reading, here’s a URL for the paper they are taking about: https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1725366 https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1...
redrove 3y ago
Excellently put, I couldn’t agree more! If you’re an entrepreneur AML will cause you nothing but harm while the rich avoid it through the caribbean, Luxembourg, Monaco, Switzerland, etc.

paulddraper 3y ago

Do you actually need to do it in 2 hours? No, of course not. And you probably won't do it that fast anyway. But that figure demonstrates the small amount of red tape.

nickpsecurity 3y ago

What you are actually saying is that speed is only for criminals and anything honest must drag out for a long time. Neither are true. Starting this process should only require that they know their responsibilities, have identified themselves, and have fulfilled any obligations like payment. With government having our ID’s and login/sig/payment tech, each step should be done in seconds. Then, some fraud prevention spotting obvious issues might add a bit more time. It should still be quick.

matchbok 3y ago

There is not less fraud in Germany. Time does not equal quality or validity. It just means time.

benced 3y ago

I don’t like this mindset that just because an individual can see why something needs to be better, it shouldn’t be.

data_maan 3y ago

Process is too fast... Are you a German? :D :D

rad_gruchalski 3y ago

WireCard GmbH AG, thanks commenter from below.

nolist_policy 3y ago
Come on. WireCard AG
- rad_gruchalski 3y ago
  Even better heh.

mNovak 3y ago

Just because something is important doesn't mean it has to be inconvenient. A lot of people conflate opening a business with a major life event and embarking on a career, where a few weeks of admin is some kind of minimum commitment. But the whole idea is that we should allow for small organic "side hustles" and growth. Here in the US (at least in entrepreneurial circles) it's common advice to wrap an LLC around anything that involves money. Hobby website starting to get some traffic? LLC. Selling earrings at the craft fair? LLC. I own a small building with my brother--you bet there's an LLC there. I started a $0 capital consulting company while a post-doc, just to try. It's not a daily occurrence, but often enough that I don't want to waste time.

geraldhh 3y ago

some ppl want to have good data, others are scrambling to get anything