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It's also connected to so much bureaucracy that you almost need to hire someone for that alone, because you wont have as much time for your actual business. Fou
by zwnow 2y ago
It's also connected to so much bureaucracy that you almost need to hire someone for that alone, because you wont have as much time for your actual business. Founding a company in Germany is so much unnecessary paperwork its crazy. Single handedly the only reason I will never try it in my home country.
- i_am_a_peasant 2y agoSome still do it. And while I would never start my own company in Germany. Working at a startup in Germnay is going pretty well for me so far. 1.5 years in.
- zwnow 2y agoYe been working in a startup as well. I just witness all the appointments my boss has to go through and I could never do that. But I'm also the type of person not picking up their phone when it rings.
- flessner 2y agoActually just founding the company is the easy part nowadays. You can do it online or let a notary work it out for you. It's just everything else that's dreadful.
- earthnail 2y agoSmall German business owner here. I still find the notary egregious. But yeah, the admin afterwards is facepalming. Had a startup in the UK before; that was a walk in the park in comparison.
- martin_a 2y agoNot true. Go to your hometown administration, pay 35 Euro and leave 15 minutes later with a "Gewerbeanmeldung" which enables you to start doing business right away.
- greenavocado 2y agoYou are lying by omission. The Gewerbeanmeldung typically registers you as a sole proprietor (Einzelunternehmer) or GbR (partnership). Most tech startups need a limited liability structure like GmbH (similar to LLC) or UG. Those require notarized founding documents, minimum capital requirements (€25,000 for GmbH), and a commercial register entry (Handelsregister) The simple Gewerbeanmeldung structure is problematic for venture capital because most VCs require a corporate entity structure (GmbH/UG) and converting from a simple structure to a proper corporation later can trigger tax consequences. At each investment round all shareholders must appear before a notary or provide notarized power of attorney, the entire investment agreement must be read aloud by the notary, changes to company documents require notarization, and each notarization costs thousands of euros and creates delays. Major decisions which are likely to affect shareholders require formal shareholder meetings with proper notice periods. Unanimous consent is often required for key decisions. Capital increases must be executed through complex formal processes. Registration with the commercial register takes weeks. Minimum nominal values of shares restrict flexibility. Required reporting to tax authorities is extensive. I can go on and on. And don't even get me started about German employee stock option plans.
- martin_a 2y ago> Most tech startups need a limited liability structure like GmbH (similar to LLC) or UG. Meh, do they really? Only if they want to go the VC route. But in this topic we're talking about more healthy ways to build and grow a company and for that you don't need a GmbH or GbR to start.
- greenavocado 2y agoYou are effectively locking yourself out of the outside investment route if you choose to do this.
- mikigraf 2y agoAnd open up for liability
- Fokamul 2y agoComparing to what country? A lot of EU countries has big administration.
- k__ 2y agoTechnically, you can just ask your co-founder if they want to found a company with you and if they say yes, you did it.
- Bewelge 2y agoI agree that the process is unnecessarily complex, but I also think hiring someone for that would be the wise choice in most places anyway. And even in Germany hiring someone for that would probably amount to paying 500-1000€ for the whole registration of the company instead of doing everything yourself and only paying the 100-200€ notary fees. It's not as bad as you might think. > I will never try it in my home country. May I ask, where would you try it? As I understand it, it's not really possible to found in a different European country while you're still living in Germany.
- zwnow 2y agoI never thought about founding my own company while living in Germany. I hate this countries bureaucracy to the core. If I ever wanted to found one, I'd first move out of Germany.
- wombatpm 2y agoGerman Bureaucracy: see Th Trial by Franz Kafka for a fictional view that is surprisingly accurate
- echelon 2y agoIt's so easy (relative to this) to just go grab a SAFE. No strings, no bureaucracy. You can structure your endeavor however you want. And you can sometimes do it with just a conversation.
- pembrook 2y ago> but I also think hiring someone for [government paperwork] would be the wise choice in most places anyway. I’m not sure if you’ve ever tried founding a business or fundraising in any other non-Germany country, but this is an insane thing to say imo. Is this why Germany has no globally relevant software (or hardware tbh) companies founded in the last 40 years? Are we sure we want to be holding up this model as an example of “a good one”?
- dinoqqq 2y ago
- jpfr 2y agoI just founded in Germany. The paperwork is … okay. Not much more crazy than tax returns or internal accounting you need to do in any jurisdiction. But yes, running any organization is a lot of work.
- toomuchtodo 2y agoIs there an opportunity to streamline the paperwork mentioned to reduce friction for founding in Germany?
- hijodelsol 2y agoYes, there are ways to buy up existing “empty” companies with a bank account, commercial registration, etc. If you want to found a new one, there are also services that will prepare all paperwork and set up appointments with notaries, etc. for you for affordable prices Day to day operations do generally not require much else than bookkeeping and accounting which you can almost fully outsource (though accountant fees are not cheap, however, doing it yourself is also not to hard if you have the right software and do not sell thousands of different products) unless you are in specific industries There are a few unnecessary fees and it takes longer than it should to get started but for most businesses it does not really matter and is limited in scope when it comes to time and money needed
- DiggyJohnson 2y agoThis makes it sound like a lot of unnecessary work…
- hobofan 2y agoThere are already services that do that, e.g. firma.de[0] But in general, not really. I also just founded a GmbH in Germany, and the paperwork really isn't that crazy, and for the more complicated parts you'll generally will want to have a tax advisor you are going to have a long-term relationship with (rather than a one-off founding service). I considered using a founding service, but ultimately, most of the "hard parts" about the process is in understanding what agency you have to talk to for what parts, which you'll have to learn anyways if you want to run a business in a way that doesn't land you in jail, so the benefits of such a service are marginal. The only real way to streamline it would be to deregulate the process (e.g. getting rid of notary requirement). [0]: https://www.firma.de https://www.firma.de
- shafyy 2y agoI have founded multiple companies in Germany and in the US. Sure, in the US you have services like Stripe Atlas that make it a bit easier. But still, I would not say it's much crazier registering a company in Germany compared to the US. Of course, it helps if you have a bit of an idea of legal concepts and accounting, but to be honest, that also makes sense, since you are starting a business. This is not to say that we should not work to make it less bureaucratic in Germany (and other countries). I agree that applying to loan and grant programs within Germany, and especially EU, are a super pain in the ass. I definitely see some potential there.
- tptacek 2y agoYou can essentially create an LLC in Delaware (from anywhere in the country) as easily as you can create an Amazon account, so that's a big claim.
- epolanski 2y agoYou can create a full blow corporation in Delaware from Europe in an easier way that you can open here. Anyway, the benefits go beyond how easy it is to open, the most important things are moving forward with things like stock options, issuing shares, creating preferred ones, etc, etc, taxes access to funding, etc..
- tptacek 2y agoAre they? With a founding team? You can just boot up an LLC and have a short operating agreement with 4/1 vesting and equal allocations.
- coffeebeqn 2y agoYou’d just be moving the complexity around if you did that. If you’re residing and working in Europe then having your company in the US will cause all kinds of tax and logistical issues that you’re probably not qualified to deal with. Probably much less so than dealing with the local paperwork. Everything your company does will now be scrutinized and has to fit through two separate tax and legal systems. Nothing simple about it
- cseleborg 2y agoThat's a bit exaggerated. I did have a company, and while it did come with bureaucracy, the vast majority of my time was spent on what you expect a founder to do (sales, marketing, product, etc.).