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Comment by devdad | Hacker News Reader

Is that correct, €25000 to start a GmbH? The Swedish equivalent (AB), probably some differences, costs ~€5000.

I think the registration cost another ~€150.

It is not a fee you have to pay, you have to guarantee this amount of capital, sort of as a signal to other companies in the market what solvency to except at least :-)

You can actually spend the money on things after the court verified the capital is present with your corporate bank.

This is the same as an AB. Many start by having €5000 and then selling things they own such as computers to the AB, to get the funds "back". I think Sweden changed from €10000 to €5000 a couple of years ago.

If the UG or GmbH goes belly up, am I in any way personally responsible?

The point where you’re selling private property to your company is the moment you really really really want to talk to a good tax accountant in germany. If you sell above reasonable price it’s considered tax fraud (verdeckte Gewinnentnahme) and the reasonable price is likely to be a point of contention between you and the tax authorities. Unless you haven very valuable machinery you want to place into the company it’s usually not worth it and in this case you’d want a third party to certify the price. You can, however, pay yourself a reasonable wage and there are pretty clear guidelines on what’s considered reasonable. Much cleaner and easier.

Personal liability is a bit a complicated topic. If you’re a pure shareholder, your liability ends with the value of the shares. If you’re at the same time the only shareholder and the CEO and only employee you can be liable for quite a few things. (Social security, taxes, damages for your personal actions, anything that constitutes fraud, ...)

This is simple and applies to most (Western) jurisdictionS: don't sell anything to a company you own or control, at an above market rate.

Now, there are many ways to value something, and there is generally some room for interpretation on how much to charge exactly. But you will need to find a way to justify the price at which a transaction was concluded.

With IP it gets a bit blurry (e.g. you might own some trademarks you want to transfer to your new company), but again, there are a ton of perfectly acceptable ways to value something and not face the wrath of your local tax collector. Just make sure you have a reasonable valuation, based on objective facts, and you'll (mostly) be fine.

> If the UG or GmbH goes belly up, am I in any way personally responsible?

Not as long as you did everything lawfully.

This is a deceivingly simple and dangerous assertion.

Some people form a GmbH/UG as a sole owner/ceo with the goal that it shields them personally from liability, but never intend to take on investment or have employees. Personal liability tends to creep in in a lot of places, piercing the shield. Many rental contracts for example will stipulate a personal liability for the owner/ceo in such a case. A credit line for the company might as well, even something as simple as a credit card for the company does. The CEO is personally liable for quite a few things that are not as clear cut as it seems at first glance: You may be liable for correct tax filing and in taxes, many things are judgment calls with a thin line between what's considered a valid way to reduce taxes and tax fraud. Personal liability may creep in from declaring insolvency too late in the hope that the next contract will save the company. Haven't filed the taxes because you need to bring in money? Company can't pay the taxes right now? A common thing when companies go down, but personal liability. It might creep in by entering contracts that the company cannot reasonably fulfill and the CEO should have known, but looked the other way because they hoped that things will just work out fine.

True, if you did everything lawfully, then you're probably shielded, but despite best efforts, most people and companies slip up sooner or later.

There are many reasons to form an LLC, but the hope of shielding yourself personally as a single developer/consultant is often in vain.

I didn't mean to make it sound simple. Thank you for expanding on that.

The ones dictated by law are certainly tricky, because those apply to you by default and you might not know about them. I wouldn't throw credit line/rental into that same mix though, since those are contracts you enter willfully and those contracts explicitly state that you are personally liable if the company can nlt meet its obligations.

The ones you contractually enter into are certainly more obvious in hindsight (and easier to avoid by just not having a credit line for example), but I'd still throw them in the same mix because people do not think of those when they plan to form an LLC. My general point is that personal liability in small companies tends to creep in through the cracks one way or another.

Just to be clear, you don't pay the gov't €5000 to start a Swedish AB, but you need a minimum of €5000 share capital.

If you want to be a sole trader (enskild näringsidkare/enskild firma) you need zero capital and the registration cost is zero (costs about €100 to register a company name but that's optional) and everything can be handled online, although if you're not a Swedish resident you'd need a temporary personal number from the tax agency first.

Thanks for clearing that up, I now realize I was being misleading.

You need 12.500€ in the bank to start the GmbH. But you might be liable for another 12.500€ (to reach full 25.000€) if things go south.

You must maintain this amount of capital at all times, or otherwise start insolvency procedures.

That is not true at all. You need to have that initially in the bank but you can absolutely spend it on whatever the company needs - services, wages, things. You can absolutely have a GmbH or UG without any cash left.

Is the finances of a UG/GmbH public information in Germany and easily obtained by citizens?

You need to file an end of year statement (Bilanz) with the register court the year after and these can be obtained for a moderate fee. The exact details on what needs to be filed depend on the size of the company, details (in german) are in this article https://www.gmbh-guide.de/jahresabschluss-bundesanzeiger.htm...

You have to submit your balance sheet each year, and with a short lag it is available online on https://www.handelsregister.de where you can buy the info on any GmbH incl. persons who own it.

You can start a UG which is essentially the same as a GmbH for as few as 1€

German business owner here. The accountants and tax lawyers here have all told me the UG is looked on with suspicion by the tax authorities.

Don't start a company in Germany. Don't take it from me, take it from the World Bank, which ranks Germany 114th in the world for ease of starting a business. Just narrowly edging out the Dominican Republic.

It sucks.

Dunno, I know a happy owner-employee of an IT consulting GmbH and I'm currently setting up my own, 2/3 of the way through. It doesn't seem like a big deal. I kind of expected more bureaucracy tbh ;)

Bureaucracy in Germany is an interesting meme. Everybody complains about it, I did as well.

Then I encountered the bureaucracy in the US. It's even more forms, more officials that get a say about everything (Different sales tax at all levels down to the county, wtf?), they're slow to deal with even for non-complex matters (the reason why Zootopia's DMV employs sloths totally went over the heads of most of my [German] acquaintances), and with little organization.

On a tangent (since it's not "public" bureaucracy per-se): You get a corporate bank account with credit line within a day in the US. That's wonderful. Now try to send money to an account at a different bank within the country, within a day. I'll wait.

So yes, Germany has a huge bureaucracy. But work with them and they'll work for you (I got tons of useful advice, for free, when I asked them how to approach whatever it is I went to them in the first place) - and compared to many other places bureaucracy seems highly efficient here.

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