Changing our legal entity from Ltd to GmbH | Hacker News Reader

Changing our legal entity from Ltd to GmbH

transloadit.com

3 pointsJdeBP9 comments

British limited companies have been tremendously popular across the EU because they are so simple and cheap to setup and manage.

The UK is really hurting itself with Brexit here.

Of course, why other EU countries make it so onerous to setup a company is another issue...

> It would require a far lower initial investment (300 GBP vs. 25,000 EURO)

The minimum capital investment to setup a limited company is £1. Perhaps they are including other fees to get to £300. Effectively the only cash that has to be paid is the fee (about £20) and it can be done in minutes online...

Since they founded in 2012, they could also have created a German Unternehmergesellschaft, which starts with 1€ capital too, and "grows" into a GmbH (25% of net income have to be added to the company investment, until the 25k€ threshold is reached, at which point the company can convert). Since those were introduced, Ltd. has become a lot less common for German founders.

I still don't understand this complexity.

Be bold. Slash requirements and red tape instead of adding another layer.

GmbH is a limited company: it protects the owners legally, in exchange it's required to actually have some assets that can be used to pay claims, and some investment from the owners into it. The UG was added as an easier path into that: you don't need the capital right now, but already gain the protection, in exchange the different label broadcasts that to everyone you're doing business with.

Unlimited companies come without those restrictions on founding them. It's a tradeoff: harder requirements in exchange for protection.

That does not explain the reason for making things complicated.

British limited companies are extremely simple and cheap: Minimal capital requirements (£1), protection, and minimal red tape and fees (as said, minutes to create one online and £20).

I fail to find a valid reason to have it differently.

The assumption that limited companies without requirements make it to easy to abuse that protection (decreasing trust in companies with that status), and that thus there's value in signaling through the company status that it has at least something backing it up.

Clearly only having GmbHs didn't meet demand, since quite a few people went for british Ltds despite them having a bad reputation, so a native replacement for those was created.

In the real world nothing guarantees that a company is solvent.

> went for british Ltds despite them having a bad reputation

Cheap shot there. They don't have a bad reputation, assuming that claiming that companies from one of the main economies in the world have "bad reputation" makes any sense at all.

The reason people go for them is that most other European countries make it onerous to setup a company, while the UK does not see any reason to make it difficult.

Requiring €25k shuts the door to many people who would like to setup their own small business, for example.

It's not a cheap shot, it was reality, especially in B2B contexts, that if your new, clearly German, company was a foreign limited instead one of the native ones that was seen as problematic by some customers (obviously depending on the field etc. too)

And again, the rates of German Ltds. have gone down massively with the creation of the UG, so clearly that policy correction is working and not seen as overly onerous. (although lots of small companies also operate as unlimited companies)

> And again, the rates of German Ltds. have gone down massively with the creation of the UG, so clearly it's working and not seen as overly onerous.

My point is that UG create another layer instead of simplifying GmbH, which they refuse to do. From what you said UG still force you into GmbH: "25% of net income have to be added to the company investment, until the 25k€ threshold is reached". That's still quite onerous.

I think this is cultural. In the Anglo-sphere, the culture is much more one of laisser-faire. Other culture are much more fearful of any financial risk.

At the end of the day, though, on this I think the UK has it right: Make it as easy as possible for people to start a business. There is no downside.

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