Comment by WA | Hacker News Reader

Comment by WA | Hacker News Reader

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I am sole proprietor / Einzelunternehmer. A GmbH works too. Cons:

- more work to set it up

- more paper work

- unnecessary in some cases

Pros:

- cash flow for you as a founder is more stable / taxes can be calculated and predicted more easily (only relevant if you expect a good year and then a bad year)

Neutral:

- Your personal liability is supposedly limited. This is only partially true. There's still the liability of the owner of the company (Geschäftsführerhaftung) and if you do illegal stuff, they can still hold you liable.

- Also for a GmbH, it is more important to manage risks by getting the required insurances and NOT rely on "limited liability". For apps, this would be "IT-Betriebshaftpflicht", possibly something about data protection with regards to GDPR violations. Maybe add insurance that covers personal liability so that you don't lose your personal cash if something goes wrong. That's about it. Optionally add domain-specific insurance if your domain is complex.

This is, btw. a typical German question. Mulling about the type of business is secondary. Get paying customers first, you can still incorporate a GmbH later. On the other hand: If nobody pays you money, you don't need a GmbH or be a sole proprietor.

You hit the nail on the head, that's for sure. :)

Hit me up and would be glad to buy you a beer if you're ever in Munich! Email is in the profile. Cheers.

Will do :)

> Get paying customers first, you can still incorporate a GmbH later. On the other hand: If nobody pays you money, you don't need a GmbH or be a sole proprietor.

is it possible to sell the product first and then register as Einzelunternehmer later (within the same fiscal year)? Or you have to register before?

After registering as Einzelunternehmer, if the business stops existing, does one have to "close activity" as Einzelunternehmer somehow?

You can only do some occasional work without registering yourself in any special form.

You can check, if you can start as a Freiberufler. It is a bit more lightweight than going with Einzelunternehmen. For example, I am a Freiberufler now working as a consultant / contractor in data engineering and management. I can also potentially sell my product, but I did not check the limitations.

You do not have to close you Einzelunternehmen afaik, if you do not make money, but you are still responsible for sending regular declarations to the Finanzamt.

German here. I am mulling over the type of business because I want to grow a B2B company where there is potential for loss of service for a big corporate customer, and my fear is getting hit with a justified (or frivolous) lawsuit that will wipe me out.

So, to come back to your comment: Is there ever a situation where you as a solo-founder/owner would consider a limited-liability corp (GmbH/UG) for reasons of liability or are the only good reasons for such a corp to be able to employ people, take in outside investments and set up something like a holding structure?

I honestly can’t answer that, because I’m not in the B2B sector. Some people wouldn’t do anything without a GmbH. They say it’s an absolute necessity. Others see it differently.

I just want to add to this discussion: Think about risks and insurance first and then about limited liability. If you think about it: what actually happens to your company if a scenario happens that triggers the limited liability aspect? It goes bust, if I’m not entirely mistaken. Every asset will be seized, except for your personal assets. But the company is basically gone afterwards. This scenario should be avoided in any case I think. It’s probably not fun.

I can only say that in my case with many independent customers paying a small amount of money, I managed my risk with insurance as far as possible. But maybe an accountant would be the better person to discuss your individual case.

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