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Yeah, I found that part odd too.

Also, you can found a GmbH and only pay in 50% of the €25k. My understanding is that you're still personally liable for the rest, but it lowers the hurdle to founding a GmbH at least somewhat.

If a company collapses while having more liabilities than assets then that's fine. No one is being forced to extend any credit to them.

It will make it harder for "worthy" companies to get loans and credit.

Is that why it's so hard to get capital, credit, loans, and investment in the USA?

Nah. Lenders are free to do whatever credit checks they like. Government doesn't need to get involved.

That's the American viewpoint, right of the strongest, sue if they wronged you. European systems typically have a different philosophy where the counterparties are more protected.

It's expressed in stronger consumer protection laws, but also these German things where you can't start a GmbH/LLC with zero capital and wish the counterparties good luck suing you if you never pay them.

You're missing the point. Strong or weak has nothing to do with it. If you want to be protected then don't do business with undercapitalized counterparties. Everyone can make their own decision on acceptable level of financial risk. It's stupid for governments to dictate this.

How do you know if your counterpart is undercapitalized, though?

You're welcome to ask them for whatever evidence you like before agreeing to do business.

Look up the business registry, debt registry etc., it should be all there, at least it is in our country.

So the OP can create a UG with €1 capitalization.

They can be cheerfully undercapitalized and counterparties, seeing that it's an undercapitalized UG rather than a GmbH, can make their own decision on financial risk.

> And the cheap door has a price of its own: to some clients, “UG” reads as “not serious,” and they would rather deal with a GmbH.

...turns out the OP doesn't like that.

That system is silly.

I can open a company, work for a year, acrue debt, acrue tax debt, close it.

Nothing will happen. Company "estate" will be sold to cover the debt, which can also be nothing.

No, if you don't handle this correctly you become personally liable

Probably criminally liable for bankruptcy as well. At least in Germany (where I am vaguely familiar with the law) you lose bankruptcy protection for debts you take on that are knowingly not covered by existing assets or expected future income. This is usually hard to prove, but if your assets are 0 and there was never a viable plan all along they'll likely found you guilty. This means you become personally liable to the creditors and might also face jail time.

In Germany yes, the law is pretty tough: you need to think _every_ day this "Will I be able to pay anything I have to pay with a horizon of 12 months?"

If in one day answer is NO, you have to immediatelly go and register insolvency. If you do not do it, big issue, and possible jail time.

Might be that German law covers for such cases, but at that point, I'd expect then the regulations and annoyances about starting a company be more high trust.

In our EU member country, one can do this without penalty, for years - and people have been abusing it consistently with only rare persecutions.

That's what bank underwriting is for and you will quickly find that your 0 income 0 asset llc would have difficulty borrowing.

Yeah, he has no clue and complains about having no clue.

He wants a company but not put down any assets, but still limited liability, he has to get a UG. But obviously customers don't want to deal with that because there are no assets in case they pay 5.000€ and the company goes belly up.

Customers deal with GmbH, because they know they have at least a little bit of value in assets. So if I buy from you for 5.000€ I know that should be covered by your assets.

The guy is an idiot and has been misconsulted by the law firm and has been pulled over the table by said law firm.

That's not how it works in most other countries and it seems fine?