Comment by JumpCrisscross | Hacker News Reader

Comment by JumpCrisscross | Hacker News Reader

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Recently helped a friend launch a French subsidiary. It is a pain.

First, you must pay a lawyer or formation agent to write and register your by-laws. Next, you must seek an introduction to a bank manager. With that secured, you get to draft a book report of a business plan. This is tedious and pointless. Once completed, the bank manager reviews it. (They will also ask for lots of personal documents, each requiring expensive notarization.) If they approve, you get a business bank account. Into this account you must deposit no less than €4,000. Unfortunately, these funds are frozen until you get your extrait Kbis. That won't happen for at least two weeks.

Now you have to buy an ad in a French newspaper. These are expensive. After a week or two, papers will arrive in the mail. You take these to the Commercial Court, where a bunch of agencies on different floors will stamp them. With those stamped papers in hand, your €4,000 will be unfrozen. (Usually. On the next business day.) Finally, you have to appoint a French accountant. They continually monitor your business and continually charge you fees. Now you can business!

Meanwhile, in Delaware, 24 hours and a few hundred dollars buys you an LLC. A bank account, set up online or in person, can get you going the next day.

And that is not the worst part. When you sell your company, you may have to wait between 6 to 9 months to get your money!

Basically, taxes are always delayed and to calculate the exact amount that you owe to the diverse government agencies, it takes an army of accountants.

Even sometimes the accountants do not know what is going on as the tax laws are always changing, sometimes at the last minutes. Meanwhile, you have sold your asset, your money is stuck in escrow for more than 6 months, you have no revenue and no money. Welcome to France!

Source: my parents sold their business in October last year and just got their money a week ago.

The advice I was given, by a competent European lawyer, was to set up a Luxembourg S.A. which, in turn, was to hold asset-light subsidiaries in each country. (This is how Spotify is structured.)

The problem is, when you're resident, it looks like you try to avoid taxes.

And government doesn't like that. At all. So if you're small, they won't miss you when they backfire at you :-)

1. No need for a lawyer to draft the bylaws, you can copy-paste from various resources.

2. The newspaper ad thing still exists, is a reminiscence of the past but only adds 100 euros or something to the overall cost.

3. "Into this account you must deposit no less than €4,000." = probably if your company's capital is $4000. You can start with 1 euro of capital if you wish (but that's probably not the greatest idea).

4. Overall, the easiest way is to first find a good accountant, and let them deal with the administrative side of things for ~1000 euros or less. If you do everything by yourself, you're probably good with 250-300 euros of expenses.

See https://www.service-public.fr/professionnels-entreprises/vos...

Even taking your lowest-cost professional estimate, which deviates from experience and ignores several practical, if not official, costs, we’re talking about 2 weeks versus 24 hours and 4x the cost, with reference to Delaware. It’s a shockingly messy process compared with the U.S., U.K., Hong Kong or even Luxembourg.

My experience is not as painful as yours, but I do not know the Delaware process.

I incorporated a "SAS" in France with the help of an online accounting service. It cost 500€ in fees, required a few hours of paperwork and the company was ready 2 weeks afterwards (KBis, bank account…).

Now I pay 90€ / mo for the accounting service, and 10€ / mo for the (online-only) bank account. That's it.

Note that you do business alone, with not too much volume, you can opt-in for the easier "microentrepreneur" status. It has low taxes, easy accounting and is straightforward to set up.

May I ask what is that online accounting service?

Here it is: https://www.dougs.fr/ (there may be referal bonuses if you want to subscribe, we can PM each other)

Thanks a lot! I don't plan to subscribe right now, maybe I will in the next 6 months or so.

> Meanwhile, in Delaware

More worryingly for the French, it’s as easy as it is in Delaware in other nearby EU countries, and cross-border EU commerce is easier than cross-state commerce in the US

> and cross-border EU commerce is easier than cross-state commerce in the US

I'm curious where you get this impression. Cross-border commerce is very lightly regulated in the US. For most industries, you literally have to put zero thought into the matter.

Don’t bank transfers take 3-4 days?

> Don’t bank transfers take 3-4 days?

Uh, what? What does this have to do with interstate commerce? ACH doesn't operate on a state by state basis.

ACH can take a couple of days to clear (usually 2), but that's not really relevant, because most business isn't done through bank transfers. And for invoices that are due net 30 or 90, having a two day latency for the final transaction doesn't make a difference.

Interstate commerce in the US is generally trivial, mostly because the Constitution makes it very clear that states have next to no ability to regulate or prevent it. The only main exceptions are industries that are heavily regulated within a state (ie, if you want to set up a new health insurer in a state, most states require you to get a license from that state - which isn't really regulating interstate commerce, but having state-specific regulations you need to be aware of. This is uncommon).

For general businesses like we usually talk about on HN, there are very few barriers to interstate commerce in the US, especially compared to the EU.

Fedwires clear instantly between banks; for the end user, within about thirty minutes (to give time for approvals). (Some banks bulk wires to the end of the day, but that is a cost-speed trade-off.)

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