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Comment by Xylakant | Hacker News Reader

> Opening a company in Germany, for instance, is not as cheap/simple as an LLC in many US states or an Ltd in the UK.

That really depends on what kind of LLC you want to open. There the so-called "UG Haftungsbeschränkt" which was created as response to the British Ltd. and costs somewhat less than 200 Euros + whatever capital you want to invest. For larger enterprises, you'd probably found a GmbH which usually costs somewhere between 1000 - 2000 Euros in Legal Fees [1] and needs a minimum capital of 25.000 Euros (which you can use to pay the legal fees, so you don't need those extra). The costs of creating a business in germany are probably not higher than anywhere else in Europe.

[1] as always, legal fees can be significantly higher than that depending on how complicated the case is.

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With the UG, you are required to sock away capital until you hit the 25K, though, no?

http://www.doingbusiness.org/data/exploreeconomies/germany/

http://www.doingbusiness.org/data/exploreeconomies/united-ki...

UK still looks easier, and doesn't have any capital requirements.

> minimum capital of 25.000 Euros

This is a very continental European concept that, IMO, is basically useless. It's a number picked by some politician, nothing more, nothing less.

> With the UG, you are required to sock away capital until you hit the 25K, though, no?

Only a part of the company profits. But you can invest that capital, so if you'd by a new macbook on the company, that counts IIRC. You don't have to keep that in money in a bank account. If you're a sole founder you'd probably pay yourself a regular wage and save what's left, so that doesn't apply either.

Those doingbusiness numbers seem far off from my personal experience. The german ones don't apply in all cases (you don't need half the steps if you don't have employees) and certainly don't cover the UG case - charges and timelines are way off. They seem to apply to the standard GmbH, but there the timeline is far too quick - it takes more like 4 - 6 weeks to have all the paperwork through court and it took more than another month until the tax administration in Berlin acknowledged our existence - they're currently a little overloaded.

I wrote about the process at http://news.ycombinator.com/item?id=4215302

You are required to save capital, so you cannot pay yourself above a certain percentage in dividends, but you can still pay yourself salary, which is not subject to those limits.

It is easier in the UK if you are already in the UK, but living in Germany is certainly easier than living in the UK in terms of immigration rules.

Minimum capital requirements aren't useless. A limited liability entity is only liable up to its capital assets. This ensures that the company has capital assets to level against if it is sued by creditors, etc.

Actually, that's a pretty common misconception. The only information is that there was at least a base capital. You can spent all of that on wages, then it's gone. But it certainly shows that someone had the dedication to invest a certain amount and thus has an incentive to keep the company alive.

If you want to avoid that do a UG & co. KG. Costs a bit more, since it technically is two companies but you dont have to build up the capital and you are also exempt from "Körperschaftssteuer"-tax.

IIRC the capital requirements don't have to be met with cash, but can be satisfied by things like IP. Developed an app? That could be included.

You may use something else in place of cash. But unless it's high-value goods or machinery, the general recommendation is that you take cash. The estimates are just too much hassle and when you get them wrong the tax office might intervene and that's something you might go to jail for since it may count as tax evasion. Now if you have an app that's worth a million bucks, go ahead...

Yes, but who evaluates how much it's worth? And why the hell should someone even have to be doing that? It's utterly useless bureaucracy. If the goal of having capital is to cover wages, say, should the company go under, then you should have that specific requirement, not some vague notion of 25K being a magical number.

I agree, but in the absence of a change in company law, the option to be able to satisfy it with intangibles is ok. I think so long as the valuation is reasonable, it counts. Any decent-sized app would easily cost >€25k, and even the website can cost that much in some cases. It's easy to discount the value of our own work, but we shouldn't.

Plus, instead of handing over the copyright to the company, it might be possible to do something like grant an exclusive license to the company instead.

The goal of having capital is if you order a bunch of Aereon chairs and fail to pay, or your delivery driver runs over someone, these folks have some hold of collecting because by law they can't come after you personally. $25k is an arbitrary number because it can't be anything but arbitrary in this situation.

Countries like the US, France and UK get by just fine without this requirement. The arbitrariness of the number is an indication that it's a bad idea: the number is too low to guarantee compensation in many situations, and adds another obstacle for would-be entrepreneurs, especially those who do not come from a well-to-do background.

Far better might be some transparency requirements.

Take the standard UG (haftungsbeschränkt) if you don't have the capital. There the base capital requirement is 1 Euro. You can even found a GbR which is not a limitied liability company but serves quite well in most standard cases.

In any case, the number is not too low to guarantee compensation: The base capital of the company is public. Every business person in Germany knows that number. So if you're trading with a fresh GmbH you can safely assume that at least 25k were available at some point. Excluding plain fraud, you can be pretty sure that at least bills in a given range can be paid from that capital. You'd have a second look if they try to order something which goes beyond their base capital. Transparency requirements don't help much with fresh companies since there is now history to judge from.

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