Yeah, managing is some work. The best is to find one of those Steuerberatungsgesellschaft and let them guide you through everything. Filing taxes will cost you €2500+ per year for a GmbH, €1300 for an UG.
Getting rid of it is easy. You file an Auflösung, sign it at the notary, ask them to notify agencies on your behalf. Then you have one year to liquidate. Not sure what’s difficult about it.
Getting to a notary when not in Germany, all the agencies, getting to the notary a second time when it’s done, all the things you need to file (3 tax filings, 2 different accounting statements, etc), getting the letters from the agencies - all when the company is essentially dead and doesn’t have any extra 2500€ per year left for filing.
Could all be done with a small number of forms and online or for a small fee in many other countries.
> all when the company is essentially dead and doesn’t have any extra 2500€ per year left for filing
That’s bankruptcy.
> Could all be done with a small number of forms and online or for a small fee in many other countries.
> What’s the benefit of doing all that?
Frankly, I have no idea. Maybe they do want to make sure that the process stays legitimate. I believe you can do all of this without having to show up in the country by giving a lawyer a power of attorney. But you better have the money to close all financial matters.
When I was shutting down the Ltd, I did it via my tax accountant. And yes, I did tax filings for the last year too. The only difference was that there was no grace period for liquidation.
So you're saying for a small UG you should always spare 1-2 years (most likely more than 1) in case you decide not to pursue the business anymore? I'd rather spend 2-5k on other things.
Apart from being an absurdly high amount for something that can be read out easily from any sane accounting system (thanks Germany for basically forcing everyone to use Datev, which they obviously only sell to professionals, so that's how a simple task becomes 2k+ per year [0]).
> Maybe they do want to make sure that the process stays legitimate
That doesn't really solve the problem, I've had clients with GmBHs who ended up not paying what they owed me - just because they pay a lot to accountants, notary, the state etc. doesn't make the business more sound. Conversely, you can handle a legitimate business (e.g. selling expertise in form of consulting projects) much cheaper and with less time invested elsewhere.
Maybe if everyone weren't wasting so much manpower on inefficient systems, things would actually work.
The added burden of dealing with personal tax, the high price tag for it along with social welfare (which only helps in highly rare circumstances, e.g. when I literally don't have anything anymore - which I don't need because of what I've invested) and the time lost just don't add up.
I've lived in many countries, small, large, rich, poor, and I think Germany is the worst among them to start a business (and also to live, but everyone has their preferences) unless you have a really good reason to be there.
To start something you need flexibility, low overhead, and not to waste time you could be using to talk to customers and build something, rather than deal with bureaucracy. Germany offers neither.
[0]: one quick note on the side, I've used Collmex to do my own accounting back then after I had to fire my tax accountant for absurd things I was being charged and to wrap up the business that I wasn't working on anymore. For me it worked out - in principle what is accounting: you want to track receipts and transform them into a balance sheet and P&L statement + a few of the extras you need in Germany, like VAT reporting. Still a massive pain to transform it into what the tax agency wants and get the info what that actually is, I think it's hard on purpose to waste people's time and direct them to tax accountants that overcharge.
Anyway, time invested vs. paying someone to do it probably doesn't fully add up but I learned a bit more about accounting which is nice to have in any business context.
> So you're saying for a small UG you should always spare 1-2 years (most likely more than 1) in case you decide not to pursue the business anymore? I'd rather spend 2-5k on other things.
I am telling you that if a company runs out of funds to sustain its operations, it's bankrupt. In Germany it is called Insolvenz. You can feel as emotional about it as you want, but that's what it is called. Yes, you absolutely need to take this into consideration, if you want to shut down a company gracefully. You need to have that financial resource available. You can, of course, finance your company by capitalizing it with extra funds and that's really simple - you put the money in the bank account of the company and write a document as a director stating what has happened.
In any country in the world, when a company does not have money to pay its obligations, it's bankrupt.
Well to me it’s quite unfriendly to small businesses to (without telling you in advance - UG is always advertised as the simplification that it isn’t) require so much money for essentially nothing. I think it should be much cheaper and easier to shut down a business. Yes, there are alternatives, but nothing is really great to start a business there, especially if you want to bootstrap and not get a massive apparatus running before you have a good market fit.
My impression of Germany was that they try to force you to keep things going on forever - health insurance, pension, etc. as soon as you want to change something you lose a ton of money. Also: don’t ever criticize anything because they obviously really know what they’re doing.
> I've lived in many countries, small, large, rich, poor, and I think Ger many is the worst among them to start a business (and also to live, but everyone has their preferences) unless you have a really good reason to be there.
Try India. There was an HN post the other day about a guy who tried to set up some manufacturing and 2 years in he was still far away from all the permits.
One thing the article we are discussing notably lacks is the mention of bribes. Obviously, you'd add, those would be illegal. Haha. True! They are illegal in India too. And in all other countries. But compared to some forms that are (outrageously!) in German, those re a real PITA.
I'm living in Germany now, by choice, and it's a lovely country with lovely people. Not everything is perfect, but many of the imperfections contribute to the loveliness. Just like in many other countries, rich and poor.
Agree that bribes should be part of the analysis, but I would do the comparison with the time and cost to accomplish a goal, without judging the method.
If you look at the outrageously high fees and lack of competition (notaries and tax accounts - yes there’s a bunch out there but it’s not the market dictating the fee and no guarantees that they won’t work towards a suboptimal outcome) I don’t really see how bribes are worse. In Germany corruption has just moved up the chain making everything expensive.
Overall it’s a lost opportunity to create wealth, jobs and a competitive advantage, both in India and Germany.
Then there’s the bit about personal preference. I didn’t see anything good in Germany, but happy for you if you do and live there.
> Agree that bribes should be part of the analysis, but I would do the comparison with the time and cost to accomplish a goal, without judging the method.
I'm sure you can get your business quickly off the ground if you are friends with the dictator in a country with an oppressive regime. (Others go to jail but that's less important apparently.)
> Then you have one year to liquidate. Not sure what’s difficult about it.
What is funny is that germans don’t even realize how absurd this looks for the rest of the world. Compare this to closing a company in two weeks in the United States.
Funny how the Americans don’t even realize how absurd that looks for the rest of the world.
The reason for this is that the company must pay any outstanding debt before it can shut down - and you need to give creditors a window to write their invoices. And you’re legally allowed to write and collect on invoices for work (or deliveries) that date back up to three years.
So what happens when you liquidate a GmbH is that a notice is placed in the register for all your creditors to see if you have an outstanding debt with them - and then you just have to wait.
The register is electronic and it’s common that people monitor it, especially if you have large sums outstanding. I have done so in the past. I know of multiple other cases where people monitored the register.
If they don’t have money and outstanding debt, they can’t liquidate the company - they’ll need to file for bankruptcy, which is an entirely different thing.
How is this complicated? You don't have to do anything for or during that closing period! The only thing that happens is that you get the final "it's been closed for good now" after that period. I let the "Steuerberater" handle everything while the GmbH was active anyway, the fee was not that much. I just gave them all my receipts and they handled accounting completely. I was a bit pissed at the Steuerberater fees accumulating during closing, which were a bit much, but I negotiated that down significantly.
But again, the least complicated part of it was having that waiting period. It had no impact on me whatsoever, not for taxes, not for anything. I just got a message after that time was over, and another one even later from the tax authorities that they are satisfied and would never retroactively look at the company again, so that I knew I would not get any tax surprises from them. Which I did get from the US IRS - years after leaving the US they wanted money from me.
When you close the GmbH it's not like you have to keep anything. You really close it, bank account and all too. The waiting period has nothing to do with you, unless creditors show up. The only thing that happened was that that very final message about the final closing only comes after that period, without any creditors showing up it has no impact on you and you don't have to do or pay anything.
I had had an "offene Handelsgesellschaft" (OHG) with someone before I had the GmbH. The limited liability company forms, GmbH and AG, are much worse than the ones with a fully liable owner. Those are much easier to set up, and they too can become quite big companies and are quite commonly in use in Germany even for established firms. But it's true, the effort around the liability corporation forms is enormous, and lots and lots of fees everywhere. You can shield yourself easily and outsource it all, but the got-to company form that Germany aimed for historically for the "common man" to quickly and easily set up a company was one of the two where one person or a group own the company and are liable. Limited liability was (still is) deliberately kept to be much more demanding.
Maybe too many people go for a GmbH too quickly? A KG with one main owner and partners only liable with their share and they can be any legal entity, so businesses instead of people can be a partner, would probably work just as well. I know I went for the GmbH form out of such stupidity, because it was "cool" and internationally it was the form everybody was talking about (limited liability. hey!) but I would have been better off with another form. The "limited liability" has very limited benefits if you are a new founder anyway, nobody is going to give the new company any credit without someone being liable in addition because creditors are not stupid.
Getting rid of it is easy. You file an Auflösung, sign it at the notary, ask them to notify agencies on your behalf. Then you have one year to liquidate. Not sure what’s difficult about it.