This is such a european startup story - where most energy is spent setting up a company and navigating bureaucracy rather than building a product. If anyone wonders why europe has such a lower number of startups this is why. And it’s not the government at fault. It’s the culture. Like seriously just pay someone 200€ to do this on your behalf and focus on stuff that matters not the “legal gray area” of earning pocket change.
This varies wildly from country to country and Germany is known for their anal retentive bureaucracy and obsession with paper.
In many other countries who didn't have the mental anesthetics of "we are Germans, we are the best" and had to make a living and get competitive the process is much simpler ( not all, far from it ).
Also, "in the US is very easy and cheap" is a fallacy. First companies don't exist "in the US", they exist in states and the amount of shenanigans also varies. Don't forget the US has a very adversarial culture and if you don't be careful and pay a significant amount of money ( when you have some traction ) to a decent lawyer/accountant it's all fine and good until you get yourself in hot water with the IRS mixed with some kind of Better call Saul episode.
I have the general feeling the downside of things is much more lower in the US than in Europe, but I might be wrong.
I’ve opened dozens of companies (ok about a dozen) in the US. I can’t speak for every state, but in Florida and Wyoming it’s really simple. Can be done online and you absolutely do not need a lawyer, not at the beginning and not years later.
The experience does vary widely with the State, but the process in the US is generally pretty easy and forgiving when you are a small company in my experience. In some States they were friendly, helpful, and accommodating when I made mistakes or didn't file some form I didn't know I needed, they understand that happens. California is the only State where I found the process to be consistently hostile.
You can get a business registered in Delaware in under 30 minutes by filling out a handful of forms online. If you don't want to do even that pay some service like Stripe Atlas $200-500 and the entire process will be down to minutes. There are still plenty of hurdles in running a tech startup in the US but bureaucracy is not one of them.
Not sure if it's so much easier in the US. If you sell things you e.g. have different sales tax requirements in every state, and if you have a Delaware C Corp you still need to do you taxes which usually requires an accountant. Overall the system isn't very different in Germany, I'd even say VAT tax rules for Europe are probably a bit easier than sales tax rules in the US. Founding a limited liability company takes 2-3 weeks here BTW, costs are around 2000 T€ I think. Maybe more expensive than opening a C Corp but not by much.
pay who 200€? in Germany? just the notary fee is in the hundreds and you probably need a lawyer and an accountant for a UG/GmbH. I’m trying this now with a new venture. Already have an accountant. But they’re slow and nonresponsive. I tried shopping around and literally got turned down left and right with these types of messages: “Unfortunately we do not have the capacity to take on any new clients at the moment.”
Lawyers can’t seem to advise on tax issues or how to best structure your business(es). Tax advisors cannot seem to actually create a company. It’s a total mess. At least for anything nontrivial and for me as a non-German.
I thought maybe Estonia or someplace else in Europe, but the tax rules are such that if your center of operation is in Germany, you still need to do taxes here.
If anyone has tips or good contacts (accountants lawyers etc), I’d love to hear.
To be clear, I don’t have a problem paying taxes in Germany. The problem for me is primarily how hard it is to set up a company and deal with bureaucracy here. And even though there are great alternatives like Estonia, they sadly don’t really solve the problem.
In contrast, and I don’t know the US but how many people live in Delaware? :)
Then you have to choose between entrepreneurship and family. Germany is the country to have a family and work for a company your whole life, not for business ventures.
- Then some more diverse set of so-called "hidden champions" (German name for world-leaders of some very special physical engineering products) which will sooner or later be fed to some US or Chinese companies.
- Some heavy industry which is currently leaving the country because of shenanigans in energy politics over the last two decades.
- Some of the dinosaurs the sibling comment already stated
- and finally lots of service businesses driven by MBAs and Legals who profit from the jungle German tax and law system is. They have zero interest in change and have been squeezing out the middle class in last 2-3 decades.
Germany is in recession right now as the only of the G7 countries. This is because the cheap Russian energy cannot cover the structural problems anymore but business, taxation and bureaucratic mentality is putting the whole country down. Can't recommend anymore.
>And given the Germany is the economic powerhouse of the EU, their bureaucracy doesn't seem to be hurting them much.
Germany is the "powerhouse of Europe", not because of start-ups and business friendly environment, but because of giant 100-year old dinosaurs like Siemens, Bosch, Daimler, VW, etc, who were innovative in the post-WW2 times and can afford all the lawyers and tax consultants the state could ever require them.
But with US and China hot on their heels on areas that the German dinosaurs were champions like motor vehicles, and dominating all things internet related, they might not be a powerhouse 100 years from now if they don't improve and modernize their mentality and keep leaving bureaucracy and innovation to the retired boomers who grew up with "world powerhouse Germany".
Serious question: who would I hire for these kind of stuff?
In a couple of situations, I decided to give software away for free to avoid the hassle. If there's a simple solution to get advice, I'd really appreciate that.
The author writes "The best approach is to start as an “Einzelunternehmer” (sole proprietor). You can register this at your local town hall for a nominal fee, and you’ll typically receive confirmation within a few days."
When I did it the cost was 35 Euro, I think it depends on city. One can argue why this step can't be done online but until 2023 it wasn't possible to register a car online in Germany either.
Then a letter to the local tax office (in Germany they're by city or region, not central. Then as the author says ignore VAT until you're over the threshold.
The difference is that a GmbH projects your personal assets. The risk for a software engineere is small, much smaller than for a lot of other business but still it protects you.
It also makes you a better business partner (in theory) as you have crossed a certain amount of effort to create a GmbH
Yeah I think all you need to know about the "gray area" is the threshold of "tax evasion" or "tax fraud" in your country, and don't get even close to it, for me I'd still be worried to make a mistake and it would be on the back of my mind, so as you are saying, if you want to make things right and easy, incorporate a mini-GmbH, use professional help, and focus on your product.
Germany has a huge burocracy problem, but not all countries in Europe do. In Norway company registration is done online in around 15 minutes, for a 370 EUR fee. I am pretty sure Denmark, Sweden and Finland are the same.
I have registered companied both in Germany and Norway, the processes are very different in terms of hurdles.
