> For me it is absolutely no choice to be employed or working in larger companies. I want my own freedom :)

Living the dream, what are/were a few of them?

I still have too much psychological/mental stuff from my Fintech startup I left in 2018 to seriously consider doing it again, even though this pandemic put the Industry I focused on as an 'essential' Industry despite denying them access to financial services and payment processing at the same time.

I also now have made friends with an accountant at a very reputable Accelerator with connections to Silicon Valley VCs. Still, it'd be tempting to get to do it all again for not having to work for anyone again, even though I also bootstrapped and had to have a day job for the first 3.5 years.

What are some viable startup ideas in fin tech?

Insurance by app?

Stock trading for free?

Not everything needs to be B2C. There are a ton of problems to solve for B2B - for example reconciling buy side transactions to the street. In this space though usually a bank/fund will spin off a product they developed in house but there are a few companies that have started from scratch.

Everyting in Fintech involves a mountain of paperwork and regulation. And probably a huge amount of money from the get-go.

Not true there are lots of regulatory-light fintech applications you can try like building applications on top of banking APIs. Very few people ever really use bank APIs you may find the bank will be glad to talk to you.

You likely (but not always) need a legal entity, but thats a prerequisite for setting up any business.

Thanks for the inspiring story. I’m guessing that the 25K€ probably referrers to a GmbH in Germany :)

If so, would you say the GmbH/UG (Limited Liability Company) route is a good idea from the start for a solo founder of a bootstrapped SaaS?

I’ve been doing my research and maybe I’m wrong, but it seems like it has quite a lot of overhead for a first time solo founder like myself.

To clarify, I’m an expat in Germany, but I’ve even looked into setting up an LLC in the US or another limited entity because they appear more lightweight to operate than their counterparts in Germany. But then I end up in a complicated international tax situation.

I’m not seeking legal advice, just wondering if you have any tips now that you’ve gone that path several times successfully.

Cheers!

GmbH gives you limited liability, that's its main purpose, to encapsulate risks and create a body on its own. You can just as well just register as a freelancer if there's no significant risk of going into debt suddenly or being sued. The overhead is not that big though, you have to submit tax returns, do proper accounting and you might want a tax consultant for this - that removes most of the headache, and costs you 3k€ a year. The pains start with employees, but I've also outsourced that to an HR company, costs me 30€ per employee per month - removes most of those pains too. Often tax consultants do that too. Bigger pains start at 10 employees, but by then ure hopefully large enough to have a few experienced people around you to take care of those :) All in all, I've found Germany to be less painfull than expected.

> You can just as well just register as a freelancer [...]

Beware: If you're registered as a "Freiberufler", you're not allowed to sell or re-sell any physical or virtual products, including any kind of SaaS (but you're allowed to have employees). If you want to do that, you have to register a Gewerbe. To put it simple, as a Freiberufler you can only sell your time or that of your employees (it doesn't matter whether you use fixed-price contracts or hourly rates), but you can't sell your software.

You can start out with an Einzelunternehmen (Sole Proprietorship) which means your personal finances and your "companies" finances are the same, but it's very little hassle and cost to set up, basically an online form and a few Euro. Then, when you want to grow your business, limit your financial liability, take in outside money or just better control the flow of capital you can set up a GmbH (don't bother with an UG if you have the €25k at hand). Bonus points if you think it likely that you'll sell your business you can set up two GmbHs in a Holding structure which has big tax benefits in the event of a sale. You still only need the €25k once in that case.

Do not do an Einzelunternehmen to start. Do a UG. Not worth exposing yourself to the unforgiving and extremely aggressive Finanzamt when they decide they want to collect money you didn't expect to owe.

Can you elaborate on that?

My tax adviser told me I should go for a Einzelunternehmen (especially use the Kleingewerbe during the first year) because of the reduced costs (registration costs 25EUR and thats it) and not having the overhead. I’ve heard that registering a UG costs about ~500EUR + yearly costs of around 1500 EUR.

Given that this is during a beginning to try things out - without having too much money laying around to play with it.

Would definitely like to know about risks before getting myself into it.

> Given that this is during a beginning to try things out - without having too much money laying around to play with it.

If that's what you want to do, then a Einzelunternehmen (without Handelsregistereintrag) should be fine and less beaurocratic overhead. Especially for bootstrapping or side-projects it's always useful to have a Gewerbe registered.

As long as you follow the best practices (specifying 0€ expected income in the first year, etc.) and don't try to do any financial trickery, Finanzamt also shouldn't be a problem. However once you start to turn a decent profit (100+k/year) and/or start to hire people, you will be required to do more bookkeeping anyway, at which point it makes sense to found a GmbH (or even two layered ones).

I know enough smart people who have been pursued by the Finanzamt because their accountant and the Finanzamt had a different interpretation of the law.

Yes it's all Germany based. Don't go the UG way, just found a GmbH.

Please note it is possible to found it with 12500€ and have to provide the other half of the 25k€ later.

My first company was without the GmbH protection and benefits. It was ok but I would not do or suggest it to anyone. Hell of a pain to migrate to a GmbH later.

I‘m about to found a UG in the next few days, so I‘m curious why you say that I should found a GmbH rather than a UG.

I heard, that transition from UG to GmbH might be associated with additional costs. Also some older folks don’t like UG in general, because it is “immature” company status for them. Personally I don’t like (haftungsbeschränkt) at the end. It’s longer than actual company’s name and just does not sound good.

If you found with 1€, the moment you place the signature your company is insolvent as it can't pay the resulting invoice. Even if you found with 1k it is often quite near to overwelm the newly created company.

Beside that, UG has very bad reputation and if you need something your company rating will lead to problems like prepayment when ordering goods. New GmbH is not the best either but increased quite fast.

In addition, transition from UG to GmbH is a bit of a pain, as you need a let your books be checked (costly) or by just paying the amount to reach the GmbH money.

There are some fixed costs with transitioning to a GmbH (notary, Handelsregister, etc.), along with all the time you have to spend to change the name all over the place, which quickly amounts to a few thousand bucks.

Given that the 1€ founding is an illusion anyway, as you will need to have some money in the company to pay your accountant, Berufsgenossenschaft, (the salary you are living off if you are working full-time), etc., the benefits of requiring somewhat less (maybe 5k instead of 12.5k) are not that great.

Can you explain a bit more about the migration process?

I’ve read that the “most straightfoward way” is to create a new GmbH and transfer all the IP away from the Einzelunternehmen. It seemed kinda complicated though. (As everything is when dealing with the Finanzamt IMO)

I think you can avoid the complicated international tax situation by not being a tax resident of Germany.

As they stated, they are an expat in Germany, so as long as they stay there for more than 6 months of the year, the are at the minimum required to pay income tax.

Is there any way I can contact you? :D

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