Well, I had a UG as holding company in Germany and even though the company was basically dormant (besides holding shares in another entity) I still had file yearly accounts which cost about 1000€ / year. Plus another 200€+ for IHK, 100€ for Bundesanzeiger, GEZ / Rundfunkbeitrag etc. All for a company that didn't really do anything. Would you really argue that this is easy / good practice? Because in my understanding this really felt unnecessarily complex and expensive.

I never filed yearly accounts for the UG so afr, the first two years you don't have to. IHK sucks, I agree. GEZ isn't mandatory if you register your UG where you live, after all you pay already.

All in all, I'd say cost of doing business. What's next, do we atart complaining that Lenovo isn't providong free laptops? Or that office space costs money?

> I never filed yearly accounts for the UG so afr, the first two years you don't have to.

Could you provide a source for this claim?

In a best-case scenario, where you have founded your company on Jan 1 2021, you so far would have still had to

- hand in your initial balance sheet at the time of founding

- hand in your Umsatzsteuervoranmeldung every month.

Moreover, you will definitely have to

- hand in your Umsatzsteuererklärung, Körperschaftsteuererklärung, Gewerbesteuererklärung (all for 2021) by 31.07.2022

- send your "electronic tax balance sheet" (Elektronische Steuerbilanz / eBilanz) for 2021 to the tax authorities by 31.07.22

- set up your balance sheet for 2021 by 31.06.22 and send it to Bundesanzeiger by 31.12.22

Well, no initial balance sheet required. Taxes are filed, of course. VAT had to be decleared, in theory, every month. You get reminders, so it can also be done for multiple months. Now, due to lack of revenue, I have to file a zero VAT declaration quarterly. And your deadlines are longer than if you eork with a registered tax advisor. That's why I said so far, I'll have to do all that this year, the 2021 balance sheet is due in 2023, no need to publish the latest in the Bundesanzeiger anyway. After all, that's par of the course of doing proper business, and cost of doing business.

> Well, no initial balance sheet required

The law very clearly disagrees with you:

https://www.gesetze-im-internet.de/hgb/__242.html

> And your deadlines are longer than if you eork with a registered tax advisor.

True. If you're paying a tax advisor, you don't really care about the deadlines and all the paperwork, anyway, though. You just pay people to do all that for you.

I had two companies, GmbH (no merged and disolved) and a dormant UG. Never filed an initial balance sheet for either.

That's interesting. Tax authorities (in NRW) very explicitly asked me for one a few months after I had incorporated.

I'm in Bavaria, and to the best of my recolection I never filed one. But then it was a cash-only incorporation, and honestly I don't remember all the files and formulars I filled and signed. Maybe there are exceptions to this under certain circumstances...

> I never filed yearly accounts for the UG so afr, the first two years you don't have to.

I've never heard about this and also can't find any sources for that when googling. Could you post an article that describes why a UG wouldn't have to file a "Jahresabschluss" in the first two years?

You need one for every year, you don't have to publish them. As an other comment elaborated, if you incorporated in 2021 you have to file you 21 balance sheet by end of 2022. Depending on when you incorporated in 21 it can be two years. You don't have to publish the latest ones in the Bundesanzeiger so.

Distraction. Being compliant with all these regulations takes the very valuable focus away from the main goal of a startup: Finding product market fit. Established companies have no problem being compliant because they already have everything setup.

This level of compliance is so low that every business in Germany manages it. It is dirt cheap to outsource to a tax advisor, and in doing so no distraction at all.

Product market fit doesn't matter if you are unable to run a business.

I don't think 1000€ per year for a yearly closing for a dormant company is "dirt cheap", but we might have different definitions of what constitutes "cheap".

Well, it is more like 800. And there is a difference between dormant, in my cade, and a holding. Because the holding is serving a purpose. The 800 are if you have someone do it for you, it is much less if you do it yourself. In case of a dormant company wothout activities it is easy enough. If you know how balance sheets work. I do, I'm just too lacy to do it myself. In the end, yes, all things considered 800 are cheap. After all, I have a mortgage.

And yet there is no successful German internet company on the scale of Amazon, Facebook, Netflix, Apple, Google. I claim the regulatory environment is a factor preventing such businesses being successful - why are are you so sure it couldn't be?

There are many difference. A key one: German companies will start to cater around German-speaking market, then expand to Europe, then further out.

An American company will focus on American market and while doing that is - due to using a wide spread language - immediately useable world wide and then can adapt to languages and cultures over time.

Because easy access to vebture capital, a huge single language market, a risk affine culture and prior success in these fields seem to play a much larger role than how difficult it is to incorporate. If an entepreneur is already discouraged by incorporating, maybe he should stay an employee.

German people of the elder generation ( boomers ) are generally risk adverse. I would say that this is the biggest reason why.

Small things also. Bezos choose books for amazon since it is a perfect comodity with low consumer prices. You do not have to see the product to know what you will get. Then by using scale of volume they could reduce the sales price and become more attractive. The last step wouldnt have worked, since you are not allowed to sell books at different price in germany. Also if you ordered a book from a bookstore sometimes you had same day delivery to that bookstore or latest next day. Amazon mostly lifted of in Germany when they started to sell other stuff.

"looking for millions of VC money" = "I don't have money" How is that inconsistent with wanting to avoid paying money for regulatory requirements that get in the way of solving your customer's problem?

The point is not that startups shouldn't follow regulations, it's that startups are a uniquely weak type of venture, but with the potential to be tremendously valuable to society. So designing a set of regulations for startups that balances the benefits to society of the regulation with the benefits to society of the potential startups is likely to lead to better outcomes for society.

As an analogy - in the city I live in, no-one is allowed to do any digging around a tree without prior permission from the city tree specialist. That regulation is designed to prevent large construction companies from damaging old and valued trees in the community. But in theory, a child planting an apple seed or small tree without permission would be breaking the regulation - can you see how that might reduce the number of trees being planted? The answer is not to remove the regulation, but to have exemptions or light-weight versions of the regulations for those use cases, and then apply more stringent regulations as the company (or tree) grows and becomes more robust and healthy.

If you already have funding these costs are peanuts, but if you just start out or want to bootstrap the running costs of a UG (~1200 yearly?) could be a dealbreaker.

> I love how being compliant, taxes, accounting, other regulations seems to be such a hard thing for people looking for millions of VC money while litterally thousands of companies do so every day.

Here is the thing: Most of these "startups" are never raising any money, let alone millions. The burden of regulation should be split into pre-raising and post-raising. (Many governments have figured that out with income, like if you have less than xx.xxx per year, you can get away from some reporting).

> people looking for millions of VC money

Startups don't begin with million of VC money which is what we're discussing here.

But they do have more investor money than 25k, don't they? Plus, proper incorporation serves your investors as well. Guess why YC ibsists in a Delaware corporation? From what I know, those are totally free of charge neither.

At the start? No, why would they? Raising money is usually something that makes sense after you build your mvp and all. If you really want an llc that's maybe $100 bucks. Otherwise cloud compute and stuff are near free at those scales and your own time isn't something you get paid for either.