> Running a corporation or LLC without sufficient capitalization can be grounds for piercing the liability shield in a lawsuit.

Which is exactly how it should be handled, IMO: Deal with the abuse situations directly.

Forcing new companies to capitalize with an arbitrary amount of money at time of founding penalizes small players who want to start a company. It's also not a hurdle at all for large players who want to commit large frauds.

I have the impression the situations where that actually happens are at least arguably serious misconduct, and usually targeted at someone with significant assets.

A construction company that pockets ten million dollars and doesn't build anything probably can't shield its owner this way, but a single-developer software consultancy that pockets ten thousand dollars and delivers buggy code can.

Haven't heard anything about LLC capitalization in this context. Liability shield can be pierced, but only if LLC is misused (i.e. "when the company is treated as a personal "alter ego" and used to commit fraud, injustice, or illegal acts"). Lack of capitalization is not one of the reasons as long as you treat it as a company, not your wallet.

Have to prove fraud to get there. "Under" capitalization is a judgment call. Effectively, it's very rare. An LLC launches with effectively zero dollars literally dozens of times a day.

This is a core difference between common law and civil law. In common law systems, things tend to get sorted out after the fact, with a judge's discretion, only if things go really wrong. In civil law systems they try to design a perfect system of laws that makes problems impossible.

Delaware is expensive and you must have had a very specific reason to build your LLC there, rather than for example in Wyoming - such that to raise capital, build a corporation, etc. Now if you want to shut it down in a couple of years, it's not exactly clear what you had in mind.

No we don't. UG is still a GmbH bureaucratic monster which a bit less start capital. You still need to follow all taxation rules like GmbH, which costs you few more thousands per year (Bilanzeirung, Steuerberater, Abschluss, ...) just to be legaly compliant.

American LLC taxation is as simple as or even simpler than Anlage EÜR. And you don't need a tax advisor to do it.

A UG and and a GmbH is legal-wise exactly the same.

OP’s point is that you don’t need money in the bank to open an LLC like you would in Germany.

> I don’t feel like a company with no assets or income can do that much damage to their societies.

Keep in mind that those companies will almost always own some debit to their employees when they blow up.

IMO, $25k is a ridiculous amount of capital to require from a company before they can operate. But capital requirements are good, and they should be proportional to employment, not company existence.

There are ways to go into debt without dealing with banks. Any time you use something and are charged afterwards, it's a debt (which you could fail to pay by being broke by the time the invoice arrives). Common example - rent/lease. Or gas/electricity.

Ok, so what is the point of the money?

> In Germany getting 25k as a working adult is hard

German median household wealth is 4x that.

The US system is built to support entrepreneurship while the EU system broadly is to support the consumer and employee. The US will never be able to match the EU's consumer and employee protections and the EU will never be able to match the US's ease of doing business, because to have one you have to fundamentally give in on the other.

Depending on who you ask, one system is wildly better than the other, but at the end of they day they are just different systems with different tradeoffs.

Single member LLCs provide much less protection than most people imagine.

1. Any debt the business needs will require your personal guarantee. Even something as simple as getting a business cellphone.

2. They don’t protect you from liability for your own negligence. If you’re a very small company with no employees, almost everything someone would sue you for (for which you aren’t already personal guarantor) will arguably be down to personal negligence on your part.

It’s different if you have employees or other members because an LLC protects your personal assets against liability caused by their negligence.

But I constantly hear the advice that people operating as freelance devs should start an LLC as the very first thing they do and that’s silly in most cases.

What most people who start a single member LLC are really looking for is liability insurance.

A lot of places in Europe are around the same.

In Finland forming a non listed stock company is 240€ in fees without any requirement for capital/assets.

I think Estonia is even cheaper.

Same in the uk, well it’s “same day” costing about $200. The normal approach is 24 hours and costs about $130

UK's system is very similar too, as is Estonia's.

There are not quite as easy, but still ways easier types to choose from in Germany, OP just decided to go for one of the very complex ones.

I get that this gives you less liquidity personally, but (a) you're only required to pay in half, i.e., 6,250 EUR each, and (b) this money isn't gone, and you don't lose the ability to recover it should you decide to liquidate the company later. As others have pointed out, you can use that money to pay costs associated with the founding (e.g., the notary) and also expenses required to maintain the company (IHK dues, bookkeeping, etc.).

Don’t let the insults get to you.

But yeah, obviously, the more capital you pay in, the more “credible” your company looks. The whole concept of limited liability means that if your company capital is X €, the creditors can only get the X € (unless you do something stupid, see https://en.wikipedia.org/wiki/Piercing_the_corporate_veil).

The fact that the minimum capital amount is so high in Germany is bonkers to me.

> I have founded a UG and upgraded to a GmbH before.

So why not to the same here, instead of going with this more complicated setup?

HN commenters are acid, but from one author to another don't let them get to you because they'll shun you for losing your temper even if it's totally justified.

Registering a private limited liability company in the Netherlands costs around 400 euros. If you can file all of the taxes and other legally required paperwork yourself, you can be set up in a week or two. You will be a salaried employee of your own company, though, with a minimal salary you will need to rake in.

The combination of "no personal risk whatsoever, minimal funds/risk coverage, maximal profit extraction" doesn't lend itself well to places with basic regulations.

Capital investments in Europe are definitely not as easy to obtain as in the US for various economic, cultural, and historic reasons, which all led to some pretty weird laws here and there, but the extra week it takes to set up a business isn't the cause.

The reason this all took so long and was so expensive is simple. As the author states:

> I wanted real limited liability

They wanted two different companies with different setups to get out of having to save up the funds or find investors while also paying the least amount of tax possible. They set up a two-company system with all the risk in one and all the earnings in the other. It's like one of those tax dodging schemes the multinationals like, except within a single country. That comes with overhead.

Funnily enough, they then end with:

> Which leaves the only real question. Why 25,000 at all? It is my company and my risk.

Weird to think it would be their own risk if they spend so much time, money, and effort setting up a system that explicitly removes all the risk from them.

All of this feels like it was based on a business plan generated by some over-eager AI that tried to optimize to tick as many boxes as possible, ignoring the real-world consequences of those choices.

No he doesn't. You can register a Kleingewerbe at the Gewerbeamt online ([1] for NRW) and start right away. You can create an UG (literally supposed to fill the gap between a GmbH and a Kleingewerbe) within 2 weeks depending on the notary. And those 2 weeks come from the fact that the notary has better stuff to do than a UG registration and therefore probably doesn't make time specifically for you.

If you want to start a business and you don't need to pay for an office or whatever (because you can actually use those 25k for something), you can literally start over night. If you need a proper company that limits your liability, you can literally start in 2 weeks.

[1] https://service.wirtschaft.nrw/unternehmensgruendung/gewerbe...

It is, I guess it's depending what you wish to achieve. I'm a independent software consultant based in Germany (no employees etc, also not selling any SaaS or anything) and I've got a liability insurance to cover any mess ups.

It's also available in the Handelsregister, which is available for free.

You don't need to use a lawyer to draw up the docs unless you have special requirements: you can use the proforma memorandum (it's auto-filled if you apply online) and adopt the model articles of association.

- https://assets.publishing.service.gov.uk/media/5a7da236e5274...

- https://www.gov.uk/guidance/model-articles-of-association-fo...

If you buy and off the shelf company then you don't need any of that - they supply a pile of stuff (e.g. articles of association) and you don't need a solicitor to be involved.

Edit: And these days you don't even need two people - used to be that you needed two directors or director and company secretary.

Then it’s not an LLC, though. Personal assets exposed.

That sounds a bit like the UK concept of a Company Limited by Guarantee - which is used by a lot of charities.

Edit: I'm not a lawyer either!

In Germany the 25k Euro also does not need to sit in the account, after you reach it.

UG forces you to retain profit to hit a capitalisation target. An Ltd is a real company, and my £1 company has an identical legal status to one with hundreds of millions of pounds of assets.