[cruppstahl]

"Found a small company (UG) with 500EUR capital to hold rights on the site if you want to further professionalize this project."

Can you elaborate a bit? I have the same problem as the original poster. But founding a company requires IHK membership fees and tax consultant fees. From what I hear this amounts to ~ 1500 €/year.

[bflesch]

If you create a legal entitiy you will have to pay taxes / IHK (depending on your annual profit) and some tax consultant fees.

But in my eyes the benefit overweights:

- all your business expenses are kept in a professional setting and don't screw with your personal finances

- you will have a separate bank account

- you have a legal entity you can later sell to a real business

- you can use leftover money to (re-)invest into nearby business areas

- you have limited liability (and you can buy proper insurances for your risky business activities!!)

Your local IHK will be happy to guide you through this process.

I also started off as a sole proprietor and moved up the food chain through UG to GmbH(s), and there is so much you will learn during this process. I think every entrepreneur should have experience with local trade laws and taxes, so in my eyes you can't start early enough.

If you have any questions feel free to ping me.

[WA]

All of these can be done as sole proprietor (Einzelunternehmer), too.

Bank account: Just go to your bank and create business bank account.

Leftover money: It's up to you how much you withdraw, although you must pay tax on all income minus expenses.

Limited liability is not true (see Geschäftsführerhaftung).

Insurance: Again, you can get insurance (IT-Betriebshaftpflicht) as a sole proprietor too.

I think, if your project is merely ramen-profitable, don't bother about all the organizatorial overhead.

Another downside of a UG/GmbH: More paperwork for taxes etc. (double bookkeeping).

[onli]

I was thinking in the direction of a limited in the UK, having read that this is the easiest way. Do you have an opinion on that?

I'm a german living in France, the tax situation is already difficult enough, but yeah – I also think it is a good idea to separate any project income and costs from my personal finances

[bflesch]

I strongly advise you against forming a limited in the UK. The setup cost might be low but if something unusual happens the fees for expert advice will eat you alive. Furthermore UK Ltd has a very bad reputation in mainland EU because they are used by many people who aren't allowed to form companies in they home countries (e.g. Germany) any more due to previous bancruptcies.

If you do it out of tax reasons and you are willing to take the risk of not being able to do any administrative "things" by going to a local government agency in the town where you live, then form an entity outside of EU for example in singapore.

Again, I'd suggest you start your first steps in business locally where you can talk to actual people. There are a lot of services available that can help you out in person.

[junto]

Also, the German tax office will look at your UK registered company and your dividend payments and artificially lowered salary, and your German tax domicile, then tax you after the fact directly as if no company existed. Single ownership UK Ltd companies are a black flag to the Finanzamt.

My best advice is to walk into the local Finanzamt and speak to someone. I've always found them to be knowledgeable, courteous and genuinely interested in helping. Explain to them your goals (minimising tax liability / indemnity / etc) and they will advise you where they can (for free).

[onli]

Okay. I'll try to get local help. I already got told that France has a system for that I could use, I'll follow up on that.

[matt4077]

Don't do offshore. It's just a premature optimization. It also does not actually save you money unless you're leaving it outside the country. If you want to spend it in France or Germany, you have to pay taxes on it anyway.

If you ever need a credit or want to sell to businesses, you'll also find out that people don't trust Limiteds. One reason is that traditionally people used them for a fresh start after going bankrupt and being barred from operating a domestic company. It also appears as if ltds attract more than their statistically fair share of douchebags, ruining it for everyone else.

Also, and I know people differ on this, but I kinda think paying taxes isn't the worst thing there is (and is probably a moral obligation). There are also possible downsides from avoiding taxes & social sec contributions, like not having the kind of certificate for your income your next landlord might want, the inability to join public health insurance and the risk of managing all your retirement funds yourself – a friend of mine lost the two million € he had saved in his limited when Royal Bank of Scotland(?) went under.

[jakobegger]

I'd recommend against that. You'll probably be fine as a sole proprietor (Einzelunternehmen).

A separate legal entity (UG / GmbH / Limited / whatever) is mainly useful for three things:

- avoiding personal liability

- shared ownership

- tax optimisation

For a website like this, there is practically no liability to worry about. And if you don't have a partner, you don't need to worry about shared ownership.

For tax purposes, the overhead of a legal entity only pays off if you already have a lot of revenue (in Austria, more than 200k€ per year)

[WA]

I second that. There is no need to start a UG or GmbH.

Especially not for avoiding personal liability!

Because as the director of the company (which you are as a solo founder), you ARE still personally liable (GmbH-Geschäftsführer-Haftung).

Get a Gewerbeschein. It's 25€ or so. IHK might want membership fees, but they are really low if you don't have much income.

Go with Kleinunternehmerregelung. It makes many things easier if your revenue is below 17,500€ per year.

Don't forget: The first 8,000€ in income per year are tax-free.

[cruppstahl]

Thanks for the insights!

[cruppstahl]

Agree for a website. I'm selling software licenses, avoiding personal liability would be interesting (if it was affordable).

[jakobegger]

"Limited liability" is mainly related to financial liability (taxes, wages, payments for supplies). If you are worried about your software accidentally deleting all your users files, getting insurance would probably be better than founding a GmbH (and more affordable too).

[cruppstahl]

Interesting - thanks for your answers!

[pjlegato]

You can form a US corporation for approximately 100-200 per year in most states (California being a notable much more expensive exception.) There is no requirement that you actually live in the US or even visit.

Stripe now has "US incorporation as a service": https://stripe.com/atlas