[miki123211]

I think what's even more important is that the costs for founding and maintaining such an LLC should scale with revenue, including scaling to 0.

In many EU countries, you still have to pay social security and/or health insurance, even if your company brings in no revenue. This isn't supposed to be a problem, as you're not really supposed to officially start a business unless you cross specific revenue thresholds. However, that doesn't work in practice if you're offering your services online, as many payment gateways in Europe will not deal with non-business accounts.

[Xylakant]

Social security gets paid on wages. Revenue doesn’t play into it.

[adamcharnock]

In Portugal (for example) is is mandatory for an Lda (limited company) to have an employee, and they must be paid minimum monthly amount. In practice this means a few hundred euros a month go to the government in taxes. Then on top of that is another hundred or so in accountancy fees.

[ptsneves]

As someone who had a company in Portugal I do not understand what you meant about requiring an employee to have limited liability company. You may be referring to the need for one of the owners needing to pay social security but it only needs to do so if it does not pay in any other form. It hurts but it is not unreasonable and may provide unemployment benefits.

The accountant requirement I confirm, but also true in Poland for example.

The really big offense is that one must pay taxes for the next year based on the previous tax payments. They give a small grace period but then it’s on. It was supposed to be an emergency measure but of course it was never removed. It is a free loan to the state.

You can open a single person business though and skip the accountant.

[buzer]

Not quite true. In Finland YEL (yrittäjän eläkevakuutus, pension insurance for entrepreneurs) is required and it's based on estimated value of the entrepreneur's work input. Even if you pay yourself 0 euros your YEL income is likely higher. The models that insurance companies use take revenue in account.

[dv_dt]

If they were being pragmatic about it, the more universal healthcare systems offered by many EU nations should be a massive advantage for startups vs nations like the US, but the wrong regulations around company operations negates it or worse.

[glimshe]

I didn't want to start a healthcare discussion but employer costs with healthcare in the US can be lower than Europe labor taxes. EmployEE costs is a different thing but many startups have young employees who don't need a whole lot of healthcare in general.

[dv_dt]

The employee healthcare costs don't count, so we can pretend that healthcare costs doesn't detract from performance or the ability to hire talent?

Serious cancers are on the rise among the young and the type of plans you allude to do not provide good coverage. And why limit startups to the young, or limit their ability to have a family? 40+ founders have a higher business success rate.

I think the US is having so many problems now because it wants to half-a** aspects of living that should be solid for false efficency.

Startups should be a voluntary fiscal risk, not a direct risk of life, limb, or family. That's also how you optimize for the success of the startup - by removing distractions and worries that are not directly in the startup proposition.

[glimshe]

I'm not arguing which system is best. I'm just saying this isn't a big advantage for a lot of startups from a purely financial perspective, which was the original point.

Sure, one startup will go down because the young founder had cancer, but that's not common enough to skew the average case too much.

40+ founders like me often had an opportunity to save for healthcare costs with the high salaries in the US plus Obamacare.

It's a fact that people in the US create lots of startups. Maybe the system could be much better (still not comparing to Europe) but it isn't too bad to be honest.

[trueismywork]

Startups but definition have no revenue.

Its also a chicken and egg problem. Having a revenue means having a company and vice versa. Unless you're in very old fields, which explains lack of new tech companies in Germany

[sib]

>> Startups but definition have no revenue

"Having no revenue" is definitely not the definition of a startup. There are plenty of startups with revenue (and even profit!)

[friendzis]

> Its also a chicken and egg problem. Having a revenue means having a company and vice versa.

How would you pay your employees making the product/service that will eventually bring in the revenue? That's what "own capital" is for.

Typical LLC/JSC will have at the very least one employee -- the CEO -- and that will bring one minimum wage worth of expenses (sort of). There are legal entity types that can function without employees with shareholders sort of self-employing, but those are not universal across the EU.

[jandrewrogers]

In the US, it is common for a small startup company to have no employees. Your role and title with a company is separate from your official employment status. This is where concepts like "sweat equity" come from. You can be an owner and work on a company without being an employee or receiving any compensation. Creating a company in the US comes with no real obligations to do something with it.

This is beneficial. It allows small companies to bootstrap without incurring the complexity and cost of having employees until they have enough revenue or capital to justify that expense.