Hi, if you do business in Germany you either have to register a company or you have to use your personal name as the name of your firm. In the US and the UK you can register an assumed name and “do business as” (DBA). This explains why so many US based business website have just an ‘About’ in which they use their domain name and a street address. A German website has to have an ‘imprint’ (a direct translation of the German term ‘impressum’ - OK, originally it might a Latin word but now the Germans are the only ones who use it). You will see that only German corporations have an ‘imprint’ section on the English version of their website.
This would be against the law in Germany because as a private individual you can’t do business under your website’s domain name. You have to be incorporated which usually involves a certain amount of paperwork and money. Could this be one of the reasons why the unemployment rate in the US and UK is lower than in Germany?[YSaerTTEW443543]
I don’t know if it’s one of the reasons for high unemployment in Germany, but I’m sure it drives a lot of business into the underground economy.
In many European countries, to have a personal business at all, you need to file a lot of papers, show your qualifications, get a copy of your police record, show a letter from the tax office saying you don’t owe any taxes, pay a lot of money and wait for the government to process your papers. In the meantime, your clients can’t legally pay you. This makes it very difficult when you have a business that has developed by surprise, as they sometimes can. Sometimes you can have a surprise clientele that grows large before you even think to file papers. In the US you don’t have to register your business as long as there’s no safety or health issue. You just attract business, do your work and pay your taxes.
In the US the DBA isn’t really the best way to go if you want to have your own business. All it does is register the name you are doing business under. It offers no protection of one’s personal assets.
Here people who have a really serious business – even a very, very small one – can form a corporation. In most states that means filling out a form, paying a small amount of money (maybe $35 or $50), and in a day or two you’ve got your own limited liability company.
I hear that in some European countries forming a corporation is much more expensive. I’ve heard figures like ?15,000. One man from Germany told me he was even required to join the chamber of commerce and pay stiff fees to them. Torsten, you can tell me if this is true.
Another thing is that when you form a corporation in the US, you don’t have to list every line of business you plan to go into. You can just write some vague statement that allows you to go into any sort of business without having to file more papers or pay more fees.
In Germany, if you start a buisiness, you usually have to do it self-reliant.That means you are responsible with all your material properties. If you have done well buisinesses and have shown your responsibilities you can form a limited liability company and you are not longer responsible with your personal properties, responsible is the company only and you have to call a header of the buisiness. The kind of header of the buisiness doesn?t any matter -it might be even an other company. Also the number of the members joined to the chamber of commerce doesn?t. You often can hear GmbH & CoKG. The company must have build assets to make sure that it is able to pay for their liabilities.
If anyone intents to join to a chamber of commerce he usually has to pay to the assets. Then he is percentage -regarded to his part of the assets- shared to the profits. I don?t know the complete dialog you had with the German but I think that is what he had told you.
When I have watched American YUPie movies I often have heard that they can rise up to a partner in the company, mostly in lawyer companies. Is it for free because they have done well buisinesses in the past?
Hi Jamie, thanks for sharing this information with us, that’s very interesting. Maybe I can add something to what Michael has said.
You are right, registering a business in Germany can be quite complicated. Even if go self-employed which is the simplest form of ‘doing business’ you automatically become a member of the Chamber of Industry or Commerce. Many professional people in Germany don’t need the so called services of that organization but as of now you have no chance whatsover to not ‘join’ the Chamber. You are obliged to join it by law or to be more precise, you get enrolled into it as soon as you register a trade or fill in a form with the internal revenue.
As for a corporation in Germany, the minium registered capital stock is ? 25.000 and the registration process is rather complicated and expensive. That’s why many entrepreneurs decide to register a British Ltd. instead of a German GmbH. A couple of years ago the German laws were changed in order to allow German citizens do business using a British Ltd.[YSaerTTEW443543]