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This is the same as an AB. Many start by having €5000 and then selling things they own such as computers to the AB, to get the funds "back". I think Sweden chan

by devdad 9y ago

This is the same as an AB. Many start by having €5000 and then selling things they own such as computers to the AB, to get the funds "back". I think Sweden changed from €10000 to €5000 a couple of years ago. If the UG or GmbH goes belly up, am I in any way personally responsible?

Xylakant 9y ago
The point where you’re selling private property to your company is the moment you really really really want to talk to a good tax accountant in germany. If you sell above reasonable price it’s considered tax fraud (verdeckte Gewinnentnahme) and the reasonable price is likely to be a point of contention between you and the tax authorities. Unless you haven very valuable machinery you want to place into the company it’s usually not worth it and in this case you’d want a third party to certify the price. You can, however, pay yourself a reasonable wage and there are pretty clear guidelines on what’s considered reasonable. Much cleaner and easier. Personal liability is a bit a complicated topic. If you’re a pure shareholder, your liability ends with the value of the shares. If you’re at the same time the only shareholder and the CEO and only employee you can be liable for quite a few things. (Social security, taxes, damages for your personal actions, anything that constitutes fraud, ...)
- charlesdm 9y ago
  This is simple and applies to most (Western) jurisdictionS: don't sell anything to a company you own or control, at an above market rate. Now, there are many ways to value something, and there is generally some room for interpretation on how much to charge exactly. But you will need to find a way to justify the price at which a transaction was concluded. With IP it gets a bit blurry (e.g. you might own some trademarks you want to transfer to your new company), but again, there are a ton of perfectly acceptable ways to value something and not face the wrath of your local tax collector. Just make sure you have a reasonable valuation, based on objective facts, and you'll (mostly) be fine.
hobofan 9y ago
> If the UG or GmbH goes belly up, am I in any way personally responsible? Not as long as you did everything lawfully.
- Xylakant 9y ago
  This is a deceivingly simple and dangerous assertion. Some people form a GmbH/UG as a sole owner/ceo with the goal that it shields them personally from liability, but never intend to take on investment or have employees. Personal liability tends to creep in in a lot of places, piercing the shield. Many rental contracts for example will stipulate a personal liability for the owner/ceo in such a case. A credit line for the company might as well, even something as simple as a credit card for the company does. The CEO is personally liable for quite a few things that are not as clear cut as it seems at first glance: You may be liable for correct tax filing and in taxes, many things are judgment calls with a thin line between what's considered a valid way to reduce taxes and tax fraud. Personal liability may creep in from declaring insolvency too late in the hope that the next contract will save the company. Haven't filed the taxes because you need to bring in money? Company can't pay the taxes right now? A common thing when companies go down, but personal liability. It might creep in by entering contracts that the company cannot reasonably fulfill and the CEO should have known, but looked the other way because they hoped that things will just work out fine. True, if you did everything lawfully, then you're probably shielded, but despite best efforts, most people and companies slip up sooner or later. There are many reasons to form an LLC, but the hope of shielding yourself personally as a single developer/consultant is often in vain.
  - hobofan 9y ago
    I didn't mean to make it sound simple. Thank you for expanding on that. The ones dictated by law are certainly tricky, because those apply to you by default and you might not know about them. I wouldn't throw credit line/rental into that same mix though, since those are contracts you enter willfully and those contracts explicitly state that you are personally liable if the company can nlt meet its obligations.
    - 9y ago

by devdad 9y ago

Xylakant 9y ago

The point where you’re selling private property to your company is the moment you really really really want to talk to a good tax accountant in germany. If you sell above reasonable price it’s considered tax fraud (verdeckte Gewinnentnahme) and the reasonable price is likely to be a point of contention between you and the tax authorities. Unless you haven very valuable machinery you want to place into the company it’s usually not worth it and in this case you’d want a third party to certify the price. You can, however, pay yourself a reasonable wage and there are pretty clear guidelines on what’s considered reasonable. Much cleaner and easier. Personal liability is a bit a complicated topic. If you’re a pure shareholder, your liability ends with the value of the shares. If you’re at the same time the only shareholder and the CEO and only employee you can be liable for quite a few things. (Social security, taxes, damages for your personal actions, anything that constitutes fraud, ...)

charlesdm 9y ago
This is simple and applies to most (Western) jurisdictionS: don't sell anything to a company you own or control, at an above market rate. Now, there are many ways to value something, and there is generally some room for interpretation on how much to charge exactly. But you will need to find a way to justify the price at which a transaction was concluded. With IP it gets a bit blurry (e.g. you might own some trademarks you want to transfer to your new company), but again, there are a ton of perfectly acceptable ways to value something and not face the wrath of your local tax collector. Just make sure you have a reasonable valuation, based on objective facts, and you'll (mostly) be fine.

hobofan 9y ago

> If the UG or GmbH goes belly up, am I in any way personally responsible? Not as long as you did everything lawfully.

Xylakant 9y ago
This is a deceivingly simple and dangerous assertion. Some people form a GmbH/UG as a sole owner/ceo with the goal that it shields them personally from liability, but never intend to take on investment or have employees. Personal liability tends to creep in in a lot of places, piercing the shield. Many rental contracts for example will stipulate a personal liability for the owner/ceo in such a case. A credit line for the company might as well, even something as simple as a credit card for the company does. The CEO is personally liable for quite a few things that are not as clear cut as it seems at first glance: You may be liable for correct tax filing and in taxes, many things are judgment calls with a thin line between what's considered a valid way to reduce taxes and tax fraud. Personal liability may creep in from declaring insolvency too late in the hope that the next contract will save the company. Haven't filed the taxes because you need to bring in money? Company can't pay the taxes right now? A common thing when companies go down, but personal liability. It might creep in by entering contracts that the company cannot reasonably fulfill and the CEO should have known, but looked the other way because they hoped that things will just work out fine. True, if you did everything lawfully, then you're probably shielded, but despite best efforts, most people and companies slip up sooner or later. There are many reasons to form an LLC, but the hope of shielding yourself personally as a single developer/consultant is often in vain.
- hobofan 9y ago
  I didn't mean to make it sound simple. Thank you for expanding on that. The ones dictated by law are certainly tricky, because those apply to you by default and you might not know about them. I wouldn't throw credit line/rental into that same mix though, since those are contracts you enter willfully and those contracts explicitly state that you are personally liable if the company can nlt meet its obligations.
  - 9y ago