We recently expanded to Berlin, which was no easy feat. Learn more about the hurdles of opening a startup (GmbH) in Berlin and pick up some tricks for making the process smoother.
Opening an office in a different country - heck, even a different city - can be both exciting and really freaking daunting. ICYMI, we’re solidifying our presence in Europe with our new office in Berlin. In the coming months, we’ll share the tale of our Eurotrip as it unfolds in a series of blog posts, so stay tuned!
Let’s kick things off with the most appealing task of all: getting acquainted with the German bureaucracy. Yay!
For startups, the most common form of incorporation in Germany is a GmbH (Gesellschaft mit beschränkter Haftung), similar to an LLC (Limited Liability Company) in the US.
As its name explained, the Gesellschaftler (members) of the entity are not personally liable for the company’s debts. A minimum capital stock of 25.000 € is needed in order to found it (note that when employing more than 500 employees, a supervisory board is mandatory).
A place to work
To get through establishing your company in Berlin, you’ll need a command center. Finding the office that fits your needs is quite time-consuming. You can get started on this before arriving by contacting property agents. However, we’d recommend renting a desk in a coworking space, because you should meet some of the Berlin crowd. Check out some of Berlin’s best coworking spaces and see if there’s one for you.
While looking for a door to put your company’s name on, do some hunting for a lawyer. If you’re a start-up, make sure that your lawyer knows your field and has experience helping and guiding companies of your size. Make sure to conduct extensive research and don’t hesitate to contact them and evaluate if they’d be a good fit.
We spent a fair amount of time looking for one and we decided to go with The Startup Lawyers. They’re a great catch and we couldn’t find a better one. Bonus: lawyers in Berlin tend to have notaries on staff, so one less thing to tackle.
Let’s get this rolling
Your lawyer will draft a shareholder’s agreement (Gesellschaftsvertrag) and the notarial certification of your company (notarielle Beurkundung). These documents are the base for your incorporation in Germany. At this stage, you’re labeled a GmbH i.G., which means the shareholders are still liable with their personal assets.
Next, you need to appoint an official managing director and have it certified by a notary. (With all of the paperwork, an hour with a notary will get you all set!) The managing director doesn’t have to be the founder and you can have more than one.
Things are not over yet! You must now get set up with the commercial registry. You’ll need to transfer your capital stock which requires a really crucial step: finding the right bank.
Time to pay up!
Banks are aplenty and diverse in Berlin. Take your time and do your homework to find the bank that fits best. These days, more and more banks are catering to startups (with more or less incentives or success).
Going through the list, we took some notes on the best choices for a bank:
different account models (starting your business the simple Business Active should be enough)
branches all over the word
personal account manager
daughter of Deutsche Bank
quick and simple service (the simplest of all, I would say!)
Unfortunately, we weren’t very lucky with the bank we chose. They wasted our time and efforts and delayed finalizing our incorporation. To avoid this we would recommend that you set up a fixed date for your bank appointment right after meeting with your notary and do not limit yourself to opening just one account. Remember, you can always stop the process at any time and close accounts later (or keep one with a frozen capital in case of emergency).
These will be the documents every bank will expect from you:
Gesellschafsvertrag (shareholders agreement)
notarielle Beurkundung (notarial certification of your GmbH)
managing director (notarial certification)
filled application forms
Next, you can deposit the mandatory shared capital to finalize the registration in the trade register which will effectively turn your GmbH i.G. into a GmbH. Note that from this point on all shareholders are exclusively liable with the company assets.
In order to be added to the trade register, send a bank account statement where your capital stock appears (minimum of 12.500 €) to the notary that will work with the Trade Register to finalize these things.
The Trade Register is also the organization that will provide you with an extract about your company: the so-called Handelsregisterauszug (also HR-Auszug).
Once you have the stock capital on your bank account, the toughest part of setting up your new company is over. Now you (or your accountant) can request the company tax number and the VAT Registration Number in order to start conducting business in Germany. After lot of effort and a few headaches, we finally incorporated Wiredcraft in Germany!
The last step is to get a Betriebsnummer (company number) at the Employment Agency so your employees can be properly registered with their insurance companies, find an accountant, et cetera. I’ll cover that in my next blog post. Follow us on Twitter and stay tuned to our blog to keep up with our expansion to Germany!