WHAT DO YOU HAVE TO CONSIDER LEGALLY AND FISCALLY WHEN FOUNDING A COMPANY AND WHAT IS IMPORTANT IN CONTRACTS? FIND OUT HERE!
Founders and start-ups need legal and tax expertise and the corresponding special knowledge from the very beginning in order to be able to grow flawlessly.
So that you do not have to postpone these important topics, you can inform yourself fully in the Venture Classroom in order to avoid mistakes that later become expensive. The video course is available individually and always part of the Founders Mentoring!
1:1 Coaching & Consulting, Strategy Workshop, LifeCalls, Group Meetings, Networking Events and much more! Topics are in particular:
Save up to €10,000 on legal or tax advice.
Save up to €30,000 by avoiding the most common mistakes.
through correct procedure and setup for financing / sale
as operating expenses, from share capital or subsidy programs.
Write us a short application about your company, or set up an account and start in advance with the Venture Classroom, the online video course for founders. This prepares you ideally for the Founders Mentoring and costs are credited.
Search for the topics that interest you and receive expert know-how, application examples and step-by-step instructions. In Founders Mentoring, you also receive individual support.
Daniel Donhauser is a lawyer for commercial & corporate, tax and employment law with a focus on the areas of, M&A, venture capital and corporate law. As a lawyer for investors, entrepreneurs and start-ups he knows both sides:
1. how investors think and what they look for when financing or buying companies.
2. What needs start-ups have and what mistakes are regularly made by entrepreneurs.
As a lecturer, he regularly teaches legal, tax and and financial know-how, as well as the appropriate strategy, so that entrepreneurs can grow safely and without mistakes, optimize profits and achieve a high valuation. As an attorney and strategic legal counsel, Daniel Donhauser and his firm advise companies and entrepreneurs on growth. A particular focus is on strategic advice for financing rounds, employee ownership and growth. In Founders Mentoring, he coaches and advises on all legal, tax, financial and entrepreneurial issues related to building companies.
Learn more about Daniel Donhauser
The costs of the Venture Classroom and Founder Mentoring are tax deductible as so-called anticipated business expenses and can be offset against future income.
Many costs that are incurred before the official founding can be taken into account for tax purposes. These include travel expenses, consulting costs, start-up seminars, telephone calls, etc. if they are business-related. These expenses represent losses and it is possible to offset these losses against future or past income. In the tax return, these are entered in the EÜR attachment and then the result is transferred either to the G attachment for business income or to the S attachment for self-employed or freelance income.
If the input tax deduction is claimed, the sales tax (input tax amounts from the invoices) for the anticipated business expenses can be reclaimed from the tax office.
For the establishment of the GmbH or UG capital is to be paid into the company, in order to establish this (share capital) from this share capital the amount for the establishment can be paid. This also applies to consulting costs for the foundation as well as the costs of the Venture Classroom. You can find out how this works in the Venture Classroom.
Usually founders in the first two phases (startup and pre-seed) need legal advice worth about 5,000€ TO 16,000€ (20-30 hours), concerning, incorporation, startup, accounting, invoices, directors liability, financing, balance sheet, employees, T&Cs. All this information as well as the correct application you will get in mentoring and save the legal advice.
Founders usually need 20-30 hours of legal advice in the first two phases (foundation and pre-seed). If this is not taken care of and everything is done alone, without a lawyer or tax advisor, this produces mistakes that can only be corrected at a later stage by lawyers and tax advisors at great expense, or leads to high tax payments.
The Venture Classroom is available at any time for all common media. Whether on the road, at home on the couch or between meetings to prepare for individual appointments. The Venture Classroom is also regularly supplemented and renewed.
In Founders Mentoring you learn what is important when setting up a company with a view to financing and exit. You set up the setup as well as a data room and contracts accordingly and avoid mistakes. In a due diligence review of potential investors, they recognize the structured setup, the enlightened and informed management and realize that after the investment there is little to no outflow of liquidity to fix mistakes. As a result, your company is valued higher and you give away fewer shares.
Startups are financed from their own funds (equity), such as shareholder contributions and capital increases in financing rounds, or from external funds (borrowed capital), such as typically loans. An exception to this are convertible loans and shareholder loans, which are loans, but can be treated as equity capital.
The legal form of the company is decisive for the formation process. While in the case of personal companies such as GbR, KG, OHG the commencement of business is usually sufficient (apart from the tax registration with the tax office), a notarial contract is required for UG, GmbH and AG.
A notarial contract is necessary for the formation of a corporation such as UG (limited liability) or GmbH. The contract is drawn up by a lawyer or notary and forms the rules of the game among themselves. This contract is read out by the notary in the presence of the founding partners and then signed and notarized. With the scan of this document one opens then an account on the UG/GmbH in establishment. Once the account is opened, the deposit of the registered capital and the proof of the deposit of the registered capital is submitted to the notary. Then the notary submits the documents to the Commercial Register and the company is registered. The incorporation is completed with the registration.
The establishment of a UG or GmbH usually takes 5 to 10 days, whereby it depends from when you count the days and how fast you act. The preparation and negotiation of a partnership agreement can take between 1 day and 3-4 days. Notarization at the notary is usually done in 1 hour. So then it depends on how long it takes to open the account. While an online bank opens a new business account within a day, conventional banks usually need 3-5 days here. Once the account is opened, the deposit of the registered capital is made, which takes one day using SEPA. With the proof that the share capital has been paid in, the notary submits the complete documents to the Commercial Register for registration. Here it depends on how fast the Commercial Register works. Usually 4-7 days can be expected.
A convertible loan agreement is a form of corporate financing from external funds that flow to the company like equity. The company borrows a loan from the lender(s), which are usually business angels or early-stage VC funds. However, the aim of the loan agreement is not repayment, but conversion (conversion) of the loan amount into company shares at predefined terms and conditions. This avoids a fixed company valuation at the time of the cash flow and shifts this valuation back in time.
The costs of the financing round of a startup vary between 2.000€ and 20.000€ depending on effort, volume and phase. Typically, the costs of convertible loans are low and range between 2,000€ and 4,000€, as only one contract needs to be drawn up. In the case of capital increases, i.e. equity financing rounds, several contracts such as Shareholders' Agreements and Investment Agreements are drawn up and here the costs are usually between 5,000€ and 20,000€ depending on the size of the investment, the lawyers involved and the notary costs.
The cost of establishing a UG or GmbH is based on 3 factors. Draft contract and consultation are between 0€ and 1.000€. Who founds a UG with sample protocol, pays at the notary between 105€ (1 person UG) to 165€ (2-3 partners). With a regular statute there are about 850€ for the notarization. In addition, there is a fee of 150€ for the registration at the commercial register.
The running costs of the holding are accounting, annual financial statements and IHK contribution and together amount to about 1,000€ per year. If you have only a few transactions in the holding company and therefore only a few bookings, the costs for tax consulting are manageable and you can usually negotiate a deal with the consultant. The costs of the foundation are between 300€ and 1.000€.
The holding is worthwhile if the costs of the foundation and the running costs are covered by the tax savings of the profit distribution or the sales proceeds. This is usually the case with a distribution or sales proceeds of the operating company of around 15,000€ over 4 years, with formation costs of 500€ and 3,000€ running costs. So, if you earn around 15.000€ or more within 4 years, you make a profit with your holding company.
Whether to start with a UG (limited liability) or GmbH depends on the capital needs of the startup company. A GmbH has a share capital of 25.000€, a UG can have a much lower capital, but is obliged to build 25% of the profits in reserves. That is the difference, except for the name. If you need little capital in the beginning to build up the idea and you do not make profits in the first years because you are thinking about rounds of financing by VC investors anyway, the UG is a good decision. If the start-up capital requirement is higher and you want to start immediately with customer acquisition, appear strongly on the market and generate sales and profits, the GmbH is the better alternative for reputation reasons and because of the cost savings of the conversion.
For inquiries and information regarding legal advice, assessment of an issue, incorporation or legal counseling, I am always available through the usual contact channels. Until then, I wish you much success with your new content and look forward to your feedback.Contact now