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Moving from Freelancing to UG/Company

6 posts in this topic

Do I need to sell my freelancer business to the UG if the UG will operate in the same industry/field? 


I have had a freelancer business for a few years with a decent profit. I would like to close it down and activate my UG. I asked an accountant and a few lawyers and got very different replies.

One of the accountants believes that I am taking advantage of what I learned in the freelancer business and this is worth money. He says if I don't do this then the Finanzamt may later cause issues. I barely have any physical products so won't be moving those to the UG.

My biggest assets is my portfolio of clients but will not work with the same ones in the UG.

I would ideally love to close the freelancer business down and not have to sell it (which involves a lot of extra steps, contract/assessment of the business/paying).

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Don't sell your freelancer business to the GmbH, doing that has too many risks: https://anwaltskanzlei-berendes.de/2016/02/22/umwandlung-des-einzelunternehmens-in-gmbh-das-problem-der-verschleierten-sachgruendung/

 

--> you would need to "convert" your freelancer business into an UG, through an "Einbringung": https://www.juhn.com/fachwissen/umwandlung-umstrukturierung/einbringung-einzelunternehmen-gmbh/

 

But why an UG?

Its tax burden and the Steuerberater fees are higher than if you remain a freelancer: 

 

And an UG is difficult to get rid of again:

 

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What an honour to have the OG PandaMunich reply to my thread! Thank you so much for this very insightful answer.

RE Why UG? I already have a UG that I have not touched in a long time (created it few years ago as a holding company as I had plans pre-covid to launch a business with different partners) and I converted it to a working UG.

Still, why UG: I am planning to hire a few employees, don't plan on taking on much profit would like to re-invest the money to grow the company so it would have a lot of attractive reasons for me specially (I know your extremely valid points on freelancing vs UG I have read almost every one - so useful!).

I am not sure if I phrased the question correctly. This is more like it: 

Can I simply shut down the freelancer business without selling / without converting it and continue in the same industry through UG?

It does not have physical assets (besides the table and chair I bought years ago), the clients I have will not be clients of the UG. 

OR - because it's in the same "industry" I gained valuable insights and a certain "IP" and I have to sell or convert if I want to do it through the UG?



 

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As long as there is really no intersection of "essential" assets between the Einzelunternehmen and the UG, you do not have to convert (einbringen) the Einzelunternehmen into the UG: https://www.schwerd.info/sachgruendung-gmbh-durch-einbringung-einzelunternehmen/

  • Zu den funktionell wesentlichen Betriebsgrundlagen des Betriebs gehören neben Produktions- und Betriebsgebäuden regelmäßig auch Bürogebäude, Fahrzeuge oder Maschinen. Auch Patente, Marken, Erfindungen und der Kundenstamm stellen regelmäßig funktionell wesentliche Betriebsgrundlagen dar. Dies gilt unabhängig davon, ob diese Wirtschaftsgüter bilanziert werden (können) oder nicht
  • In addition to production and operational buildings, the functionally essential business assets of the business regularly include office buildings, vehicles or machinery. Patents, trademarks, inventions and the customer base also regularly constitute functionally essential business assets. This applies regardless of whether these assets are (or cannot be) recognised in the balance sheet.

Please note that the Finanzamt will ask you, when you give up your business, what you intend to live off next.

And when you then say that you want to continue in the same profession, but with your own UG, they will try to identify intersections, which can end up costing you more than simply doing this "properly" in the first place, by doing an "Einbringung".

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Thank you so much @PandaMunich, after your reply I am convinced to do an Einbringen as I want to avoid any future issues with Finanzamt like you mentioned. My biggest hesitation was that I already had a UG but what I read is that the freelancer business can be converted (einbringen) to an existing UG.

Do you know if it's too complicated of a process? I am going to schedule a meeting with the notary but one of the lawyers I spoke to made it look like a really complicated process that's suited for really big companies.

Will my UG need to pay a tax from the value of the freelancer business brought in? I am the sole owner.

 

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You need to ask a Steuerberater, lawyers are (usually) bad at the nitty-gritty of taxes.

If this is done properly, no tax will be due.

 

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