Buying an existing company might seem like a lucrative opportunity to do your business in Europe. But before you reach a wrong decision, consult with experts. They will warn you about all the traps that can wait for you when you are buying an existing company.
If you plan doing business in Slovenia, at Data d.o.o., we have 45 experts who can consult you in the process of company registration. We also provide accountancy services, tax consultation and services of business address. Data d.o.o. also has its own legal department. They can highlight all the traps you can expect if you are considering buying an existing company.
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Traps of buying an existing company – buying an existing company does not include founding capital
While you might be tempted with the low price of buying an shelf company, you might not know that companies they sell do not have founding capital. In other words, the company has an empty bank account because the previous owner withdrew the money from the bank account. This means that it is possible, that you have to return the founding capital to the company. And the minimal amount of founding capital in an LTD company is 7.500€.
Traps of buying an existing company – be cautious especially if you plan to employ foreign citizens
Dealing with entrepreneurs for over 28 years gave us insight in the other traps that buying an existing company can pose. One of them is also the restraints when it comes to employing foreigners. The seller can tell you that the company fulfills the conditions to employ non-EU citizens. But if you buy a company older than 6 months, you are no longer left with the option of making a 50.000€ investment. And the other two conditions are either employing an EU citizen for 6 months or showing company turnover 10.000€/month for 6 months. Companies on the market usually do not include employees or such a high turnover.
Why do we recommend opening a new company instead?
You can register the company at the VEM point free of charge. Only this way, you will know exactly the history of the company and what is happening with it. You can also engage in support from tax experts and legal advisors from the beginning to avoid making mistakes.
The basic traps which buying an existing company can bring to you are:
- the company has restrictions in employing foreign citizens,
- it can also be in debt,
- you will have to return the amount of founding capital back to the company.
Other expenses which you can expect with buying an existing company
In addition of the high probability that you would have to return the founding capital back to the company, you can also expect other traps in forms of expenses. When you become the owner of the company, you will take on all the debt that the company might have. You can never really know if the company is in debt, up until you become the owner of the company as certain documentation is privileged only to the owner. Transferring ownership also occurs at the notary, so you will also have to carry notary expenses.
If you would like more information on opening a new company in Slovenia, send us an e-mail to email@example.com. You can also contact us over the phone 00386 1 6006 270 or 00386 40 530 718 (Viber, WhatsApp). You can also follow us on Facebook.