If you are serious about starting a company in Germany, one of the first questions to ask is “What is the most suitable legal form for my company?”.
In order to answer this question, you should ask yourself – am I willing to become personally liable for my business? If the answer is yes, you can start a GbR (civil-law corporation in a form of civil law partnership).
Most frequently, it makes sense to start a company with limited financial liability. Simply speaking, if your company goes bankrupt, it does not mean that the owner goes bankrupt as well.
There are several forms of companies with limited liability in Germany.
Here is a good overview: Link
GmbH (Limited liability company) is the most frequent one. In order to start it, you should be willing to invest at least 25 000 EUR. All legal registration fees would cost appr. 1000 EUR.
UG (haftungsbeschränkt) is a small sister of GmbH. This relatively new legal form provides exactly the same financial flexibility as GmbH but does not require an initial capital investment. Officially, you can start a UG with only 1 EUR capital. The profit must stay with the company until you reach 25 000 EUR. Then, the owners are obliged to transform a UG into a GmbH. This legal procedure will cost you additional time and money. That’s why my advice is to start a GmbH if you have the required capital in order to avoid unnecessary effort afterwards. If you are lacking capital, UG is a great alternative.
In the nearest future, we will write about all bureaucratic formalities when registering your company in Germany. Stay tuned!