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You can significantly accelerate the incorporation process by using a model protocol (Musterprotokoll) if these following conditions are met:

1. Your GmbH has three shareholders or less.
2. Your GmbH has one managing director.
3. You do not have any special requirements for the articles of association.

The 'Mini-GmbH' is the corporate legal form Unternehmergesellschaft (haftungsbeschränkt) — commonly known as the UG.

The UG is a limited liability structure that caters to the needs of startups that have restricted starting capital (the minimum share capital is only €1.00 per shareholder) but still want to benefit from limited liability.

The UG is not a corporate form of its own, as frequently assumed, but is a variation of the regular GmbH, which was created by the legislation to Modernise the Law on Limited Liability Companies and to Combat Abuse (Modernisierung des GmbH-Rechts und zurBekämpfung von Missbräuchen [MoMiG]) in 2008. And, why the name Mini-GmbH comes from

Since its introduction, the UG enjoys enormous popularity among founders with more than 200,000 formations already — a number that is steadily growing.

As opposed to partnerships or sole proprietorships, the GmbH generally is only liable for damages with its assets. The personal assets of its shareholders are off limits. There are a few exceptions to this rule, which we explore below.

If the assets of the GmbH amount to less than € 25,000 before its entry into the commercial register (Handelsregister), the company as a legal entity can claim the missing share capital from all its shareholders. In this case, the GmbH's creditors have the right to full payment from the shareholders’ private assets. Failure to meet the minimum share capital requirement may jeopardise the limited liability of the company.

If a GmbH has lost its assets because of illegal actions by its shareholders, an extraordinary form of liability applies - liability for the destruction of economic basis. In this event, an insolvency administrator can make claims on the shareholders' private assets. If the shareholders do not fulfil their legal obligation to act in the best interests of the GmbH, they no longer have limited liability.

Your GmbH needs to have an official corporate name. You can choose a name inspired by your name, the sector, your corporate purpose (or business branch) or make something up. In every case the name suffix “GmbH” is mandatory, so your chosen corporate form is transparent to the public.

The four options are explored in greater detail below:

Name your company after a person‬‬‬

It is common to use the names of one or more co-founders as a company name, e.g., "Franklin Smith GmbH."

Create a fantasy name for your company

You may invent a word to serve as your company name, e.g., "Bribotax GmbH" or "Rompostomp GmbH".‬

Describe what your company does‬

Use a description of the purpose or the activity of your company, e.g. "Steve Baker's Online Children's Book GmbH" if you are selling children's books online.‬

Use a combination of the above options

You can combine two or more options, e.g., "Rompostomp – Frank Smith’s Online Book Store GmbH" or "Bribotax – Jill Reagan‘s Party Service GmbH".

Before you incorporate a UG, you should choose your company name carefully. Something to consider is the fact that many founders use fantasy terms that are not only unique - and thereby avoid copyright issues - but also pronounceable in as many languages as possible.

Most importantly, it's crucial that your company name only has positive connotations. Always consider your future customers before you make a final decision.

If you are unable to raise the minimum capital requirement of € 25,000 to form a GmbH, your best alternative is the UG (haftungsbeschränkt) - colloquially known as the mini GmbH or 1-Euro GmbH.

The UG is a special variation of the corporate form GmbH and caters to the needs of startups with limited starting capital that still want to benefit from limited liability.

The minimum capital requirement is only € 1 per shareholder.

A limited liability company, such as the GmbH, is your perfect match if you want to protect your personal assets and are able to raise the necessary capital share of € 25,000.

This corporate form also offers other advantages such as tax benefits and the public image of a fully-fledged company.

Hybrid corporate forms such as GmbH & Co. KG or the non-profit variation gGmbH are also limited liability options.

The Holding offers many tax benefits. For instance, if you transfer a subsidiary's profits to the Holding, 95% are tax-exempt — provided that the Holding holds a high enough share of the subsidiary (§ 9 Abs. 2a GewStG). The tax savings can then either be re-invested or paid out.

Tax benefits of the Holding also apply in the sale of subsidiaries. Such transactions only attract a 1.5 % sales tax.

Yes, it is possible to convert an existing company into a subsidiary of a Holding. However, if you want to sell the company and benefit from the tax advantage that Holding structures afford, you are going to have to wait seven years to do so.

If you sell the subsidiary before seven years have passed, the tax advantage is prorated. For example, if you sell a subsidiary after four years, the tax advantage applies to four-sevenths (57 %) of the selling price.

For total tax savings, the existing company must be intergrated as a subsidiary in the Holding formation process.

Liability of a Holding structure's subsidiaries does not extend to the parent company. Thus, transferring profits from the subsidiaries to the parent company protects them from liability claims.

For non-Holding companies, the profits remain as company assets. In the case a liability claim, assets have no protection.

The most important benefit is the liability limitation. Usually, all company assets are liable for damage claims. Within a holding structure, only the individual subsidiaries have unlimited liability.

If the respective subsidiaries are limited liability companies (GmbH or UG), the shareholders are not personally liable.

Operational Holding

Large-scale businesses typically use this kind of Holding. The Holding company itself is also an operating company, while the subsidiaries are branches. Within this structure, the parent company’s maintains tight control over its subsidiaries.

Management Holding

Within a Management Holding, the parent company issues directives to its subsidiaries about business strategy, capital flow management, and recruitment for management positions. Management Holdings often choose countries with attractive tax regulations to base their operations.

Finance Holding

Finance Holdings focus only on investment management rather than business oversight. In some cases, the parent company sets financial targets for its subsidiaries and functions as a corporate bank by providing capital.

Organisational or Structural Holding

This kind of corporation uses the Holding legal form as an organisational structure. Each subsidiary is a different department of the parent company.

Holding as a shareholder

Within this structure, the Holding acts as a regular shareholder, leaving the subsidiaries to manage their respective business operations autonomously.

This structure gives shareholders the tax benefits of a Holding without creating additional costs or increasing administrative burden.

The paid-in share capital of the UG (haftungsbeschränkt) must be between €1.00 (per shareholder) and € 24,999. The shareholders must pay the share capital after the incorporation but before the registration in the commercial register (Handelsregister).

The total share capital is the sum of the nominal shares held by each shareholder. The articles of association should explicitly articulate these amounts. The shareholders must pay the full amount in cash.

Although the minimum required share capital for a UG is only € 1.00, the upper limit is € 24,999. In practice, this figure is usually between € 1.00 and € 1,000.

‪For an accurate determination of your UG share capital, you should seek professional advice as the amount significantly influences your company's credit status and thus your liability as a shareholder.

The UG makes starting a limited liability company with low starting capital possible.

As with any limited liability company, UG shareholders' liability is limited to company assets. Claims cannot extend to the private assets of shareholders.

The UG has the lowest financial risk and the least bureaucratic hassle relative to other limited liability companies.