Want to set up a limited liability company (UG or GmbH) in Germany? We’ve put together a roadmap to help guide you through the formation process. This will save you hours of research as we’ve included everything you need to get registered in one neat checklist.
Get ready for some fun German terminology! In true German style, there are a lot of bureaucratic hoops to jump through and forms to fill in.
They don’t have to be followed strictly in this order. In fact, some steps should be started as soon as possible.
If you want to hack the process, you can do that with an expert guide who will help you incorporate your company in the shortest time possible.
1. Choose the right limited liability company for your business
- Make sure its the right legal entity for your purposes.
- Check if you have sufficient share capital:
- For a UG the mandatory €1 – but €1,000 or above is recommended.
- For a GmbH the bare minimum is €12,500, but at least €25,000 is best.
Founders’ Hack: The UG is the ‘mini’ GmbH because it requires less share capital (as little as €1). But, if you want your formation to be hassle-free, you should opt for at least €1,000 of share capital.
However, if you get close to €12,500 in share capital consider the GmbH. The formation of a GmbH requires only half of the share capital to be deposited right away. Since the minimum share capital for a GmbH is €25,000 that amounts to €12,500. But, keep in mind that this effects the limited liability of the corporate entity – shareholders will be personally liable for the missing €12,500 if something were to go wrong.
2. Come up with a company name
- Check the commercial register (Handelsregister) to find out if the name has already been taken.
3. Decide on the Unternehmensgegenstand (object of the company)
- Under German law, this needs to be quite specific.
- Check the Handelsregister to see what companies similar to yours have used for their Unternehmensgegenstand.
4. Apply to the German Chamber of Commerce and Industry (IHK) for a company name and company purpose check
- This service is free!
5. Find a notary and make an appointment to form the company
- Check out https://notar.de to find a notary that speaks your language.
6. Draft your articles of association
- Use either a:
- standard template for your statutes and registration statement (known as the Musterprotokoll); or
- customised version.
7. Get together your necessary documents for the notary appointment
- You’ll need the following:
- Articles of association
- Shareholder’s list
- Founding documents needed to open a bank account
8. SHOW UP to the notary appointment with your fellow shareholders to make it official!
- Don’t forget to bring your ID and necessary documents!
Foreign founders beware: You’re not a German national or an EU citizen? Germany has some fun in store for you:
- Shareholder: You can be a shareholder of a German company. But, if you use a foreign company as a go-between you need to be well prepared. A notary in your jurisdiction needs to confirm in detail that the company exists and is properly represented. This confirmation needs to be apostilled by the relevant state authority. So get started on this right away or reconsider. This applies to all foreign companies (even in EU countries).
- Managing Director: This is a tricky one which causes a lot of trouble. We recommend you make sure that you have a VISA allowing for multiple entries or some form a permanent residence. Again, double-check with a notary or lawyer EARLY in the process.
- Bank: German “offline” banks often refuse to render services for foreign founders (even worse if you found with a foreign company). Being an EU citizen helps. You may think you can hack this with an online bank. But, they have problems here too. In our experience, you will not be accepted if your country is not on this list: ID Now.
NB. Seek legal advice to get this right!
Founders’ Hack: Notaries can vouch for the costs of the registration with the Handelsregister. Ask your notary about this possibility. Some do it only for known customers. Some do it if you deposit the amount in cash with them.
This can save about a week in time because the Handelsregister will process your registration right away. Otherwise, they will send you an invoice and wait until you have paid the fee.
Important: Make sure your mailbox has your company name on it! If you cannot receive mail causes all kinds of problems.
9. Find a bank that will accept you and open a business bank account with them
- Take your formation documents given to you by your notary.
- No need to wait for step number seven. Start your bank search early on in the company formation process.
Shameless plug: From the many many incorporations we have managed, we’ve seen it all when it comes to banks: the good, the bad and the ugly. You can leverage our years of first-hand experience by talking to us here.
Founders’ Hack: Start talking to banks as soon as possible (even before you go to the notary) and talk to several in parallel. For “offline” banks you need to appear in person, so if you start your search late in the process, you’ll lose a lot of time.
Tip: Set up your bank appointment to occur right after the notary appointment!
Don’t forget: Check with the bank what documents you need to bring and in what format. Some banks accept pdfs while others require the original documents.
10. Deposit the Stammkapital (share capital) via cash or wire transfer into the company’s bank account
- Put Stammkapitaleinlage [DATE] in the reference field.
11. Send the share capital’s deposit slip to the notary
- Do this promptly so the notary doesn’t have to chase you up for it (you want to get on your notary’s good side).
12. Pay the notary invoice
- Be a good founder and do this ASAP.
Fun fact: Technically registration will happen even if you do not pay the notary. But, we do not do this. You want to be friends with your notary you will need him or her for other official matters, including future funding rounds.
13. Pay the Handelsregister invoice
- Unless the notary has done this for you!
14. Be on alert for the ‘legal’ scams that get sent to you after your company is registered
- There are a number of people sending fake official invoices, usually for a commercial register of some type.
- Before paying anything make sure it’s legitimate by looking out for the following three things:
- The recipient has long German words eg Kosteneinzugsstelle der Justiz;
- A simple IBAN number; and
- The amount should equal €150.00.
15. Your notary will notify you once the company is registered
- You can also check online at www.unternehmensregister.de.
16. Find a tax adviser
- Do the following:
- Help you complete the tax office questionnaire (Fragebogen zur steuerlichen Erfassung);
- Advise you on different tax implications for your company; and
- Grant them power of attorney.
NB. Start the selection process early. You want to get a feel for your tax adviser. He or she can also help immensely with tax registration. Remember, no tax registration, no invoices. No invoices, no income.
17. Submit your trade registration form to your local trade office
- Trade registration in Germany is called Gewerbeanmeldung. This is done at your local trade office which is called a Gewerbeamt.
- Click here for a guide on how to fill in the Gewerbeanmeldung form.
- Can be done in parallel with the previous step.
Tip: If you’re setting up a business in Berlin or Hessen it can complete the registration online in English.
18. Make sure you’ve got your company’s Tax ID (Ust.-ID) from the Finanzamt (tax office)
- You need this to make your invoices valid!
19. Get the right insurance for your business and as an expatriate
- When moving to Germany there are many different insurances that are mandatory as well as desirable for both your business and you as an individual. The bureaucracy is complex and the choices are broad. You need a partner on the ground in Germany to discover the policies that are the best fit for you and your enterprise.
Shameless plug: We can talk you through all the different expat insurances you need if you book in here.
CONGRATULATIONS YOU MADE IT!
You can now start doing business.
But, the fun doesn’t stop here. You still need to set up:
20. Buchhaltung (Bookkeeping)
- Find a firm to do the bookkeeping for you and integrate it into your operations. Make sure you ask the right questions to get a better idea if a prospective firm is a good fit for you and will deliver a quality service:
- How are their fees structured?
Do they charge based annual turnover or ingoing and outgoing transactions? Depending on your business model this is a crucial question that will determine the financial viability of the firm’s services for your business.
- What kind of software do they use?
The industry standard is Datev and is a good indicator of how professional their services are. Agenda is also a reputable brand that you can trust.
- What is the process of delivering invoices and transaction receipts?
A straightforward and easy to follow system should be in place. Steer clear of any firm that gets you to categorise or designate this kind of documentation.
- How are their fees structured?
- Set up a DIY-Bookkeeping system (make sure it’s foolproof and accepted by your tax adviser to avoid an accounting nightmare at the end of the year).
Founder beware: If you go down the DIY path, make sure your system is foolproof and accepted by your tax adviser to avoid a costly accounting nightmare at the end of the year. Unless you’re a freelancer or have a very small business this is almost impossible to do and is not best practice.
Shameless plug: We can take your bookkeeping pain away. Just click here. Accounting shouldn’t take up your precious time and you’re probably going to f*** it up anyway. Let the professionals handle it and save yourself having to pay an accountant €€€ to fix up your books for your EOFY reporting and tax return (Jahresabschluss).
21. Jahresabschluss (Annual accounts)
- Set up your Opening Balance Sheet (Eröffnungsbilanz).
- This is where finding a good tax adviser is important. Don’t even think about DIY, you might get in trouble with the Finanzamt. We can connect you with a professional who’ll keep you in the clear. Trust us: You don’t want to mess with the Finanzamt!
NB. Bookkeeping can make small-time entrepreneurs come undone. Without accurate bookkeeping, you can find yourself in hot water when it comes to publishing your Jahresabschluss and operating your business in general. We’ve seen one too many founders paying accountants a lot of money to do a clean up job a year operating.
22. Lohnabrechnung (Payroll)
- Set up a payroll accounting system
- Be smart. Let an expert handle this side of your business so you don’t risk
Viel Erfolg (Good luck)!
Starting a company is an exciting part of an entrepreneurs life. We wish you the very best with your endeavour. If you have any further questions or just want us get rid of the pain of German bureaucracy, book a free consultation to have a chat with one of our German experts.
The information published on our site is all written and checked by experts with the greatest care. Nevertheless, we cannot guarantee the accuracy of this information, as laws and regulations are subject to constant change. Therefore, always consult an expert in a specific case – we would be happy to connect you with the right professional.
firma.de assumes no liability for damages caused by errors in the texts.