How to start a company in Germany: A company formation checklist

updated on 9. August 2022 25 minutes reading time
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Want to start a limited liability company (UG or GmbH) in Germany? We’ve put together a roadmap to help guide you through the formation process. Save yourself hours of research with this one neat checklist. It gives you everything you need to start (incorporate) your company.

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.

How to start a company in Germany:

  1. Choose the right company form
  2. Come up with a company name
  3. Decide on the company objective
  4. Apply for an IHK check
  5. Make a notary appointment
  6. Draft your articles of association
  7. Prepare for the notary appointment
  8. SHOW UP to the notary appointment!
  9. Open a business bank account
  10. Deposit the Stammkapital (share capital)
  11. Send the share capital’s deposit slip to the notary
  12. Pay the notary invoice
  13. Pay the Handelsregister invoice
  14. Don’t get scammed
  15. Wait for your company to be entered into the Handelsregister
  16. Find a tax adviser
  17. Register with your local Gewerbeamt
  18. Make sure you have your company’s Ust.-ID from the Finanzamt
  19. Get the right insurance
  20. Register with the Transparency Register
  21. Create a bookkeeping system
  22. Lay the foundations for your company’s Jahresabschluss 
  23. Set up a payroll accounting system

 

You don’t have to follow the steps in this order. In fact, start working on some of the steps as soon as possible. For example, begin shopping around for a bank account right away (it can take a while to find a good match).

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.

We hope this helps you on your way to starting a company in Germany!

 

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Andreas Munck

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Got questions about setting up a company in Germany? 

  • Startup expert
  • 10+ years experience

Hi, I’m Andreas and I’ve been advising businesses in Germany for over a decade. I’d be happy to call you and answer any questions you have in a one-on-one consultation.

 

 

1. Choose the right limited liability company for your business

  • Make sure it’s 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 impacts the limited liability of the corporate entity as shareholders will be personally liable for the missing €12,500 if something were to go wrong.

LEARN MORE:

Timing is everything: When to form a UG or GmbH
Why incorporating a business is best done earlier in the year.

How to choose the right legal form for your business in Germany
The legal form you choose has fundamental financial, fiscal and legal implications.

Should you set up a GmbH or a UG? We lead you through the German LLC maze!
Learn the difference between the GmbH and the smaller version of the GmbH: the UG.

2. Come up with a company name

  • Check the commercial register (Handelsregister) to find out if the name has already been taken.

LEARN MORE:

Assessing company names: Is my company name still available?
An overview of what to keep in mind when choosing a company name and what the regulations are.

How can I protect my company’s name in Germany?
The most reliable method to protect your company is to register its name as a trademark.

How to find the perfect company name for your UG or GmbH
Find out which legal regulations you must follow to make sure your company name is legally viable.

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.
Founders’ Hack: The German Chamber of Commerce and Industry (IHK) will check your company name and company objective for compliance for free. So take advantage of this offering.

LEARN MORE: 

The company objective (Unternehmensgegenstand): Definition and formulation
Important info on both the company objective (Unternehmensgegenstand) and the company purpose (Gesellschaftszweck), including examples.

4. Apply to the German Chamber of Commerce and Industry (IHK) for a company name and company purpose check

  • This service is free!

LEARN MORE: 

Name check by the IHK: Is the company name I want still available?
To avoid your name choice getting rejected by the authorities, a preliminary check by the IHK helps a lot.

5. Find a notary and make an appointment 
to form the company

Note: We have a network of notaries and can do this for you. 

 

6. Draft your company’s articles of association

  • Use either a:
    • standard template for your statutes and registration statement (known as the Musterprotokoll); or
    • a customised version that you’ve drafted yourself (known as a Gesellschaftsvertrag or Satzung).

LEARN MORE: 

Musterprotokoll vs Gesellschaftsvertrag (articles of association): How are they different?
Practical tips for choosing the right articles of association here.

Should I use the Musterprotokoll or bespoke articles of association when incorporating a UG in Germany?
Get to know the advantages and disadvantages of each option.

The UG’s Gesellschaftsvertrag: The articles of association of Germany’s entrepreneurial company
Learn why you need articles of association, what they must contain and the pros and cons of the Musterprotokoll.

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 of permanent residence. Again, double-check with a notary or lawyer EARLY on 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.

Note: 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.

LEARN MORE: 

The notary appointment for company incorporation in Germany: What founders need to know
What is the appointment like, which people absolutely have to attend, and what you have to watch out for?

Digital GmbH incorporation: Everything you need to know about the new online notary appointment
A brief introduction to forming a company online in Germany.

What are the notary fees for forming a UG in Germany?
How much a company has to pay in notary fees depends on its formation process.

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 via this tool.

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.

LEARN MORE: 

Opening a German Bank Account as a Non-German Citizen: How It Works
Learn how opening a bank account from abroad works and from which countries it is currently possible or not possible to do so.

Why entrepreneurs should have five bank accounts in Germany
Real-life lessons that make the case that entrepreneurs should have at least five bank accounts in Germany.

Digital business accounts: A comparison of online banks in Germany
A primer on the online banks in Germany and the digital business accounts they offer.

 

10. Deposit the Stammkapital (share capital) via cash or wire transfer into the company’s bank account


  • Write Stammkapitaleinlage [DATE] in the reference field.

LEARN MORE: 

Stammeinlage and the GmbH: Delving into capital contributions in Germany

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).

LEARN MORE: 

GmbH Stammkapital (share capital)

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, don’t do this. You want to keep your notary onside for future official matters, including funding rounds.

LEARN MORE:

Notary costs for forming a GmbH (limited liability company)

What are the notary fees for forming a UG in Germany?

13. Pay the Handelsregister invoice

  • Unless, of course, the notary has done this for you.

LEARN MORE: 

German limited liability companies (GmbH & UG) and the Handelsregister: From registration to removal

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 such as Kosteneinzugsstelle der Justiz;
    • A simple IBAN number; and
    • The amount should equal €150-

LEARN MORE:

Beware of fake Handelsregister invoices!

15. Wait patiently until the Handelsregister does its thing

  • Your notary will notify you once the company is entered into the commercial register
  • You can also check online at www.unternehmensregister.de.

 

16. Find a tax adviser

  • Grant your tax adviser power of attorney do the following:
    • Get help to complete the Fragebogen zur steuerlichen Erfassung (tax registration questionnaire); and
    • Ask for advice on the different tax implications for your company

NB. Start the selection process early. You want to get a feel for your tax adviser. A good one can make sure your tax registration questionnaire is accepted by the tax office. Remember, no tax registration, no invoices. No invoices, no income.

PS. Before you begin setting up your business, think about getting a tax adviser to help you understand the tax implications of the different legal structures in Germany. If legal liability isn’t a must then find out how much money it would cost you to maintain a non-incorporated business vs. an incorporated one. Corporations generally have a lower tax rate but cost a lot to maintain (ie, bookkeeping and tax returns fees are much higher).

LEARN MORE:

Fragebogen zur steuerlichen Erfassung: Everything you need to know about the tax registration questionnaire

 

17. Submit your trade registration form to your local Gewerbeamt

 

Tip: If you’re setting up a business in Berlin or Hessen it can complete the registration online in English.

18. Make sure you have 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.

LEARN MORE:

What’s with compulsory insurance (Pflichtversicherung) for the self-employed & freelancers?

20. Register with the Transparency Register

Due to an EU directive aimed at combating money laundering, most companies now have to register with the Transparenzregister (the German Transparency Register). This step in the company formation process is slightly less annoying because it can easily be done online.

LEARN MORE:

Transparenzregister: What is the Transparency Register?

CONGRATULATIONS YOU MADE IT!
You can now start doing business.

But, the fun doesn’t stop here.
You still need to set up:

21. 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 on annual turnover or incoming 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.

OR

  • 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).

 

22. Jahresabschluss (annual accounts)

 

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.

LEARN MORE:

Creating a Jahresabschluss (the German equivalent of an annual financial statement): What you need to know

Jahresabschluss Checklist: How to manage your first annual accounts

23. Lohnabrechnung (Payroll)

  • Set up a payroll accounting system
  • Be smart. Let an expert handle this side of your business so you don’t risk

LEARN MORE:

How does payroll accounting (Lohnabrechnung/Gehaltsabrechnung) work in Germany?

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. 

 

Be more specific

If you want a checklist that is specific to the type of limited liability business you want for your business, we’ve got you covered:

 

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.

 

The Master list of all Company Formation articles can be found here. 

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