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

Want to start a GmbH or UG in Germany? This is your roadmap to get you there. You’ll save yourself hours of research with this one checklist. But, get ready for some fun terminology! In true German style, there’s a lot of red tape to deal with but we’ll guide you through each step.

 

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How to start a GmbH or UG

  1. Choose the right legal form
  2. Come up with a name
  3. Write 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 Handelsregister entry
  16. Find a tax adviser
  17. Register with your local Gewerbeamt
  18. Get your company’s Ust.-ID (VAT ID)
  19. Buy insurance
  20. Register with the Transparency Register
  21. Create a bookkeeping system
  22. Sort out your Jahresabschluss (EOY accounting)
  23. Set up a payroll accounting system

 

You don’t have to follow the steps in this order. 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.

Note: This is a checklist for how to form (incorporate) a GmbH or UG company in Germany. If you want to dig deeper or need help with visas, then the Ultimate Guide to Starting a Business in Germany is for you.

 

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Andreas Munck

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Want to talk to a human 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.

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Learn more: 

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
The legal form you choose has fundamental financial, fiscal and legal implications.

Should you set up a GmbH or a UG?
Learn the difference between the GmbH and its smaller version, 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:

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?
The most reliable method to protect your company is to register its name as a trademark.

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

3. Decide on the Unternehmensgegenstand (company objective)

  • Under German law, this needs to be quite specific.
  • Check the Handelsregister (commercial register) to see what companies similar to yours have used for their Unternehmensgegenstand (object of the company).
Founders’ Hack: The IHK (chamber of commerce and industry) will check your company name and company objective for compliance for free. So take advantage of this offering.

Learn more:

All about the Unternehmensgegenstand
Important info on both the company objective and purpose, including examples.

4. Apply to the IHK (chamber of commerce & industry) for a company name and objective check

  • This service is free!

Learn more:

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 Gesellschaftsvertrag (articles of association)

  • Use either a:
    • standard template for your statutes and registration statement known as the Musterprotokoll; or
    • a customised version of the Gesellschaftsvertrag or Satzung 

Learn more:

Musterprotokoll vs. Gesellschaftsvertrag
Practical tips for choosing the right articles of association here.

Should I use the Musterprotokoll?
Get to know the advantages and disadvantages of each option.

The UG’s Gesellschaftsvertrag
Learn why you need articles of association and what they must contain.

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 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 in the process.
  • Bank: German “offline” banks often refuse to render services for foreign founders (even worse if you form 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
What is the appointment like, which people absolutely have to attend, and what do you have to watch out for?

The online notary appointment
A brief introduction to forming a company online in Germany.

The notary fees for incorporating a UG
How much a company has to pay in notary fees depends on its formation process.

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9. Find a bank that will accept you and open a business bank account

  • 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.

 

Our 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
Learn how opening a bank account abroad works plus which countries you can do it from.

Why entrepreneurs should have 5 bank accounts
Real-life lessons that make the case that you should have at least five bank accounts in Germany.

Comparing online banks
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:

Delving into capital contributions
Learn about share capital, outstanding deposits, increasing a deposit, the exact difference between assets in kind, cash contributions and mixed asset contributions.

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 share capital
Covers cash and contributions in kind in the incorporation process and capital increases and decreases.

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
The notary fees for incorporating a GmbH

Notary fees for forming a UG
Get a handle on the notary costs for forming a UG.

13. Pay the Handelsregister invoice

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

LEARN MORE: 

The Handelsregister (commercial register)
Learn what a Handelsregister entry looks like, where to get an extract and when changes are necessary.

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!
Find out what the fake documents look like and how you can avoid being ripped off.

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 questionnaire is accepted by the tax office without any delays. Remember: No tax registration, no Steuernummer (tax number). No Steuernummer, 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 (i.e., bookkeeping and tax return fees are much higher).

Learn more:

All about the tax registration questionnaire
How to register your business for tax purposes.

 

17. Submit your trade registration form to your local Gewerbeamt

 

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

Learn more:

Registering an LLC in Germany
When and where to register your GmbH or UG.

All about the Gewerbeanmeldung
Everything you need to know before you register a trade.

How to fill out the Gewerbeanmeldung form
What you need to pay attention to register successfully with the trade office.

18. Get your company’s Ust.-ID from the Finanzamt

 

19. Get the right insurance for your business and as an expatriate

  • When moving to Germany many different types of insurance are either mandatory or 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 to find the policies that fit your enterprise.

Learn more:

What types of insurance do I need?
Make sure you’ve got the right level of coverage for your business.

Which insurance is compulsory?
How to properly protect your business in Germany.

Berufsgenossenschaften
What are the statutory insurance associations in Germany & what do they offer?

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:

What is the Transparency Register?
All about the obligation to register with this transparency register.

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CONGRATULATIONS YOU MADE IT!

You can now start doing business. But, the fun doesn’t stop there.

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.

Our plug: We can take your bookkeeping pain away. 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 returns (known as the Jahresabschluss in Germany).

LEARN MORE:

Doppelte Buchführung
Overview of the basics of double-entry bookkeeping.

 

22. Jahresabschluss (annual accounts)

  • Create your Eröffnungsbilanz (opening balance sheet) and submit it to the tax office. Although there is no fixed deadline for submitting this, usually larger and medium-sized companies get up to three months after the start of business. UGs and smaller GmbHs are often given a period of up to six months. If you don’t do this, expect less than friendly letters from the tax authorities.
  • Find a good tax adviser. Don’t even think about DIY, it’s not worth the trouble. We can connect you with a professional who’ll keep you in the clear. 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 pay accountants a lot of money to clean up their messy books.

Learn more:

The Jahresabschluss
Guide to end-of-year accounting for companies in Germany.

Jahresabschluss checklist
How to manage the annual accounting of a German company.

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 work?
Find out what’s involved and what the abbreviations mean.

Viel Erfolg (good luck)!

Starting a company is an exciting part of an entrepreneur’s life. We wish you the very best in your endeavour. If you have any further questions or just want us to get rid of the pain of German bureaucracy, book a free chat with one of our German advisers. 

 

Be more specific

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

 

[BEGIN: Insert an Image between this tag]

Andreas Munck

[END insert Image]

Still got questions about setting up a business 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.

 

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

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