How to set up a GmbH: Your guide to starting a limited liability company in Germany

As a founder, the biggest challenge is coordinating all the steps for forming a GmbH. Luckily, you have this checklist to show you the way.


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How to start a GmbH

  1. GmbH planning and requirements
  2. Company name and company objective
  3. Determine the share capital
  4. Choose between standardised or customised articles of association
  5. Go the notary appointment to make it official
  6. Open a business bank account
  7. Enter the GmbH into the commercial register
  8. Register with the trade office 
  9. Do a trade registration
  10. Register with the Transparency Register 
  11. Start operating
  12. FAQs


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Andreas Munck

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Got questions about setting up a GmbH 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.


Step 1: Planning and requirements

Before you start setting up your company, do two things: First, learn the basics about the GmbH and secondly, answer these foundational questions:


Step 2: Decide on the Firmenname (company name) and the Unternehmensgegenstand (company objective)

What you call your company matters a great deal. If it doesn’t stick in the minds of your customers, you’ll miss out on sales. But getting your company name right isn’t just a matter of marketing – it also has to be legally permissible.

For a company name to be officially viable, it must meet formal criteria to be greenlit by the notary and the competent district court.

In addition, you need a Unternehmensgegenstand (company objective) that defines the new GmbH’s business activities. These details will be noted in your company’s entry in the commercial register and made publicly available.

Answering these questions will help you take a strategic approach when choosing a name:

  1. Does the name evoke positive associations and fit the company and products?
  2. Is the name easy to understand and remember?
  3. Does the desired name not have any negative meanings in other languages?
  4. Is the name available regionally, nationwide and even worldwide?
  5. Is there a suitable free domain for the company website?
  6. Can the name be trademarked in the future?


To be able to answer “yes” to all these questions, you need to do a little research. Ask friends and acquaintances to clarify the first two questions. After a thorough Google search, the directories of the Handelsregister (commercial register) and the  Deutsches Patent- und Markenamt (German Trademark and Patent Office) are important addresses so that you can avoid name duplications.

Tip: It is better to put together a shortlist of three to five names because your first preference may not be viable.

Did you know you have to follow official company naming rules? If you break any of these, expect additional costs and delays. But, you can easily avoid this by getting a name check at the Chamber of Industry and Commerce (IHK).


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Andreas Munck

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Want to talk to a human about doing 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.


Step 3: Stammkapital: Share capital & formation costs

Once you decide on the name of the GmbH, you should sort out the financial details. A GmbH’s minimum share capital is €25,000. However, the central question is: How many company shares should you issue to each shareholder? The percentage of shares each shareholder holds determines company voting rights and, in turn, individual Stammkapital (share capital) capital. The distribution of shares is directly bound to capital contributions.

The same applies to limited liability company profits and losses: generally, their distribution depends on the share percentage breakdown (as per the GmbH Act).

A different distribution is possible, but this has to be written in the articles of association and certified by a notary.

Stammkapital, Stammeinlagen & Haftung: How to avoid share capital, capital contributions & liability common pitfalls

There are many myths about the liability and share capital of a GmbH in Germany. So be sure to have your facts straight about how the share capital and liability are intertwined:

  • In principle, you can form a GmbH by paying half of the minimum share capital—€12,500—into the company’s business bank account.
  • Each shareholder must pay at least one-quarter of the fixed share capital contribution (Stammeinlagen) at the time of formation.
  • The shareholders then “owe” the company their respective outstanding share capital contributions. This indebtedness lasts until the shareholders deposit the entire share capital into the business account.


How does paying less than the fixed share capital affect a GmbH’s liability? The GmbH is always liable with its entire fixed share capital. This means that if you are a founder who has yet to pay your share capital contributions in full, you’re liable with your private assets.

Let’s unpack this with an example:

Jane and Joe form a company with €12,500 share capital of a GmbH and distribute the shareholdings equally (split 50-50). Jane and Joe have a personal liability of €6,250 for the company. They will continue to be personally liable until they deposit the total amount of €6,250 into the GmbH’s business account. In other words, until Jane and Joe each pay €12,500 in full (reflecting 50% of the shares) they’ll remain personally liable for the company.

Being personally liable as a founder is risky. For example, if the GmbH is sued or goes into insolvency, you’re personally liable for the outstanding amount. This is why advises founders against forming GmbHs with less than €25,000.

How much does it cost to form a GmbH?

How much the formation costs in your case depends on many factors. As a rule, the formation of a GmbH costs ≈€800

Will the costs of formation be financed from the company’s assets or from private funds? It’s best to clarify how you would like to pay for the formation costs of the GmbH at the start.


Step 4: Musterprotokoll vs. Gesellschaftsvertrag: Standardised or customised articles of association?

For the GmbH legal form, you can use a founding documents template called the Musterprotokoll (aka standardised articles of association). Alternatively, you can draw up your own articles of association and customise the documents to fit your business’s needs (this is called either Gesellschaftsvertrag or Satzung).

Think carefully about the pros and cons of the two types of formation for your company. (We’ve outlined the most important factors in this article to help you do just that.)

First of all, figure out whether your company is eligible to use the Musterprotokoll by answering these questions:

  1. Are you a team of four or more GmbH shareholders?
  2. Will the company have more than one managing director?
  3. How will the GmbH’s fiscal year be set? Will it be different from the calendar year?
  4. Do you want rules (e.g. on the distribution of profits or the sale of shares) that differ from the GmbH Act?
  5. Will part of the share capital be “contributions in kind”?


If you answered “yes” to any of the following questions, the Musterprotokoll is not an option. Instead, you will have to draft customised articles of association.

If the Musterprotokoll is a good fit for your company, start preparing for the notary appointment.

Gesellschaftsvertrag: Think about the future when drafting the articles of associations

If you decide to form the company with articles of association, you can define the internal rules of the GmbH. Start by thinking step by step about which provisions you would like to add to the articles of association. Also, do some thought experiments using worst-case scenarios.

Plan now for the next five years because every change to the articles of association needs notarisation by a notary, which is always costly.

Get a lawyer or notary to draft your articles of association to ensure they are legally compliant.

If you establish a company with articles of association, you will also need a list of shareholders. You can easily create this yourself.


Step 5: The notary appointment for certification

After settling all the formalities, it’s time to start the official incorporation part of the formation. First, the shareholders and managing directors must attend an appointment where a notary certifies the founding documents and prepares the Handelsregister (commercial register) registration.

Get to know more about the notary appointment.

Be organised

Try to schedule your opening of the business account as soon after the notary appointment as possible! This is the only way to avoid a drawn-out formation phase.

Why is this important? Until the new GmbH is entered into the commercial register, the company is still “in Gründung” (“in formation”). Your company is stuck in limbo and is forced to tack “in Gründung” or “i. G.” onto your company name in business letters or its website imprint, for example.

Indeed, being “in Gründung” signals the following to the outside world:

  1. The company is not a legal entity yet.
  2. There is no Handelsregister (commercial register) entry or registration number for the company.
  3. The limitation of liability is not yet in effect.

The last point, in particular, is crucial for you as a founder: As long as the entry into the commercial register is missing, the shareholders are personally liable for the company. In other words, there is no limitation of liability to protect you as a business person.

Appointments at notary’s offices and banks at short notice are not easy to get in Germany. Without skilful coordination, the formation phase can be a bottleneck for your business.

The fastest way to start a company:

Step 6: Geschäftskonto: Open a business bank account

You should open the business account for the GmbH as soon as possible after the notarisation at the notary’s office. The managing director must always attend the bank appointment. Many branch banks also require that all GmbH shareholders be present when the company account is opened. You should, therefore, clarify with the bank beforehand how the appointment will proceed. If you are setting up the company from abroad, the requirements for opening the account will usually change, as additional documents will be necessary.

During the bank appointment, all shareholders must pay their capital contribution in cash, in full or pro rata, into the new business account. Now comes the next important step: the deposit slip for the share capital must be sent to your notary’s office as soon as possible. Only then can the entry in the Handelsregister (commercial register) take place.


Step 7: Entry into the Handelsregister (commercial register)

The entry in the commercial register takes place a few days or a few weeks after the notary has received all the necessary documents. As soon as the entry of the GmbH is published, you will receive a notification by post.

You will usually receive an invoice in advance, which you should pay as soon as possible. The invoice address is the registered office of the limited liability company. It is, therefore, vital that you remember to put the company name on the letterbox of the business address promptly after the notary appointment. Otherwise, the processing of the entry in the commercial register will most likely be delayed.

Entry into the commercial register means the GmbH is officially a legal entity, and the limitation of liability is effective.

Warning: Avoid the business register invoice scam

At this stage, please pay particular attention to scam letters that imitate the official invoice from the court cashier for entry in the Handelsregister (commercial register). This is a ploy that tricksters to swindle hundreds of euros out of newly minted founders. The layout, file number and seal usually look deceptively similar to the original invoice.

Transparenzregister (transparency register)

Since 1 August 2021, every GmbH also has to register for the transparency register. The founders must do the registration themselves. Before this date, the entry was only mandatory for certain companies and the notary took over this task. The entry costs €4.80 per year (as of 2021).

Find out more about registering with the transparency register here.


[BEGIN: Insert an Image between this tag]

Andreas Munck

[END insert Image]

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.


Step 8: Gewerbeanmeldung (trade registration)

Every GmbH that is commercially active must register with the local Gewerbeamt (trade licensing office). The GmbH managing director must apply for the trade registration with a simple form. This incurs fees of between €15 to €60.

This step comes after entry into the Handelsregister (commercial register) because you cannot register a business without a registration number from the commercial register.

Here is an overview of everything you need to know about the Gewerbeanmeldung.


Step 9: Steuerliche Erfassung: Tax registration

In parallel to registering your business, you must now complete the questionnaire for tax registration. Only then can the tax office assign you a Steuernummer (tax number). You are obliged to submit the completed questionnaire within one month of registering your business. If you need help, you can find a definitive guide here.

As soon as the tax office has checked your details, you will receive a tax number for the limited company. You will need this to send out your first invoices and to pay the VAT correctly.


Step 10: Start operating

The last step is to start business operations. Easier said than done because here, too, some bureaucratic tasks await you. If you hire employees, for example, you have to apply for a company number and register your business with the relevant employers’ liability insurance association.

Since every GmbH is obliged to keep double-entry bookkeeping, you must now set up your external accounting system – in the business itself or through an external service provider. In the start-up phase of the GmbH, you must also prepare an opening balance sheet, which you must also submit to the registration court. An additional step is the preparation of an accounting template.


Tips for a seamless GmbH formation

Many founders just want to get started and realise their business idea as quickly as possible. Nevertheless, it is worth considering exactly when you start in order to avoid delays and additional costs.

Draw up a timetable

Problems can arise at many points when founding a GmbH, as the bureaucratic apparatus in Germany is complex but at the same time offers little assistance. Here it is important to maintain an overview. Planning is, therefore, the be-all and end-all. Find out in advance what waiting times you can expect for which appointments or processing. You can keep the formation phase as short as possible by being super organised and coordinating like a professional.

Do the formation at the start of the year

Of course, you can incorporate it when you want. However, it is worth taking a look at the calendar when you start preparing. If you don’t want to set the GmbH business year differently from the calendar year or if you form with a Musterprotokoll (standardised protocol) anyway, it is less advisable to form in the last third of the year.

Assuming you start your formation in October and your GmbH is ready for business from mid-November, you are now obliged to prepare annual accounts for the first, very short business year. This legal obligation exists regardless of how long you have been preparing accounts. An annual financial statement from a tax consultant costs several hundred euros and means additional bureaucratic effort. Therefore, incorporation at the beginning of the year is always recommended – unless you adjust the business year individually in your articles of association.


Save on set-up costs

Many additional costs can be avoided by doing good research or preparing documents on your own. If, for example, your company name is rejected by the district court judge, you will have to go to the notary a second time and pay all the fees again. Good research and a check by the Chamber of Industry and Commerce can avoid this. You can also keep the fees low at the notary’s office. Learn more tips in our guide on notary fees for the GmbH here.

Create a checklist

A quick start-up often fails due to long processing times, busy schedules, and missing documents. Especially when founding a company from abroad, documents may have to be certified by foreign authorities and translated into German by a sworn translator. All these official procedures burn through a lot of time. So, make a complete checklist of all the documents you need as early as possible and work through them logically.

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Realistically assess your finances

Bear in mind that your GmbH is liable with its entire share capital, i.e. at least € 25,000. Even if you can establish a GmbH with €12,500, you should not disregard the outstanding contributions. The undercapitalisation of the GmbH takes its revenge at the latest when a liability case occurs.

So, if the financing of your GmbH is on shaky ground, consider forming a UG (the entrepreneurial ‘lite’ version of Germany’s llc). With this special form of GmbH, the minimum share capital is the symbolic amount of one euro. At the same time, you can convert a UG into a GmbH at any time if €25,000 in capital is available.

Not all advice is the same

There are plenty of startup consultants, but not everyone can help you with specific questions. Starting a business abroad, GmbHs as a holding structure or legal intricacies in the GmbH articles of association require support from a professional with many years of experience. Make sure you choose a consultant who has the right expertise for your business.


[BEGIN: Insert an Image between this tag]

Andreas Munck

[END insert Image]

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.



What does a GmbH need?

  • At least one partner (natural or legal person)
  • At least one Geschäftsführer (managing director)
  • €25,000 Stammkapital (share capital), at least €12,500 must be paid into the business account at the time of formation
  • A new business account
  • A registered business address at a physical location (what’s known as a “Ladungsfähige Geschäftsadresse” in Germany)
  • Entry in the Handelsregister (commercial register) and the Transparenzregister (transparency register)
  • Steuernummer (tax number)

What does it cost to set up a GmbH?

The formation costs of a GmbH consist of several items:

  • Notary fees:
    • Standard protocol: approx. €350 for individual founders, approx. €490 for founding teams.
    • Articles of association: approx. €815 for individual founders, approx. €825 for founding teams
  • Entry in the Handelsregister (commercial register): €150
  • Transparenzregister (transparency register): €4.80/year
  • Gewerbeanmeldung (trade registration): 1€15-60 depending on town/municipality


When does it make sense to establish a GmbH?

Formations in spring are always recommended if founders cannot or don’t want to change the business year (formation using the model protocol) to save tax consultant costs. Without a separate agreement, every limited liability company must have annual financial statements prepared with a reporting date of 31 December. This also applies to new companies that have only existed for a few months or weeks.

How many people does it take to set up a GmbH?

Every GmbH needs at least one shareholder who provides the share capital. This can be a natural person or a legal entity, e.g., another GmbH. In most cases, the shareholder of a one-person GmbH also becomes the managing director. There is no upper limit to the number of shareholders.

Can you set up a GmbH on your own?

Yes, this is possible and very common. Sole proprietors usually also take on the position of managing director. If you set up a solo company, you also have to raise the share capital of €25,000 on your own.

Who pays the formation costs of the GmbH?

It is usual for shareholders to pay the costs privately. In the articles of association, however, the founders can agree that the company bears a share or a fixed maximum amount of the formation costs. Such an arrangement is not possible with the standard protocol.

What are the advantages and disadvantages of a GmbH?


  • What are the advantages and disadvantages of a GmbH? Limited liability
  • Tax advantages
  • Excellent reputation
  • Very flexible company structure


  • Minimum share capital €25,000
  • Expensive to set up
  • Obligation to keep double-entry bookkeeping and annual accounts Logo (transparent)

Set up a GmbH without red tape:


Which entrepreneur is a good match for the GmbH?

The GmbH is suitable if the founders wish to have limited liability and have the necessary share capital of at least €25,000 available. The legal form is very well known and has a good reputation in Germany and abroad.

Who manages the GmbH?

The business is managed by one or more managing directors. The post can be held either by shareholders or employees of the GmbH. Managing directors in employment are also called third-party managing directors.

What are the duties of a managing director of a GmbH?

  • Representation of the company externally, in and out of court
  • Implementation of the resolutions of the shareholders’ meeting
  • Duty of disclosure and information
  • Duty of loyalty
  • Tax and formal duties
  • Calling the general meeting of shareholders

For what is an employed GmbH managing director liable?

  • Breach of fiduciary duty (e.g. non-competition clause, duty of confidentiality)
  • Breach of tax obligations
  • Failure to pay social security contributions
  • Delay in filing for insolvency
  • Mixing of assets


Have you read all this now and are now thinking that the GmbH is not right for you? There are options for your business, such as:


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Andreas Munck

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Andreas Munck

For over a decade I have been advising new entrepreneurs on the way to their own business. I would be happy to call you and help you with all your founding questions in a one-on-one consultation.

  • Startup Expert
  • 10+ years experience


Want to know more?

Our GmbH essential reading:

What is a GmbH?
The pros and cons of the GmbH
Formation costs of the GmbH
General T&Cs

Master list:

All Company Formation articles



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