Many people who want to start a company ask themselves about the appropriate legal form. One possibility is the limited liability company – in short, the GmbH. But what exactly is behind it and what prerequisites must be considered when establishing a GmbH? What is the duration of the registration in the commercial register, what capital is to be raised and what does the foundation of the GmbH with the notary and tax consultant cost? We describe to you the essence and the process with all steps to a successful company formation.

The limited liability company has, strictly speaking, two entities. On the one hand it is a commercial company and on the other it is a legal entity. A legal person, unlike a natural person, is not a truly existing person. Therefore, it cannot act independently, but requires a natural representation. This function is therefore carried out by the managing director. However, a legal person is legally treated on an equal footing with a natural person: he can buy and sell, hire and terminate staff, sue and sue, and of course he must also pay taxes.

1.2 Big advantage: Limitation of liability

Another essential feature of a GmbH is the name-giving limitation of liability. This means that the shareholders are not directly and fully liable for the liabilities of the company with their private assets, but only indirectly with what they have made available to the company as capital. Of course, the loss of the share capital of a GmbH – for example in the event of insolvency – is no pleasure, but the private assets of the shareholders remain unaffected. For individual merchants and partnerships, however, this can look quite different.

1.3. Does the GmbH have many tax advantages?

We conducted individual load comparisons for many clients and compared the GmbH with the GmbH & Co. KG. Here you can download calculations for legal form comparison free of charge. As a result, a GmbH pays on average about 48.3% taxes and a GmbH & Co. KG about 45 %.

2nd requirements for establishing a GmbH

2.1 Number of partners

The foundation of a GmbH is possible with one or more shareholders. There is no legal restriction on their number. However, it should be borne in mind that a large number of participants often have more different opinions on an aspect of the company to consider than if only a few shareholders have to decide on it, or even only one.

Share capital: EUR 12,500 as capital!

To found a GmbH, various requirements are required. The most important, however, concerns share capital. According to the GmbH law, it amounts to at least EUR 25,000.00. In addition, the share capital must be provided in full euros; Cent amounts are not allowed. The required minimum share capital of EUR 25,000 may deter many interested parties, but the legislature only expects that before the registration of the GmbH in the commercial register, only half of this minimum share capital will actually be paid into the account of the company to be founded, i.e. EUR 12,500. The shareholders participating in the incorporation may allocate this amount among themselves, each of them having to contribute at least one quarter of their own share capital.

An example:

Ms. Klug and Ms. Fleiß would like to found a GmbH. They still agree on a share capital of EUR 25,000, with each wishing to take over one half, i.e. EUR 12,500. If before the registration of the GmbH each shareholder claims for himself the right to transfer only a quarter of his share to the account of the GmbH to be founded (EUR 12.500 : 4 = EUR 3.125); 2 x EUR 3.125 = EUR 6.250 < EUR 12.500), this will not be enough to meet the condition of the minimum deposit. Only from a share capital of € 50,000,00 this is possible with two shareholders (EUR 25,000: 4 = EUR 6,250); 2 x EUR 6.250 = EUR 12.500.

Frequent question: Must the share capital remain in the company’s bank account?

To which a clear answer: No. Rather, the share capital is to be understood as “start-up capital” and can be invested by the company after its establishment. The first transfer will usually be made to the notary, because the GmbH usually has to bear its founding costs itself according to the social contract.

2.4.

In addition to money, but also in kind contributions for the foundation of the GmbH are permitted (e.g. house, car, patents), but require a special foundation report. This confirms, inter alia, that the value of the contributions in kind has not been overstated but is actually appropriate.

Excursion: Can I also set up an entrepreneurial company (limited liability)?

If the financial hurdle may already seem too high, you do not need to say goodbye to this idea. As an alternative to the fully-fledged GmbH, there is also the entrepreneurial company (haftungsbeschränkt). To found such a company, a share capital of only one euro is necessary. However, this is to be paid in full to the account of the company, but in kind contributions are excluded. Such a “Mini-GmbH” or “Ein-Euro-GmbH” bears the name Unternehmergesellschaft (haftungsbeschränkt) instead of the company addition GmbH. In addition, there is a legal obligation to put a share of the annual profit in reserves, which in the course of time should lead to this “mini GmbH” becoming a full-fledged company.

2.6.

2.6.1. Individual social contract

The most important basis for founding a GmbH is the shareholder contract. Setting it up means agreeing on the goal of the enterprise and the rules of the shareholders. Thus, the contract also lays down the rules that should apply to the company’s business (for example, the name, registered office and object of the company, the share capital and the shares of the shareholders). Finally, he must be notarized. Then the notary submits this contract signed by all shareholders together with a list of shareholders for registration in the commercial register.

2.6.2. Model scheme

There is a second way to found a GmbH, namely by using the so-called model protocol. This is a ready-made form, which only has to be filled in with the necessary data in order to be recognized as an alternative to the social contract and shareholder list. It is annexed to the GmbH Act and thus legally valid. However, the use of the model protocol is subject to various conditions. Thus, no more than three shareholders may be involved in the GmbH and this may only be represented by one managing director. Also restrictive is the prohibition of regulations that should deviate from the law. The advantage of the model protocol over the social contract lies in the lower cost of using it.

2.7. Managing Director

It is also important that at least one managing director is appointed to represent the GmbH externally. A managing director must be a natural, unrestricted person. Furthermore, he must not be subject to a prohibition from legal action to pursue the activity. In addition, a conviction for certain crimes (for example, bankruptcy delay, violations of the Stock Corporation Act) is also a legal exclusion ground.

The first questions at the foundation of the GmbH are particularly important: What should the GmbH be called (company)? What should be the business purpose of the company? Who is Partner and Who is Managing Director?

If two or more shareholders set up the company, you should include further provisions regarding the possibilities of termination, succession and severance payment conditions in the GmbH’s social contract.

founding 3.2. GmbH – Step 2: Create a social contract

As a rule, you make an appointment with a company law attorney to have the company contract drawn up by him. If, on the other hand, you only want to set up a “small” GmbH without special social contractual regulations, for example on your own, the model protocol is usually sufficient.

3.3. GmbH founded – Step 3: Notary appointment

This is followed by a notary appointment, at which all shareholders and managing directors must appear in person. Please think of your identity card here.

founding 3.4. GmbH – Step 4: Open a bank account

After this notary appointment, you will receive the signed founding documents. This allows you to open a bank account at each bank and savings bank on the "GmbH in Gründer" (short: GmbH i.G.) and pay in the share capital. As a result, you will receive a proof of deposit, which you can submit to the notary so that he can now register the company to the commercial register.

Founding 3.5. GmbH – Step 5: Registration of the GmbH to the commercial register

Registration in the commercial register takes place after successful examination of the requirements by the official register in whose district the company is to have its registered office. This is only possible by the managing directors – the shareholders have no further influence on the relations of the GmbH vis-à-vis third parties. Only with this step the GmbH is created. All actions undertaken by the shareholders on behalf of the company in the run-up to the establishment – one speaks of a GmbH in foundation – have to represent the acting persons themselves.

Upon registration in the commercial register, the GmbH is created as a legal entity. This eliminates the addition “in foundation”. At the same time, the limitation of liability also becomes effective.

4. Duration of the GmbH establishment

Overall, you can found the GmbH in about four weeks.

5th Cost of the GmbH Founding

The majority of the costs for establishing a GmbH are attributable to the services of the notary. The costs associated with the drafting of the shareholder contract or the model protocol as well as those associated with the registration in the commercial register are fixed. Some of the costs are subject to legal requirements and are therefore fixed, while others are determined by the respective notary himself (for example, costs for copies and printouts).

Furthermore, fees at the district court and the trade office must be taken into account. Just like the notary costs, these also vary depending on the choice of the articles of association or the model protocol, the number of shareholders (one or more) and whether contributions in kind should also be made at the time of incorporation. All these costs can, after preliminary consultation of the shareholders, already be paid by the share capital. This also makes sense, since it is an expense that reduces the taxable profit.

6. GmbH found: the fee of the tax consultant

Who is unsure how to start his company, can be informed in advance with a tax consultant. The costs for this are based on the legally binding tax advisor fee ordinance. Considering the scope of such a future decision, these costs are certainly a good investment, a cornerstone for the successful start of the company.

Furthermore, the remuneration of ongoing tax consultancy is also regulated in the Tax Consultant Fees Ordinance and thus basically identical for each tax consultant.

Tax consultants & lawyers for the establishment of a GmbH