You have the right business idea but you do not know which would be the appropriate legal form for your enterprise?
Certainly one of the most important decisions to be made during the establishment of a company is to choose the appropriate company form. It is important that before the decision, you must ask for professional help, because the wrong choice of the company form may affect your private wealth and thus your private life, too.
What should you pay attention to when choosing the legal form?
The legal form of a company has a great role also in the freedom of choice of the entrepreneur. Therefore, in an individual enterprise (self-employment), we can make the decisions, so there is a huge corporate freedom, and all responsibilities shall be borne by us, too. In contrast, in a big capital company, the members have the right to intervene, but the liability is not limited to the individuals. The expertise or the capital may be good reasons for not establishing a company alone. During the choice of the personally “appropriate” legal form, the advantages and disadvantages shall be duly considered.
- risk/liability (The capital companies and the personal companies primarily differ in terms of the responsibilities)
|Individual enterprise (self-employment)||Personal liability with the owner’s own private wealth|
|Civil law partnership (GbR)||Basically, the members are liable for the debt of the company with their complete wealth, including their own private wealth regarding the partner.|
|Limited partnership (KG)||The general partner of a limited partnership is personally liable with his/her private wealth.|
|Limited liability entrepreneurial company UG (Mini-GmbH)||The liability is limited to the assets of the company.|
|Limited liability company (GmbH)||The liability is limited to the assets of the company.|
|Limited liability company (Ltd)||The liability is limited to the assets of the company.|
|Limited liability company &co. Limited partnership (GmbH& Co.KG)||Unlike a typical limited partnership, the member, who is liable in person (general partner), is not a natural person but a limited liability company (Ltd.). One of the aims of this corporate legal structure is to exclude or limit the risk resulting from the responsibility of the persons behind the company.|
|Limited liability company &Co. Limited partnership (Ltd & Co.KG.)||Unlike a typical limited partnership, the member, who is liable in person (general partner), is not a natural person but mostly a British Private Company Limited by Shares (Ltd.)|
|Public limited company (AG)||The Public limited company is liable only with its own corporate assets.|
|Legal form||Share capital|
|Individual enterprise (self-employment)||there is no legally stipulated minimal capital|
|Civil law partnership (GbR)||there is no legally stipulated minimal capital|
|Limited partnership (KG)||there is no legally stipulated minimal capital|
|Limited liability entrepreneurial company UG (Mini-GmbH)||minimum one euro; beside this company share, there is the legal liability to retain at least 25% of the annual profit as a reserve composing share capital, until this does not reach the minimal company share (25 000 euros) of a traditional Ltd.|
|Limited liability company (GmbH)||The company share is minimum 25 000 euros and a quarter of it, but at least 12 500 euros must be deposited.|
|Limited liability company (Ltd)||minimum one GBP|
|Limited liability company &Co. Limited partnership (GmbH& Co.KG)||The company share is minimum 25 000 euros and a quarter of it, but at least 12 500 euros must be deposited.|
|Limited liability company &Co. Limited partnership (Ltd & Co.KG.)||minimum one GBP|
|Public limited company (AG)||Minimum deposit 50 000 euros|
- A generally applicable statement cannot be made on the corporate taxation. The types of tax that shall be taken into consideration by your company depend, among others, on the selected legal form. Therefore, concerning the tax aspects, consult with an experienced tax adviser, who can also recommend you tax saving opportunities.
- The complete accounting (accountancy) with annual financial reports is obligatory for all companies. However, there are also differences among the small and large enterprises. Discuss these with a tax adviser.
insurance costs (e.g. operator liability and health insurance)
- What insurances do you really need as an individual entrepreneur and which insurances do really make sense?
– Health insurance
– Accident insurance
– Pension insurance
– Unemployment insurance
– Operational insurances, such as liability insurance
All startup companies and factories need personalized, different insurances. Therefore, please ask advice from an insurance specialist.
registering in the company register
- Those companies that require commercial management must be registered into the Company register. The registration occurs upon the request submitted to the competent District Court, and the certification by a notary is needed. Failure to do so may lead to a fine.
audit obligation, auditing
- The audit obligation by an auditor mainly affects the annual financial reports of the large and medium-sized capital companies (e.g. PLC or Ltd.). Although the audit has a high cost, it is indispensable because it is based on statutory requirements.
- This requirement applies to all natural persons as a capital company without personally liable member and to all commercial companies, as for example Ltd & Co. Limited Partnership.
Who can benefit from our services?
- Beginner entrepreneurs
- Companies that are extending to abroad, and need another legal form
- Companies that are extending to abroad and need a depot, branch site
- At a restart, after bankruptcy proceedings, with the “Neustart Limited & Co. KG” package, you can completely restart – this time without risk (private property insurance)
- Offshore companies for entrepreneurs who for personal reasons do not want to be shown publicly in the company documents as the owner or the executive directors (anonymous company establishment)
- Companies who need certified translation
Do you need more services?
After the company establishment, we remain at your disposal. Read under the “Services” menu which opportunities we have for you. Do you still have questions? Contact us!
Our offer for company set up
- Personal companies and limited partnerships (GbR, KG)
- Capital companies (UG -„Mini GmbH“, GmbH, Ltd, AG)
- Mixed companies (GmbH & co.KG, Ltd. & Co.KG)
- Capital companies (GmbH, AG)
- USA, Panama
- Limited partnerships (KG)
- Capital companies (OHG, GmbH, AG)
- Capital companies (Limited)
- Capital companies (AG,GmbH)
If you cannot find the answer for your question, simply send us an e-mail. We speak German, English, Hungarian, Serbian and Croatian.
We do not provide tax or legal consultation. These services are provided by tax advisers and lawyers who are our partners. All company registration in abroad and in Germany are performed by the all-time competent lawyers (notaries, solicitors).