Company formation guides

UG vs. GmbH: the differences and which legal form suits you

UG vs. GmbH: both limit liability in the same way, to the company's assets. The GmbH needs €25,000 in share capital, of which at least €12,500 must be paid in at formation (Sec. 5, 7 GmbHG). The UG starts from €1, but must put 25% of its annual net profit into a reserve until the share capital reaches €25,000 (Sec. 5a GmbHG).

How do I form a UG? Step by step to your own entrepreneurial company

How do I form a UG? In ten steps: make the basic decisions, check permits, check the company name, prepare the model protocol or articles of association, have them notarised (in person or by video), open a business account and pay in the share capital, then commercial register, trade office, tax office and other authorities. After the notary appointment, registration in the commercial register usually takes 5 to 14 days.

UG or sole proprietorship: which suits your business start-up?

UG or sole proprietorship depends mainly on two questions: how high is your liability risk, and how much profit do you want to keep in the business? A sole proprietorship is faster and cheaper to set up, with no notary and no minimum capital, but you are liable with your private assets. The UG limits liability to the company's assets, but requires a notary and commercial register entry, and brings balance sheet obligations and a reserve of 25% of annual net profit (Sec. 5a (3) GmbHG).

Business start-up checklist: step by step to your own business

The business start-up checklist has four phases: preparation (idea, business plan, financing), choosing the legal form, forming and registering (notary and commercial register only for the UG, GmbH and other registered forms, plus trade office and tax office) and launch (account, insurance, contracts). A sole proprietorship is usually ready to start in 1 to 3 days; a UG or GmbH only comes into existence as a legal entity on registration in the commercial register.