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

Requirements: who may form a UG

Before you get started, it is worth taking a quick look at the formal requirements. Most founders meet them without any difficulty, but some points regularly lead to queries from the notary or the register court.

Shareholders: A UG can be formed by a single person. Shareholders can be natural persons, but also other companies, such as an existing GmbH. Minors can only become shareholders with their parents' consent and approval from the family court (Sec. 1643 (1) BGB in conjunction with Sec. 1852 no. 2 BGB). The law does not require shareholders to have German citizenship or to live in Germany.

Managing director: The UG needs at least one managing director. This must be a natural person with full legal capacity (Sec. 6 (2) GmbHG). Anyone convicted of certain intentional criminal offences, such as delaying insolvency or bankruptcy, cannot be a managing director for five years from the date the judgment becomes final. Anyone subject to a professional or trade ban is excluded for as long as the ban applies and it concerns the company's business purpose (Sec. 6 (2) sentence 2 GmbHG). If you form alone, you will almost always be shareholder and managing director at the same time.

Registered office in Germany: The UG's registered office under its articles must be in Germany (Sec. 4a GmbHG). In addition, a German business address is entered in the commercial register.

Private address as registered office: This is permitted and common for solo formations. But bear two things in mind: the business address is publicly visible in the commercial register, and your tenancy agreement may restrict commercial use of the flat. If you don't want to publish your private address, use a business address at which the UG can actually be reached.

Forming as a side business: This is also possible. Check your employment contract beforehand for rules on secondary employment and competition, and inform your employer if the contract requires it.

Forming a UG as a sole proprietor: Yes, that works. The only important point is that the UG is a new company and not the legal successor of your sole proprietorship. Existing contracts, customer relationships and accounts do not transfer automatically; they must be transferred or concluded anew. Whether switching is worthwhile is explained in our guide UG or sole proprietorship.

How do I form a UG? The 10 steps at a glance

The table shows the UG formation process at a glance: who is responsible, roughly how long each step takes and what it costs. The duration depends heavily on how quickly you get a notary appointment and how fast your register court works.

Step	Who is responsible?	Duration	Costs
1. Basic decisions	you and your co-founders	depends on you	none
2. Check permits	trade office, chamber, specialist authority	only for activities requiring a permit, otherwise this step is skipped	depending on the permit
3. Check the company name	you, lawyer, chamber of commerce (IHK)	a few days	IHK check
4. Model protocol or articles of association	you or a lawyer	24 hours at Recht 24/7	fee at Recht 24/7: €259 net
5. Notary appointment	notary	appointment usually within a few days	model protocol approx. €160 (one shareholder) or approx. €240 (two to three), articles of association approx. €350 to €750
6. Account and share capital	bank, managing director	1 to 2 days	account fees depending on the bank
7. Commercial register	notary, register court	usually 5 to 14 days after notarisation	approx. €300
8. Trade registration	managing director, trade office	depends on the municipality	depends on the municipality
9. Tax office	managing director	questionnaire within one month (Sec. 137 (2), Sec. 138 (4) AO)	none
10. Other authorities	IHK or chamber of crafts (HWK), employers' liability insurance association, transparency register	ongoing after registration	IHK contribution according to the chamber's contribution rules

The company bears the formation costs itself. The notary and register court invoice the new UG. Notary costs are calculated under the GNotKG, including expenses and VAT; the figures for the model protocol apply up to €7,000 share capital.

The steps in detail

1. Basic decisions: alone or as a team, shares, managing director

Most delays in forming a UG do not happen at the authorities, but beforehand: because the founders have not yet agreed on basic questions. So clarify these first:

• Shareholders: Are you forming alone or with partners? How many shares does each person take?
• Share capital: What amount are you starting with? The UG bears its own formation costs. If the share capital is lower, the company is technically over-indebted on the day it is formed. We recommend at least €500, better €1,000 to €2,500. More on this in the article How much capital a UG should have.
• Managing director: Who represents the UG externally? If there are several managing directors, you need individual articles of association (see step 4).
• Business purpose: What exactly will the UG do? The purpose must be specific enough for the register court to see in which field the company operates. General wording such as "trade in goods of all kinds" is often objected to.
• Registered office: In which municipality will the UG have its registered office? This determines which register court, trade office and tax office are responsible.

If you are forming as two or three, also talk early on about what happens if someone wants to leave, falls ill or dies. These questions can only be regulated in individual articles of association, not in the model protocol.

2. Check permits

For many activities, trade registration is enough. Some trades, however, need a permit before you may start, for example security services, restaurants serving alcohol, brokers, road haulage or financial investment brokerage (Sec. 34a, 34c, 34f GewO, Restaurant Act or state law, Sec. 3 GüKG). In licensed crafts, a master craftsperson or comparable qualification is usually required in the business.

Clarify whether a permit is required before forming, with the trade office or your chamber. For activities requiring a permit, formation takes longer by the authority's processing time.

3. Check the company name

Legally, your UG's name is called its "Firma". It must be clearly distinguishable from other companies in the same place, must not be misleading and must carry the suffix "Unternehmergesellschaft (haftungsbeschränkt)" or "UG (haftungsbeschränkt)" (Sec. 5a (1) GmbHG). Abbreviations such as "UG (haftungsbeschr.)" or omitting the bracketed suffix are not permitted.

The liability trap: if the UG trades without the suffix "(haftungsbeschränkt)", for example on invoices, in the legal notice or in contracts, the person acting can be personally liable according to case law, because the contractual partner was entitled to assume unlimited liability. So make sure you use the full name from the very beginning.

How to check the name:

• search the commercial register and company register for identical or similar company names
• check the trade mark register at the German Patent and Trade Mark Office (DPMA) for older trade marks, so that the name does not infringe third-party rights
• ask the IHK for a company name check to confirm the name can be registered

At Recht 24/7, a lawyer checks the name for admissibility and risk of confusion, and we also obtain the IHK's assessment. If you also want to protect the name as a trade mark, you can have it registered with the DPMA.

4. Model protocol or individual articles of association

For the formation, you need either the statutory model protocol (Sec. 2 (1a) GmbHG) or individual articles of association. The model protocol is a standardised form that combines the articles of association, appointment of the managing director and list of shareholders in one document. It is cheaper at the notary, but allows almost no provisions of your own.

Criterion	Model protocol	Individual articles of association
Number of shareholders	three at most	any number
Number of managing directors	exactly one	any number, also with sole or joint representation
Own provisions	not possible, provisions deviating from the statute are excluded (Sec. 2 (1a) sentence 3 GmbHG); deviations forfeit the cost advantage, purely linguistic deviations do no harm (Sec. 105 (6) GNotKG)	freely designed, e.g. pre-emption rights, compensation, succession, voting rights
Notary fees	approx. €160 for one, approx. €240 for two to three shareholders (up to €7,000 share capital, including expenses and VAT)	approx. €350 to €750 (including expenses and VAT)
Later changes	every change requires a notarised amendment to the articles	likewise, but often needed less frequently because matters are regulated in advance
Suitable for	solo formation with a simple structure	teams, several managing directors, investors, succession rules

Rule of thumb: if you are forming alone and want to start simply, the model protocol is usually enough. If you are forming as two or three, individual articles are often the better route, because they regulate what applies in a dispute. Without such rules the statute applies, and it rarely suits a small founding team.

5. Notary appointment: in person or online

You cannot form a UG without a notary. The notary notarises the model protocol or articles of association and certifies the application to the commercial register. All shareholders and managing directors bring a valid identity document to the appointment. If a shareholder cannot attend, they can be represented with a notarially certified power of attorney (Sec. 2 (2) GmbHG).

From notarisation, the company exists as a "UG in formation" and can already act. Full limitation of liability, however, only applies on registration. Anyone who acts on behalf of the company beforehand is personally liable (Sec. 11 (2) GmbHG).

Online formation: Since 1 August 2022, you can also have the formation notarised by video conference with the notary (Sec. 2 (3) GmbHG, introduced by the DiRUG). This runs via the Federal Chamber of Notaries' video system. You need to register there, an ID card with the online ID function, a smartphone that can read the ID card and a computer with camera and microphone (Sec. 16c BeurkG). Mixed forms are possible: one person comes to the notary's office, the other joins by video (Sec. 16e BeurkG). The notary fees are the same as in person, plus a flat fee of €25 for the video system (no. 32016 KV GNotKG). So nothing is saved, and the technical preparation takes time. In practice, a well-prepared appointment in person is often the faster route.

Forming from abroad: If you live abroad, notarisation is possible with a notary abroad with an apostille, or via a German diplomatic mission.

6. Open a business account and pay in the share capital

After the notary appointment, the managing director opens an account in the name of the UG in formation. An account opened beforehand, such as your private account or that of your sole proprietorship, does not pass to the company. You then pay in the share capital in full. The bank confirms the payment, and the managing director assures the register court that the capital is at their free disposal (Sec. 8 (2) GmbHG). Opening the account and paying in usually take 1 to 2 days.

Be careful with assets: in a UG, the share capital must be provided in cash. If you pay in and the UG shortly afterwards uses this money to buy your private laptop or car, this can be treated as an impermissible hidden contribution in kind (Sec. 19 (4) sentence 1, Sec. 5a (2) sentence 2 GmbHG).

7. Commercial register: application and registration

As soon as proof of payment is available, the notary submits the application electronically to the competent register court. This includes the deed of formation, the list of shareholders and the managing director's declarations. The court checks the documents and registers the UG. This usually takes 5 to 14 days after notarisation. Queries about the company name or business purpose extend this time.

On registration, the UG has come into existence as a legal entity, and liability is limited to the company's assets. About ten days after notarisation, the register court sends its invoice to the company.

8. Trade registration

After registration, but at the latest when commercial activity begins, the managing director registers the trade with the trade office at the UG's registered office (Sec. 14 (1) GewO). Many municipalities offer this online. You usually need the commercial register extract, the managing director's ID and, where applicable, the permit from step 2. The trade office informs other bodies, including the tax office, IHK or chamber of crafts and the employers' liability insurance association (Sec. 14 (8) GewO).

The fee depends on the municipality. If the UG only manages its own assets, trade registration may not be required.

9. Tax office: tax registration questionnaire and VAT ID

The UG must notify the tax office of its formation. This is done with the tax registration questionnaire, submitted electronically via ELSTER. The deadline for notification is one month (Sec. 137 (2), Sec. 138 (1b) and (4) AO). In the questionnaire, you also apply for the VAT identification number if you need it for business with companies elsewhere in the EU.

Prepare the information carefully: expected turnover, estimated profit and planned employees determine the advance payments. In our experience, the tax office contacts you about ten days after registration. At Recht 24/7, we advise you on the tax questionnaire and on applying for the VAT ID.

10. Other authorities: IHK or HWK, employers' liability insurance association, company number, transparency register

• IHK or chamber of crafts: Membership arises automatically, and the chamber will contact you. Craft businesses belong to the chamber of crafts. The contribution depends on the chamber's contribution rules. The statutory contribution exemption for business founders only applies to natural persons not entered in the commercial register, not to the UG (Sec. 3 (3) IHKG).
• Employers' liability insurance association: The UG registers with the competent association within one week of starting business; a timely trade registration counts as notification (Sec. 192 (1) SGB VII).
• Company number: Before you hire your first employee, you apply to the Federal Employment Agency for a company number (Betriebsnummer). It is required for registering employees with social insurance.
• Transparency register: Since 1 August 2021, the transparency register has been a full register. Entry in the commercial register no longer replaces notification. The UG must report its beneficial owners without delay, meaning every natural person with more than 25% of the shares or voting rights (Sec. 3 (2), Sec. 20 (1) GwG). Missing notifications are subject to fines (Sec. 56 GwG). We can take care of the entry if you wish: Transparency register for €129 net plus VAT.

Checklist: forming a UG, tick by tick

This checklist summarises forming a UG so you can tick off each item. You can print it out and work through it point by point. The checklist is also available as a PDF, without registration [REDAKTION: PDF erstellen und verlinken].

Before the notary appointment

Between notary appointment and registration

After registration

How long does it take to form a UG?

How quickly can you form a UG? If everything is prepared, it goes fast. A typical timeline looks like this:

When	What happens
Day 1	You order the formation documents; at Recht 24/7 they are ready within 24 hours
Days 2 to 7	Notary appointment, depending on the notary's availability
1 to 2 days after the appointment	Account opening and payment of the share capital
5 to 14 days after notarisation	Registration in the commercial register
after registration	Trade registration, tax office, transparency register, chambers

The timeline is based on experience, not a promise. Delays arise mainly from:

• a company name that the register court objects to
• a business purpose worded too generally
• late account opening or payment
• disagreement within the founding team about the articles of association
• missing documents for shareholders resident abroad
• a heavy workload at the register court

If you want to form your UG immediately, do everything in parallel that can be done in parallel: check the name while the contract is being drafted, choose a bank before the notary appointment takes place.

What forming a UG costs: the short version

The costs consist of three blocks: preparing the documents, the notary and the register court. On top of that come the fee for trade registration and, later, the IHK contribution.

Item	Amount
Formation documents at Recht 24/7	€259 net plus VAT, fixed price
Notary with model protocol	approx. €160 (one shareholder), approx. €240 (two to three), including expenses and VAT, up to €7,000 share capital
Notary with individual articles of association	approx. €350 to €750 including expenses and VAT, depending on the number of founders and the drafting
Register court	approx. €300 (€225 registration and €75 retrieval fee)
Trade registration	depends on the municipality

Exactly what is included in the fixed price and how the costs break down in detail is set out on the page Form a UG.

Two examples: forming alone or as two

The following examples are simplified and fictitious; they show typical constellations.

Example 1: solo formation. Lena is going self-employed as a web designer and does not want to be liable with her private assets. She forms the UG alone, is shareholder and managing director, and chooses the model protocol with €1,000 share capital. After the notary appointment, she opens the business account, pays in the capital and sends the proof to the notary. Nine days after notarisation, the UG is registered. She then registers the trade, submits the tax questionnaire and registers in the transparency register. Her focus: start quickly, with low notary costs.

Example 2: formation by two. Ahmet and Jonas form a UG for an online shop. Both hold 50%, both are to be managing directors, and they want to regulate what happens if one of them leaves. The model protocol is ruled out because it only allows one managing director and no provisions of their own. They have individual articles of association drawn up with a pre-emption right, a compensation clause and voting rights. Their notary appointment is more expensive, but the most important point of dispute in later years is already settled today.

If both had been able to contribute €12,500, the GmbH would also have been an option. You can find the comparison in the guide UG or GmbH.

After formation: obligations in the first year

With registration, everyday life as a corporation begins. You should know these obligations in the first year:

• Opening balance sheet and bookkeeping: The UG is a merchant by virtue of its legal form and must prepare an opening balance sheet and keep books (Sec. 238, 242 HGB). A simple cash-basis income statement is not enough.
• Annual financial statements and disclosure: Every year, annual financial statements must be prepared and published or deposited with the company register, at the latest one year after the balance sheet date (Sec. 325 (1a) HGB). Micro corporations only submit the balance sheet and can deposit it (Sec. 326 (2) HGB). Anyone who fails to do so risks administrative fine proceedings (Sec. 335 HGB).
• Statutory reserve: A quarter of the annual net profit, reduced by any loss carried forward, goes into the reserve (Sec. 5a (3) GmbHG). Only the rest may be distributed. Once the UG has reached €25,000 share capital, it can change its name to a GmbH.
• Managing director's contract: It governs the managing director's duties, remuneration, holidays and liability. Without a contract, there is no basis for a managing director's salary that is recognised for tax purposes. At Recht 24/7, the managing director's contract is included in the fixed price.
• Social insurance: If you hold 50% or more of the shares as a shareholder-managing director, you are usually not subject to social insurance contributions. If in doubt, clarify this through a status determination procedure (Sec. 7a SGB IV).
• Spotting a crisis: If insolvency is imminent, the managing director must convene a shareholders' meeting without delay (Sec. 5a (4) GmbHG). In the event of insolvency or over-indebtedness, there is a duty to file for insolvency without culpable delay, at the latest three weeks after insolvency occurs and six weeks after over-indebtedness occurs (Sec. 15a (1) InsO).

Common mistakes when forming a UG

From supporting many formations, we know the stumbling blocks that come up again and again:

1. The suffix "(haftungsbeschränkt)" is missing. The website, invoice or business card just says "Example UG". This can trigger personal liability.
2. Share capital too low. With €1 share capital, the UG is over-indebted immediately after paying the formation costs. Notaries point this out, and banks view it critically.
3. Business before registration without a plan. Until registration, whoever acts for the company is liable. So only conclude large contracts after registration, or secure them deliberately.
4. Account opened too early. An account from before the notary appointment does not pass to the UG.
5. Business purpose too vague. This leads to queries from the register court and costs days.
6. Model protocol for a team. What suits a solo formation leaves the most important questions open when there are several shareholders.
7. Follow-up obligations forgotten. The transparency register, employers' liability insurance association and disclosure are often only noticed when a fine notice arrives.
8. Contracts of the sole proprietorship not transferred. Otherwise customer and supply contracts continue in your personal name, with full liability.

If you are forming with partners and want to set up a limited partnership with limited liability, the UG & Co. KG is an alternative. An overview of all legal forms and formation steps is provided by the business formation checklist.