Forms of Incorporation in Germany

The choice of legal form is decisive
Depending on the type of foundation, various possible legal forms come into question for your future company. Basically, a distinction can be made between sole proprietorships, partnerships and corporations.
The sole proprietorship (Einzelunternehmen) is suitable for solo founders, among other things, due to the low effort required for registration. No minimum capital is required. However, with this legal form, the solo founder is liable with the business assets and his private assets.

For the civil law partnership (GbR), at least two or more team founders participating in the company are required. The effort and costs are kept within limits and unlimited liability applies. However, this legal form is more suitable for small traders.

General partnerships (OHG) or limited partnerships (KG) are recommended above all for companies with greater economic significance. In the case of the KG, the general partner (one or more persons) manages the business but is also liable with his private assets. In contrast, the limited partners are only financially involved and are only liable with their contributions.

The limited liability company (GmbH) is popular primarily because of its limited liability. However, the formation is more complex and requires a minimum share capital of 25,000 euros. Here, the shareholders are only liable with their company assets. It is also possible for solo founders to register a one-person GmbH. A similar legal form, but with a much lower minimum capital of only one euro, is the limited liability company (UG). This legal form is often considered a precursor to the GmbH.

In addition, both solo founders and team founders can think about founding a stock corporation (AG). However, due to the amount of the required share capital of 50,000 euros and the comparatively large expense, this legal form is probably only considered by a few right at the beginning of the company formation.

In addition, there are numerous mixed and special forms. For this reason, it is always advisable to seek professional advice before deciding on the legal form.