Company formation

Most Germans do business as natural persons or by means of special limited partnership (Kommanditgesellschaft). There are certain possibilities of combining different types of companies but the company most understandable to foreigners is certainly GmbH (Gesellschaft mit beschränkter Haftung).

This type of company is closest to the English limited company or US LLC. It is of course possible to arrange for other types of companies as AG (joint stock company) or SE (European joint stock Company), but their usage is mostly limited to huge business entities.

GmbH is identical with limited or LLC. Shareholders (in this case "associates") are liable for the debts of the company unless the initial capital has not been fully invested. In case that initial capital has been fully paid up, no liability of associates exists.

Recently the possibility emerged to buy ready-made off the shelf companies in Germany. However, since the formation of new company goes on quite quickly, there is no need to buy already existing company. Difference in price is quite significant.

If you decide to form new GmbH Company, you have got to count on the following:

• initial capital of 25,000€ (minimally 50% of this amount must be paid up on the bank account during the formation procedure)
• minimally one founder – associate (natural person or legal entity)
• minimally one director
• seat of the company
• trade license of the company
• registration of the company on financial office
• opening of the bank account

In order to avoid any problems when registering the company with Companies house it is strongly recommended to come and sign the formation documents at the German notary public office. Mostly the bank account gets open on the same day and basic capital is invested. If everything is done properly, company can be registered within 5-10 days.

Basic costs of company formation come up to 1000 €.