Setting up a company may appear tricky not only for foreigners but for natives as well, in almost every country.
A quick google search of “How to setup a company in Germany” yields numerous results, from paid services to informal lists and how-tos.
This page aims to help both the curious international entrepreneur and German native in navigating the wealth of information available starting a company in German, with details both in English and in German.
The following article lays out the full journey on registering the most common forms: GmbH and UG, with an appendix and summarized tl;dr at the end for your convenience.
Let’s Start 🛫
You want to make a company that is Great!
The first thing you will need to do is identify the type of company you are going to form in legal terms. If you are new to establishing a company, it is most likely that you will be interested in a UG or a GmbH. (For partnerships and other more complicated organizations, it may be better talk to a lawyer).
Both a UG and an GmbH come with limited liability. Exactly what every entrepreneur wants. The main difference between the two is the initial capital that is needed to raise the company.
A GmbH requires a minimum of 25 thousand euros, which can be any asset (another company, real estate etc.), whilst a UG can theoretically be started with 1 euro, however only in cash.
If you are going to start a UG, it is advised that you have an initial capital of around 500 euros to cover the costs of setting up.
One last point is that 1/4 of a UG’s revenue must be put aside until 25k has been made by your company, which can then be used to “convert” your UG into a full GmbH.
In order to initiate the process of founding a Company, you will need a Notary and a deed of incorporation.
A standard Deed of Incorporation is available from the law and is referred to as the Master Template, which ensures a standard Notary fee.
The template covers founding teams of up to 3 members with 1 Managing Director. However, in most cases the Master Template is not always sufficient to cover all the needs of a multi member founding team.
In more complicated cases, which entail multiple founders, specific clauses in terms of exit or capital, it is advised to have custom Shareholder agreements and Articles of Association.
In such occasions, the fees fluctuate dependent on each individual case.
All of the above should be explained to you further from your Notary.
When starting my company, I undertook the incorporation with Dr. Julia Laumann, whose office is located nearby and proved to be really helpful and English friendly.
The notary expenses for the Master Template should be around the 250. Again this changes the more you deviate from the master templates.
There are some links that help you find Notaries such as notar.de.
Bank Account 💸
Before the Notary can move forward with the submission of your company to the Handelsregister, he/she requires proof that the share capital has been deposited to a company account.
However as your company has not been formed yet, not every bank will open an account for you. At this point in time, the company is an “i.G” (in Gründung) which means it is under founding.
Banks that have such a feature (as far as I know) are Deutsche Bank and Fidor Bank.
After the transfer has been completed, your Notary will send the papers to the Handelsregister.
FinTech and Banking have experienced quite the boom lately mainly towards personal accounts. Now Penta is bringing German Business Bank Accounts for Tech Startups. If you want to keep things simple and streamlined, it may be worth checking out their progress and using their services.
Waiting time ⏲️
Now you have to wait for the Handelsregister to finish processing your application.
This might take 2–3 weeks.
Commercial Register 👩⚖️
After 2–3 weeks, you should receive a letter from your local Amtsgericht mentioning that the deed needs to be paid. In the case of a 1 person UG, the fee is 150 euros.
The letter suggests that payments in cash are processed faster. That is up to you.
After you have paid the deed it could take another 10 days to process.
Your company is formed! 🎉
Dr Laumann informed me about the completion of the company, before I got the letter from the Handelsregister.
Congratulations! However you are not quite done yet.
Now you must send the commercial registration paper to your bank so that they release the bond of the capital and legitimize your company.
At this point, you should be able to start making payments and fully utilize your account.
My bank, Fidor, needed to be reminded to do that with a phone call but in the end everything went smoothly.
But we have not paid the Notary, and the deed has been paid from another account? The notary and the deed can be paid in cash or by another bank account. Your accountant will be able to handle those payments as loans to the company.
Unless you are very keen on German law and bureaucracy find a Steuerberatungsgesellschaft (Accountant).
Your accountant will get your tax number, which you will need for invoices. This process can take up to 2 weeks.
You are obligated to register also with the Trade Office (Gewerbeamt). This can be done online here.
The form requires details for the founders, the company registration etc. The main issue that I faced was selecting the category between “Industrie”, “Handel”, “Dienstleistungen” and “Handwerk”. This is needed for taxation and regulation reasons from the government.
If you intend to sell anything you classify as “Handel”, services like Data Analysis would go under “Dienstleistungen” or even both depending on the company.
If you are unsure please contact your local Gewerbeamt.
Lastly, the IHK (Chamber of Commerce) will send you a letter to pay 80 euros yearly. For more information click here
⚠️ Caution! ⚠️
A few things to remember.
- Now that your company is legal, it is required by law to make the registration details available on your website. You might have seen that as “imprint” or “impressum”.
- The moment your company is registered you will start receiving letters mentioning that you need to pay extra money as fees. These are most likely scams. Give it a friend to translate and if it mentions that you don’t have to pay, then you can ignore it.
- You can spot a fake one by its bad quality in comparison to official papers.
- Find a Notary
- Make a company Bank Account as an i.G
- Wait for the Commercial Register
- Pay the Commercial Register
- Wait for the Commercial Register again
- Receive confirmation
- Use confirmation to unblock your bank account and become a full U.G
- Find an accountant
- Register with the Trade Office
- Wait for the IHK to send you a letter to pay their yearly fee
Disclaimer. Everything mentioned here is knowledge gathered through personal experience, by no means are any of the instructions or hints bulletproof and you should look for a lawyer to consult you during this process.