The establishment of a GmbH (Gesellschaft mit beschränkter Haftung, or limited liability company) in Germany follows various legal requirements and formalities. In this blog post, you will learn the essential steps to founding a GmbH.
1. Initial Considerations: Why a GmbH?
The GmbH is one of the most popular legal forms for businesses in Germany. It is particularly suitable for small and medium-sized enterprises, as the liability of the shareholders is limited to their contributions. This means that in the event of insolvency or financial difficulties, only the company’s assets are liable – the personal assets of the shareholders generally remain unaffected.
2. Preparing for the Formation
Before starting the formation of your GmbH, you need to consider a few fundamental aspects:
- Shareholders: A GmbH can be founded by one or more individuals. These can be either natural persons or legal entities (e.g., other companies).
- Company Name: The name of your GmbH must include the designation “GmbH” and must not be misleading or infringe on existing names. A name availability check is therefore advisable.
- Registered Office: The GmbH must have its registered office in Germany, requiring a domestic business address. This affects the competent commercial register.
- Share Capital: A minimum share capital of €25,000 is required to establish a GmbH. At least €12,500 must be deposited into the company’s business account before registration in the commercial register.
3. The Articles of Association
The Articles of Association (also called the company’s charter) are the core document of the GmbH, governing all essential aspects of the company’s internal operations. The document must be notarized by a notary and must include i.a. the following details:
- Name and registered office of the GmbH
- Business purpose: the nature of the company’s activities
- Amount of share capital and shareholders’ contributions
- Regulations regarding management and representation rights
- Profit distribution and shareholders’ rights
4. Notarization
The Articles of Association must be notarized by a notary. The notary ensures that all formalities are properly observed. All shareholders must be present and sign the document. Alternatively, legal representation of the shareholders/founders is possible, provided the necessary prerequisites are met in advance.
5. Depositing the Share Capital
After notarization, the share capital must be deposited into a business account of the GmbH. It is beneficial to provide the full share capital (€25,000), but a minimum contribution of €12,500 as a cash deposit is sufficient.
6. Registration in the Commercial Register
The GmbH must then be registered with the competent commercial register. This requires the notarized Articles of Association, proof of the deposited share capital, and a list of shareholders. Once registered, the GmbH receives a commercial register number. Only after this registration does the GmbH attain its legal personality.
7. Business Registration and Tax Registration
Following the entry in the commercial register, you must register your company with the trade office. At the same time, the tax registration takes place with the tax office, which assigns a tax number to your GmbH. Depending on the business activities, the GmbH may also be subject to VAT obligations.
8. Opening Balance Sheet and Ongoing Accounting
As a GmbH, you are required to maintain proper bookkeeping and prepare an annual balance sheet along with a profit and loss statement. It is advisable to have this handled by a tax consultant to avoid tax-related errors and establish a solid foundation for business management from the outset.
Conclusion
The formation of a GmbH in Germany is a structured process that involves several important legal requirements. By adhering to the necessary formalities, drafting an Articles of Association tailored to your needs, and properly registering your business, you can lay the groundwork for a successful GmbH.
If you need assistance with the formation process or legal advice, feel free to contact your Hamburg-based law firm BALIN LEGAL. Attorney Eugen Balin, LL.M. will be happy to support you in successfully establishing your GmbH.
Disclaimer: This text does not claim to be exhaustive and does not constitute legal advice. Legal consultation is provided only on a case-by-case basis by reviewing the specific circumstances from a legal perspective.
If you require legal advice on these or other legal matters, please send your inquiry via email to Attorney Eugen Balin, LL.M. at info@balin-legal.de.
