Establishing a GmbH: costs, requirements and capital

Share capital, articles of association, notarization and entry in the commercial register – there are a lot of things to consider when setting up a GmbH. So that you don’t lose track, we have summarized all the important information about setting up a GmbH in this article for you.

Table of contents:

1. GmbH: What is that?
2. Requirement
3. steps
4. Length of time
5. Advantages
6. GmbH accounting made easy with GetMyInvoices

Frequently asked questions about setting up a GmbH: costs, requirements and capital

Would you like to set up a GmbH? You are not alone with this project! Many entrepreneurs choose the legal form of a GmbH when setting up a company - after all, it is based on that one-man business the second most popular legal form in Germany. However, setting up your own GmbH involves a lot of formalities. The capital contributions are also comparatively high and the process takes a long time. But the effort is worth it.

What is a GmbH?

The GmbH is a legal form of a corporation and the abbreviation for “limited liability company”. To found a GmbH, at least one shareholder (owner) and one managing director are required. It is also possible to set up a one-person GmbH. In this case, the owner and the managing director are the same person. The main feature of the GmbH is its limited liability. This means that the partners cannot be held liable for damages with their private assets.

Requirements: How to set up a GmbH

To set up a GmbH, you need share capital of at least 25,000 euros. This can be contributed by one or more partners. The shareholders’ individual capital contributions do not have to be the same amount, but can vary. It is not possible to found a GmbH without capital. However, instead of making cash deposits, you can also make contributions in kind such as real estate, securities or land.

Additionally, according to the GmbH law meet the following requirements:

• Founding: You need articles of association and must be registered in the commercial register.
• Shareholder: In addition to the founder and managing director, any number of other shareholders, legal entities and legal entities can be involved.
• **Capital: **At least half of the minimum share capital of 25,000 euros must be in the business account at the time of registration.
• Articles of association: This is necessary to determine the key data of the company.

Founding a GmbH: You have to reckon with these costs

If you would like to set up a GmbH, this will initially involve comparatively high costs. The exact costs of setting up a GmbH always depend on the amount of your founding capital and the number of owners and managing directors. However, there are additional fees, which vary from city to city. These usually include:

• Notary costs for notarizing your partnership agreement (approx. 300 euros)
• Costs to appoint the managing director (approx. 130 euros) and to create the list of shareholders (approx. 100 euros)
• Fees for business registration (approx. 10 to 80 euros)
• Costs for the commercial register entry at the local court (150 euros with cash and 240 euros with contributions in kind)
• Membership fees for the IHK or HWK (approx. 150 to 300 euros per year)

Duration: How quickly can a GmbH be founded?

You guessed it: Setting up a GmbH involves a lot of paperwork and it takes a while until you have fully registered your GmbH. The length of time it takes to found a GmbH depends on many factors and is often out of your control. Under optimal conditions, setting up a business can easily take three to four weeks.

Step by step to founding a GmbH

If you want to set up a GmbH, there are a lot of bureaucratic hurdles to overcome. With this checklist you can keep an eye on all steps:

**Step 1 – Set company name: **The first step is to find a name for your GmbH. To check whether your desired name is still available, you can do so for free electronic commercial register research.

**Step 2 – Draw up a partnership agreement and have it notarized: **The partnership agreement records all important facts. A notary then certifies the contract and makes the entry in the commercial register.

**Step 3 – Open a business account and pay in share capital: **You need a business account to pay in the share capital. Important: For the next step, your bank must definitely certify the deposit.

**Step 4 – Commercial register entry: **The next step takes you back to the notary: There you present the bank receipt just mentioned, he confirms the referral to the local court and reports your GmbH to the commercial register.

**Step 5 – Registration at the trade office: **You can then register your GmbH with the trade office - in some cities this already takes place online.

**Step 6 – Obtain tax number from the tax office: **Of course, the tax office always calls whenever you do business. In order to obtain the tax number, you must first send a questionnaire for tax registration including the opening balance sheet to the tax office.

GmbH in formation

The GmbH in formation is a preliminary stage of the GmbH - you have only fully founded your GmbH with the official entry in the commercial register. In the preliminary stage you are allowed to do business and conclude contracts. **But be careful: **In the event of a loss, you are liable for all of your private assets.

Setting up a GmbH: advantages and disadvantages

Setting up a GmbH always entails certain obligations. For example, you must Annual financial statements create it and put it in Federal Gazette publish. So why set up a GmbH? The advantages are apparent:

Advantages of setting up a GmbH	Disadvantages of setting up a GmbH
+ Positive evaluation and high reputation among business partners	– Relatively high costs and high effort when setting up
+ Limited liability	– Obligation to submit annual financial statements
+ Commercial register entry creates trust	– Relatively complex accounting, for which you usually have one Tax Consultants need
+ If you become a partner, you can reduce the taxable profit
+ The corporate income tax of a GmbH is lower than the income tax of a partnership