F.A.Q. for Incorporating
Here is a list of typically asked questions in regards to opening a company in Germany.
Can the money for capitalizing the company be used or is it gone for good?
Yes, the money can be used after funding the company but this needs to be carefully structured. The capital for your company has left you for good and is now with your company – like giving it to your sister. You can use the funds for everyday needs of the company. It's not permissible to simply return it to the shareholder if you want avoid personal liability.
What's the image of UG in daily business? Is it really that bad?
The UG was introduced into German law on November 1, 2008. As a rule, Germans do not immediately accept new concepts. They must first draft a competitive business plan and have this (first) plan criticized by another expert, and both plans must be discussed until they finally come to the "final (= ready for implementation)" plan...
The concept of the Mini-GmbH results from the strong competition of the UK Ltd, which needs only one pound sterling to be exempted from private liability. Many Germans, however, wanted to have a limited liability, but could not afford to set the " high amount " 25 T€. Although absolutely legal, a Limited in Germany caused lawyers and judges enormous headaches in deciding which law would be applicable when and for what. The Ltd is a British company incorporated under British law and its branch office operates in a foreign jurisdiction. Concerns revolve around debtor protection and the reputation of the Ltd. The Ltd symbolizes economic power, tradition and seriousness. You can probably imagine what a contribution of one euro looks like in comparison. In the end it is the economic operators who decide.
Non-entrepreneurs are not very familiar with this form of company. Only when you say "Mini-GmbH" will they have an idea. Acceptance otherwise depends on your industry and the risk involved. If your company is a business that will make a six-figure profit per annum, you should choose a GmbH directly when deciding whether or not it is a UG. Otherwise you will only lose face! Conservative Germans will frown upon you: "They are so broke that they can't come up with a serious contribution (of 25 T€)" or "They want to make six-digit profits but only 1 €, that can't be a serious business". If your company is heavily dependent on suppliers, it may be best to have a limited liability company. If you are a freelancer and want to appear larger, then the UG is perfect and your company can grow into a business.
The UG is ideal for attracting investors! While you prove your success with your first sales, you earn your first money while looking for a venture capitalist. So what is the bottom line with an UG? You have a legal structure that is suitable for small to medium sized companies. Make sure that your letterhead correctly refers to your company! It is important to add the legal phrase "(limited liability)".
What is the difference between a standard and individual UG?
The requirements for an individual UG are the same as the standard setup of a UG but with some major differences. Your company will have:
- more than one director,
- more than three shareholders,
- initial capital of more than € 300, and / or
- articles of association differing from what the law provides.
Already one of these differences disqualify your setup to be "standard".
The lawmaker wanted to setup a competitive legal structure to the UK Limited and also provide startups with an affordable setup to start their business and look out for an investor. For this reason parliament reduced the legal costs as shown for the standard formation in order to enhance low budget corporate start-ups.
As a foreigner may I open a company in Germany?
Are you wondering whether you as an alien may be a shareholding director of a German company? You may worry no longer. It permissible that any non-German may be a shareholder even also its director. If you want to understand more why being a foreigner is no issue to be a shareholder, just click this sentence.
When you are not in or do not wish to come to Germany, then you can found it and run it from abroad as well. I can represent you at the notary and other authorities but only introduce you to a bank.
May I live and work in Germany and work as the shareholding director of my?
Yes, this is quite well imaginable. You will need a permit based on §21 I AufenthG. Typical exceptions to have such permit will be that you already have an unrestricted work permit. You have an unrestricted work permit when your title reads like "Erwerbstätigkeit gestattet".
What's the difference between GmbH and UG
Not only the money itself is a major difference in both kinds of companies. It also has to do with the company's acceptance in the market. Click here to read in in depth on the image of UG in daily business life.
What is a readymade company and why is it so advantageous?
A shelf company just setup that it is ready to take over. It is fully registered and has a local tax number. Our associate company Beam my Presence to Germany UG sets up these shelf companies. They will guarantee you that the
Why can't you open an account for my company?
Well, we love to serve and take care of you but when dealing with a bank, we would be collaborating with a third party on which we have no influence. Besides, you will have certain needs and expectations that you wish to have met. All this is beyond our abilities. Besides all that, you yourself have to establish a good banking relationship if at any time you might want a loan or other kind of support.
Gosh, I am stunned! This stupid bank turned me down. Can't I insist that they take my company?
We regret your disappointment but such is life. No-one has the right to demand from any bank that they provide with an account. The only exception is for the so-called "p account" ##verlinken# but that is only for private persons – not business.
Does my company need a special permission to operate?
Depending on line of business, the company might have to be registered with other offices or maybe even require a permission to operate. Click this sentence to find out whether your company's line of business requires permission or not!
Why do you to collect and cover the fees of the authorities? This makes your offer seem so expensive.
Simple! We want to take care of you and expedite the proceedings. Payments inside Germany arrive faster. We will argue with them if the fees are incorrect – without charging you. One less detail for you to worry about. Especially the notary will be pleased to learn that his payment is secured and will jump to serve you.