6 Steps for Starting Your Own Business in Germany
6 Steps for Starting Your Own Business in Germany
What’s it like to launch a business in a country infamous for its intractable bureaucracy? With some good research and money set aside for legal costs, it’s not as hard as you think. Here’s a step-by-step guide to starting a business in Germany.
Step One – Figure out what kind of business you need to register as
One of the most confusing steps in registering your business in Germany is figuring out what precise legal entity you need. If you plan to be a self-employed freelancer, the process differs from that of setting up a non-profit. For more information on these options, refer to articles on setting up your self-employed business or starting a Verein in Germany.
If you need to establish a company, several models exist. The most common is a Gesellschaft mit beschränkter Haftung (GmbH), popular due to its limited personal liability for founders and lower capital contribution requirements compared to other business types in Germany. The steps in this guide focus on setting up a standard GmbH.
Step Two – Draft Articles of Association
To establish a GmbH, the company needs at least one shareholder, who can be either a person or a legal entity. The shareholder’s nationality or residency doesn’t matter, but the GmbH requires a local representative and a German business address.
You’ll need to draft articles of association—essentially, a company constitution. These documents should include the following:
- The company’s purpose
- The company’s business name
- The company’s shareholders and their respective shares
- The amount of share capital (see the required amounts below)
- The company’s registered office (German address)
Specialized lawyers often draft articles of association, though templates are available online, including some in English. Your local chamber of commerce (Handelskammer) may also offer sample templates. Regardless of how you draft them, these articles need to be notarized, and using Handelskammer templates might reduce your notary fees slightly.
Step Three – Notarize Articles of Association
After drafting the articles of association, you must designate the company’s managing director(s) before a notary, for which you’ll incur fees. In some cases, this process can be completed via video, provided you have an EU electronic ID card or a German electronic residence permit.
Step Four – Put Up the Share Capital
Once the articles of association are notarized, you can open a company bank account and deposit the required share capital. For a GmbH, the articles of association typically specify a minimum share capital of €25,000, with at least €12,500 needing to be transferred into the bank account. After the transfer, this money can be used for business operations.
If you lack the full €25,000, you can create a Unternehmergesellschaft (UG) for just €1, often referred to as a “Mini-GmbH.” It’s a transitional step to a full GmbH, with founders required to set aside 25% of profits until they accumulate the necessary €25,000. The formation process for a Mini-GmbH mirrors that of a regular GmbH.
Step Five – Register Your Company in the Commercial Register
Once your share capital is in the bank, the managing director must apply to have the company registered in the Handelsregister (commercial register), which also involves notary fees. As soon as the company is listed in the commercial registry, it officially exists but cannot yet operate.
Step Six – Notify the Trade Office
Before you commence operations, notify your local trade office (Gewerbe- or Ordnungsamt). In some cases, simply informing them is sufficient. In other cases, depending on your sector, you may need a trade license to operate. If your profession is regulated, you’ll need to investigate specific licensing requirements, potentially requiring the help of a specialized lawyer.
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