Found a limited liability company: The most important requirements

Starting your own business is an exciting step that brings with it both entrepreneurial freedom and responsibility. Are you toying with the idea of becoming self-employed and setting up your own limited company? One of the most frequently chosen legal forms for companies is the GmbH (‘Gesellschaft mit beschränkter Haftung’), which is a proven model for entrepreneurs in many countries.

In this article, you will find out how you can set up a GmbH, what requirements and legal steps are necessary and what you should pay attention to in order to get your business off the ground successfully.

Founding a GmbH: the most important steps at a glance

1. Determining all the details of your GmbH
2. Coordination with the Chamber of Industry and Commerce: the company name and the object of the company
3. Prepare a sample protocol or articles of association
4. Notarisation
5. Paying in the share capital and opening the business account
6. Publication of the commercial register entry/transparency register
7. Carry out the business registration
8. Registration with the relevant tax office
9. Other steps

1. determining all the details of your GmbH

The law stipulates a number of minimum details that must be provided when registering your GmbH. These are

Name of the company (company name)
Object of the company
Registered office
Details of the shareholders
Shareholding structure (amount and distribution of share capital)
Details of the management

The choice of company name should be carefully considered. Your company will use this name in external commercial dealings. The name must fulfil the formal criteria of a company name in order to pass muster with the relevant notary(s) as well as the local court. A detailed trade mark search is essential for this. It is therefore advisable to take a look at the commercial register and the register of the trade mark and patent office with a lawyer. You can also have your desired name checked by the relevant Chamber of Industry and Commerce.

It is also necessary to formulate the object of the company. It describes the activities of the GmbH and is published in the commercial register for everyone to see.

2. coordination with the IHK

The IHK offers a free online form which you can use to carry out an informal clarification of the company name. During the registration procedure, the court may issue a statement, which can be avoided by this initial informal clarification.

3. prepare a sample protocol or articles of association

If you want to set up a GmbH, you can either use the standardised model protocol or draw up articles of association, which are also called ‘articles of association’. Both documents essentially concern the relationship between the shareholders and define, for example, the voting rights or the conditions for leaving the company.

Within a partnership agreement, you can formulate all aspects of the internal relationship between the shareholders yourself. The articles of association give you the opportunity to customise all agreements. However, it should be noted that any changes to the articles of association require a new notarisation, which incurs additional costs. Due to the complexity of the document, it is advisable to have it drawn up by a lawyer.

If you are initially planning to set up a less complex GmbH, it may make sense to use the sample protocol if

You have fewer than three shareholders
You only have a single managing director
The share capital is to be paid in as a cash contribution
and no individual regulations are required for the organisation of the company

In addition, since 1 August 2022 it has been possible to form your GmbH online, which is why there is also a sample protocol for online formation.

4 The notarial certification

The notary notarises the articles of association and the minutes of incorporation. They will also draw up the documents required for entry in the commercial register, such as the list of shareholders. All shareholders and managing directors must be present and notarise the founding documents.

Until the GmbH is entered in the commercial register, your company will be labelled ‘ GmbH i.Gr.’ (GmbH in formation). This means that your GmbH does not yet have legal capacity, that no entry has been made in the commercial register with a registration number and that the limitation of liability does not yet apply. Until entry in the commercial register, the shareholders are still personally liable for liability claims against the GmbH.

5. paying in the share capital and opening the business account

To reduce the time it takes to set up the company, you should open a business account soon after the notary appointment. The managing directors must be present for the opening.

The share capital is paid into this business account. The articles of association are submitted to the bank to prove that the share capital is available to the company. If the share capital is not paid in as a cash contribution but as a contribution in kind, a non-cash incorporation report must be prepared on the value of the contribution. A receipt for the payment must then be forwarded to the notary's office.

6. publication of the commercial register entry (transparency register)

After the notary has received all the necessary documents, he/she forwards them to the register court. As soon as the entry in the commercial register is published, you will receive confirmation and the invoice by post, which should be paid as soon as possible. Upon entry in the commercial register, the company is authorised to do business and the limitation of liability applies to all liabilities incurred by the company.

In addition, since 1 August 2021, every GmbH must also be entered in the transparency register. An annual fee of EUR 20.80 is charged for the transparency register, while the entry itself is free of charge.

7. carry out the business registration

When founding the newly created GmbH, it is necessary to submit the extract from the commercial register to the responsible trade office. Any necessary licences must also be submitted at this time. However, there is one exception: if licences for banking transactions or financial services in accordance with the German Banking Act (KWG) are involved, these must be submitted when the extract from the commercial register is submitted.

8 Registration with the responsible tax office

The trade office will officially notify the tax office of the formation of your GmbH. However, to speed up the process, it may make sense to register the GmbH with the tax office yourself. To do this, you must complete a tax registration form and receive the tax number for your company.

9. other steps

You should follow these other steps if you want to set up a GmBH:

• Create an opening balance sheet
• Draw up an imprint for the company website and create all the necessary business documents with the minimum information required
• Depending on the purpose of your company, it may make sense to register with the relevant professional association
• If you have founded an international GmbH: Apply to the Federal Central Tax Office for a VAT identification number for your company
• Take out all the necessary insurance policies for your company (e.g. public liability insurance)
• In order not to lose track of all the requirements, you will find our checklist for founders.

FAQ:

What is a GmbH?

A GmbH is a corporation and is considered a legal entity. The company has its own rights and obligations. It can exercise these through its management. The GmbH is a limited liability company, which means that it is liable for all internal and external obligations as a company as a whole. The shareholders are not personally liable with their own assets.

What does the abbreviation GmbH mean?

The abbreviation ‘GmbH’ stands for ‘Gesellschaft mit beschränkter Haftung’ (limited liability company). When the company is entered in the commercial register, it benefits from a limitation of liability.

Who is liable for a GmbH?

If the company is entered in the commercial register, liability is limited. This limitation of liability relates to the company's internal and external liabilities. It is only liable for the liabilities incurred in the company with its company assets and the private assets of the shareholders remain unaffected in the event of liability.