Founding a corporation: These are the possibilities

A capital company, such as a GmbH, UG, or AG, is a legal entity where the liability of shareholders is limited to their investment. Unlike sole proprietorships or partnerships, capital companies require a minimum capital contribution and offer greater protection of personal assets.

The process involves selecting a legal form, drafting and notarizing a partnership agreement, registering the company with the commercial register, and opening a business bank account to deposit the initial capital. Additional registrations with tax authorities and trade offices may be required.

The required capital depends on the legal form. For example, a GmbH requires at least 25,000 Euros, while a UG can be founded with as little as 1 Euro. The AG (stock corporation) requires a minimum of 50,000 Euros.

Capital companies offer limited liability protection, making them attractive for riskier ventures. They also enhance credibility with investors and clients and allow for greater flexibility in transferring ownership or raising capital.

The most common types of capital companies include the GmbH (limited liability company), AG (stock corporation), UG (entrepreneurial company with limited liability), and KGaA (partnership limited by shares). Each has unique features, such as the UG being a cost-effective entry option or the AG being ideal for larger companies seeking to raise capital.

The minimum capital depends on the type of company: - GmbH: €25,000 share capital, with at least €12,500 to be paid in at the time of incorporation. - UG: €1 minimum capital, with a portion of profits required to be retained until €25,000 is reached. - AG: €50,000 share capital, fully subscribed at incorporation. This capital serves as financial security for creditors.

Capital companies are subject to corporate income tax (15% on profits) and trade tax (varying by municipality). Additionally, dividends paid to shareholders are subject to capital gains tax (25%). These tax rules differ from partnerships, where profits are directly allocated to the partners.

The establishment of a capital company requires the following steps: 1. Drafting the articles of association (company bylaws). 2. Notarizing the articles of association. 3. Depositing the share capital into a business account. 4. Registering the company in the commercial register. 5. The company is legally valid and operational only after registration.

Capital companies offer several benefits, including: - Limited liability: Shareholders are generally liable only for their contributed capital. - Separation of private and business assets: This protects personal wealth. - Easier access to capital: Attracting investors or issuing shares is simpler. - Professional image: This can enhance trust with business partners. These features make capital companies particularly attractive for larger or growth-oriented businesses.