Corporations are particularly attractive for entrepreneurs.
Among the corporations, the limited liability company (GmbH) and the entrepreneurial company (UG haftungsbeschränkt) are particularly well known. But what exactly are corporations? In this article, our team explains how a corporation is defined.
What is a corporation?
Kapitalgesellschaft is a generic term for various legal forms, such as the GmbH and the UG haftungsbeschränkt. All companies that fall under the umbrella term ‘Kapitalgesellschaft’ have one thing in common: they are limited liability companies. This is particularly interesting for inexperienced founders. With limited liability, the shareholders' private assets remain protected in the event of liability. Only the company is liable with its full assets.
Important questions about the corporation
In order to decide whether a corporation is suitable for you and your start-up project, you should consider various questions. Our team answers the most important questions in this article:
- What types of corporations are there?
- How do you set up a corporation?
- How does liability work in a limited company?
- What are the advantages and disadvantages of a limited company?
What types of corporations are there?
As a corporation is only a generic term for various legal forms, you will find an overview of the sub-forms here:
- Limited liability company (GmbH)
- Entrepreneurial company (UG haftungsbeschränkt)
- Public limited company (AG)
- Partnership limited by shares (KGaA)
Not sure which legal form suits your start-up project? Our team will be happy to advise and support you on your path to entrepreneurship. Book the right legal advice package now!
How do you set up a limited company?
If you set up a corporation, it is always necessary to make a capital contribution: You can set up a UG haftungsbeschränkt with a minimum capital contribution of just one euro. In the case of a GmbH, you have a minimum capital contribution of 12,500 at the start of the foundation, later you have to come up with a total of 25,000 euros. The capital contribution for an AG or KG auf Aktien is at least 50,000 euros.
You must also draw up a memorandum and articles of association, which must be notarised.
Are you interested in more details about founding a company? Then find out now with the checklist for founders.
How does liability work for corporations?
Corporations have the advantage of so-called limited liability. This means that in the event of liability, the shareholders are not liable with their private assets, but the company is liable with its full corporate assets.
Are you still unsure how to set up your company and have unanswered questions? Our team will be happy to assist you with your company formation. Book the right legal and tax advice package now.
What are the advantages and disadvantages of a limited company?
On the one hand, you can protect the private assets of the shareholders through limited liability. In addition, corporations enjoy a high reputation among customers. On the other hand, you should bear in mind that setting up a corporation involves costs and effort. It is therefore always advisable to seek professional advice to find the best way for you and your company.
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