Many people decide in favour of a GmbH as a legal form for these reasons

You may have noticed in the past that the abbreviation ‘GmbH’ is used in almost all industries. This is no coincidence! It is completely irrelevant whether you earn your living as an artist, in a trade or in another field: in theory, you can set up a GmbH in almost any business sector.
You also have the opportunity to determine the content of the articles of association and the company succession as freely as possible. You can find information on other advantages and challenges in the following sections.

• Tax advantages of the GmbH
• Limited liability
• Legal capacity
• Many advantages, but also disadvantages of a GmbH
• Conclusion

A particular advantage of the GmbH is that it is often possible for founders to save taxes on its basis. A particular focus here is on the utilisation of profits. For example, if these are not distributed to the shareholders but reinvested directly, those affected benefit from lower corporation tax compared to income tax.
But be careful! If you decide in favour of the aforementioned distribution, capital gains tax will be due. And this in turn is higher.

A GmbH is considered a legal entity. This means that this legal form is able to conclude transactions independently. As managing director, it is then your task, among other things, to represent the GmbH as such to the outside world. How the other roles are distributed is determined by you and your shareholders.

First of all: Whether you consider the following disadvantages to be real disadvantages or whether they are just challenges for you depends, of course, on your own judgement. However, if you want to set up a GmbH, you should be aware of the following points:

• The minimum capital is 25,000 euros. 12,500 euros must be paid in when the company is founded.
• You can transfer the rest later.
• You should not underestimate the effort involved in setting up a GmbH. This applies both with regard to legal requirements and bookkeeping.
• Personal liability is not fundamentally excluded. If you fail to fulfil your duty of care as managing director, you may well be liable with your personal assets.