UG: Advantages for Founders at a Glance

Founding a UG: Advantages at a Glance

Is the Unternehmergesellschaft (UG) the right choice for your business? The UG (haftungsbeschränkt) is a popular option for founders looking to start a company with minimal capital. But what are the real advantages of a UG, and are there drawbacks you should consider?

In this article, you’ll find everything you need to know about the UG, its pros and cons, and how you can quickly and easily launch your digital business with our incorporation packages.

What is a UG (haftungsbeschränkt)?

The UG (haftungsbeschränkt) is a type of limited liability company, particularly appealing to founders who want to start their business with minimal capital. It is a special form of the GmbH, which means that liability is also limited to the company’s assets. This protects you as a founder from personal liability risks.

The biggest difference compared to a GmbH lies in the share capital: while a GmbH requires a minimum capital of €25,000, you can establish a UG with just €1. This flexibility makes the UG a popular choice for smaller businesses and startups. Additionally, the UG offers the advantage of being convertible into a GmbH once the required reserves have been accumulated.

Advantages of the UG – Why is it so attractive for founders?

Establishing a UG comes with numerous benefits, particularly appealing to founders who want to start their business with minimal capital. Thanks to its low share capital requirement and limited liability, the UG offers a secure and flexible way to start a company. For startups and smaller businesses, it provides an easy and cost-effective entry into entrepreneurship.

Low Share Capital

The biggest advantage of the UG is its extremely low minimum share capital of €1. This allows you to start with minimal personal investment, making it especially attractive for startups and solo founders. It significantly reduces the financial risk associated with starting a business.

Limited Liability

Like the GmbH, the UG offers limited liability. This means that in the case of debts or financial difficulties, you are only liable with the company's assets. Your personal assets remain protected – a significant advantage compared to partnerships such as a GbR.

Low Incorporation Costs

In addition to the low share capital, the costs of founding a UG are considerably lower than those for a GmbH. Since less capital needs to be paid in, notary and commercial register fees are also lower. Moreover, the UG can be established entirely online, speeding up and simplifying the process. With our incorporation packages, you receive all necessary documents and step-by-step guidance through the formation process.

Flexibility

A UG can be structured flexibly and later converted into a GmbH once reserves of €25,000 are accumulated. This gives founders the option to start small and scale the business gradually.

Reserve Requirement

Although it may initially seem like a disadvantage, the mandatory reserve requirement can be beneficial in the long term. The UG is required to allocate 25% of its annual profits to reserves until the share capital of €25,000 is reached. This automatically strengthens the financial stability of your UG and facilitates its conversion into a GmbH.