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Basic information about the UG

The UG was established in the wake of the popularity of the British limited company and is intended to make it easier for start-ups to pursue entrepreneurial goals with little share capital.

In principle, it is already possible to set up a UG with share capital of one euro. This may sound practical, but it is not advisable in practice. There is a risk of the company becoming undercapitalized, which could result in insolvency. To avoid consequences under civil and criminal law, your share capital should at least cover the formation costs.

The share capital can only be paid in as a cash contribution; contributions in kind are not possible for the UG. We recommend an initial investment of at least 1000 euros.

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Found a UG: The requirements at a glance

Who can set up a UG and what steps do I need to take before I can start trading with my company? There are a few requirements for founding a UG, which you can find here at a glance:

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Shareholders & management: Your UG needs at least one adult shareholder and a management.

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Registrable name: The company name must meet minimum legal requirements. You can have the IHK check whether your company name is registrable.

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You need a German registered office. German citizenship is not mandatory.

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For entry in the commercial register, it is necessary that the share capital has already been paid in. You need a business account for this.

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Regardless of whether you set up with a model protocol or individual articles of association, your articles of association must be notarised. Entry in the commercial register is also carried out by a notary.

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Once you have been entered in the commercial register, you must apply to the relevant tax office for a tax and VAT ID and make an entry in the transparency register. If you trade on the stock exchange, you will also need an LEI number.

What documents do you need to set up a UG?

Before you can register your UG in the commercial register with legal effect, you need a form of articles of association. It is possible to form a company with a standard record or with individual articles of association.

The standard record is a legally pre-formulated and standardised document and serves as proof of incorporation. The document formalises the basic data of the company and contains information on the shareholders, the share capital and the purpose of the company. However, the use of the standard record is restricted: Only one-person UGs and multi-person UGs with a maximum of 3 shareholders can use the standard record. Furthermore, you cannot add any individual regulations to the standard record.

If you would like a more flexible structure for your articles of association, we recommend individual articles of association. This is particularly advisable in more complex social constellations that require a certain degree of individualisation. The lawyers at Digitale Gründung will be happy to help you draw up your articles of association.

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Notarisation and incorporation

The costs for designing your contracts depend on the individual effort involved. Basically, you can expect costs (including the costs at the local court) of 400 – 2,000 euros for setting up your company.

The articles of association (or standard record) must be notarised by a notary. The notary’s office then handles the registration with the commercial register. The prerequisite for this is that the share capital has already been paid into the business account. You will need a bank statement and proof of payment.

Official applications and registrations

With the entry in the commercial register you lose your founding status “UG in Gründung” (UG i.G.). This means that the UG has been legally spun off and has limited liability. Further official registrations are then required for the UG: This includes tax registration with the tax office and registration with the trade office. The UG must also be registered with the Chamber of Industry and Commerce and entered in the transparency register.

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Checklist for founders: Requirements for a UG

Checklist for founding a UG:

  • Standard record or UG articles of association
  • Notarisation
  • Opening a business account and paying in share capital
  • UG commercial register application
  • Applying for a tax and VAT ID at the tax office
  • Business registration (IHK, trade association, etc.)
  • Entry of the UG in the transparency register
  • LEI registration for securities trading, if applicable

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FAQ

Why found a UG (haftungsbeschränkt)?

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Founding a UG (haftungsbeschränkt) is particularly suitable for young companies. This is because 1 euro is theoretically enough for the share capital. If you don't want to be liable with your private assets but don't have the start-up capital for another limited company, a UG (haftungsbeschränkt) is a good choice. Unlike a sole proprietorship, liability is limited here and private assets are protected. In practice, however, there are also many arguments against setting up a UG (haftungsbeschränkt), as it often makes more sense to set up a GmbH. Individual advice should be sought here.

What is the difference between a GmbH and a UG (haftungsbeschränkt)?

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The biggest difference between a UG (haftungsbeschränkt) and a GmbH is the amount of share capital required to set up the company. A GmbH requires 25,000 euros in share capital, half of which must be paid in when the company is founded. In the case of the UG (haftungsbeschränkt), on the other hand, EUR 1 is sufficient as share capital, provided the capital requirement does not necessitate a higher sum. In the case of a UG (haftungsbeschränkt), reserves must be formed from profits which may not be distributed to the shareholders. In addition, the UG (haftungsbeschränkt) can also consider increasing its capital and changing its name to a GmbH. Otherwise, the UG (haftungsbeschränkt) has the same rights and obligations as a GmbH in terms of shareholder, accounting and liability requirements. The UG (haftungsbeschränkt) must also pay corporation tax and trade tax in the same way as the GmbH.

What do you need to start a business?

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To set up your company, you need a clear business idea and the right legal form. Make sure you have sufficient start-up capital and register your company with the commercial register. Choose a unique company name and make sure that you meet your tax obligations. Check whether special licenses or permits are required for your project. Open a separate business account and be prepared to master the challenges of starting a business with perseverance and commitment.