Open a Company in Germany: Your Start-Here Guide

Which form is right for you? (one screen)

There is no single "right" legal form (IHK Region Stuttgart). The best choice depends on how much liability protection you want, how much capital you have, whether you are going it alone or with partners, and whether you plan to raise money. Use the quick decision aid below, then the comparison table, then follow the link that fits.

A 4-question decision aid

Four questions usually narrow it down:

• Do you need limited liability? If you want to protect your personal assets, you are looking at a UG or a GmbH rather than a sole proprietorship.
• How much capital can you put in? A sole proprietorship needs none; a UG can start from €1; a GmbH needs €25,000 of share capital.
• Are you solo or with partners? A sole proprietorship is for one person; a GbR forms automatically once two or more partners act together.
• Will you raise outside money or look credible to larger clients? The GmbH is the standard, well-recognised form for that, which is why most serious SME businesses choose it.

There is no universally correct answer, so weigh the trade-offs rather than copying someone else's choice.

Compact comparison (sole proprietor / UG / GmbH + AG one line)

This is the short version. For the full matrix of entity types, follow the links below rather than expecting every detail here.

The UG (haftungsbeschränkt), often called the mini-GmbH, has existed since 1 November 2008 (§5a GmbHG); it takes cash contributions only and must set aside a quarter of its annual profit as a statutory reserve until it can convert to a full GmbH. If you want limited liability, you can open a GmbH or take the low-capital UG route. To weigh every structure side by side, compare all entity types.

The path in 5 stops

Make-it-in-Germany frames the whole process as five steps: (1) register your business, (2) pay taxes, (3) insure yourself and your company, (4) inform yourself of the relevant contracts and laws, and (5) fulfil your duties as an employer if you hire staff. In practice the registration and tax pieces break down into a clear sequence of stops:

1. Choose your legal form (see above).
2. Notary (corporations only). "The involvement of a German notary is required for the incorporation of a GmbH"; for a GmbH at least €12,500 must be actually and verifiably contributed to a bank account before registration (gtai.de). Sole proprietors and freelancers skip this entirely.
3. Handelsregister (commercial register). For a GmbH, UG or AG, "registration with the German commercial register via a German notary is mandatory" (gtai.de). The notary files it for you.
4. Trade office (or skip it). Before operations begin, "the competent local trade office must be notified" (gtai.de) if you are a business trader. Liberal professions skip this step (see the callout).
5. Finanzamt (tax office). After the trade-office registration you automatically receive a "Questionnaire for tax registration" from the Finanzamt; freelancers must contact the tax office directly. The trade office automatically notifies the tax office, the chambers and the courts (existenzgruendungsportal.de).

Gewerbe versus Freie Berufe. Business people (Gewerbetreibende) must complete a trade-office registration (Gewerbeanmeldung). Liberal professions (Freie Berufe), such as healthcare practitioners, legal and tax advisors, engineers and journalists, register directly with the Finanzamt and skip the trade-office step entirely, because "the activity is what counts, not the qualification" (existenzgruendungsportal.de). For the detailed walkthrough of each stop, see company formation in Germany.

Rough cost & timeline at a glance

Costs split into two layers, and it helps to keep them apart. The trade-office registration itself is small: roughly €10 to €40 (existenzgruendungsportal.de), or around €20 to €60 (firma.de), depending on the municipality. A sole proprietorship or freelancer essentially pays just that registration fee, with no capital and minimal other cost. A UG or GmbH adds the notary fee, the Handelsregister court fee and any advisory cost, which together typically come to a low four-figure euro total, on top of the share capital.

On timing, a sole proprietorship, freelancer or GbR is usually ready in around one to two weeks. A UG or GmbH typically takes around three to six weeks once you account for the name check, notary, bank account and capital, the Handelsregister entry, the trade-office and tax registrations and the transparency register (firma.de).

Capital is not the same as fees. The €25,000 for a GmbH is share capital you keep and use inside the business; it is not a fee paid to anyone. The notary, register and advisory fees are separate and far smaller. For the full breakdown, see the full cost breakdown.

Doing it in English, from abroad

Since 1 August 2022, under the DiRUG reform, a GmbH or UG can be formed by online video notarisation: a cash formation completed using an eID and a qualified electronic signature, with no physical presence at the notary, and some commercial-register filings can also be done online. It is a genuine remote route, but it does not mean that every form can be set up fully online in every case, and it carries identity-verification conditions that not every foreign founder can meet.

In practice, an English-speaking firm can act as your local representative and run the registrations for you, which is how most non-resident founders handle it. German is still useful when dealing directly with authorities, but you do not have to handle the German-language process alone. If you would like us to do this for you in English, our team is one message away.

A German business address

A German business address is required for a GmbH, and it is standard for any registered company (gtai.de). A registered or virtual office address is commonly used to satisfy this requirement, so you do not need to rent physical premises just to incorporate. It is a practical detail rather than an obstacle; the company formation guide covers how it fits into the wider setup.