Step One - Figure out what kind of business you need to register as
One of the most confusing steps in registering your business in Germany is figuring out what precise legal entity you need to set yourself up as.
If you intend to be a self-employed freelancer, there's some different steps. If you're setting up a non-profit, there's a different process for that as well. You can read about these in our dedicated articles on setting up your self-employed business or starting a Verein in Germany.
If you need to set up a company, there's a few different models, which you can read about it our article outlining the different possibilities. The most common business in Germany though, is a Gesellschaft mit beschränkter Haftung - or a GmbH. It's most popular due to the limited personal liability for its founders and its (comparatively) low capital contribution requirements compared to other types of German businesses.
The steps in this article focus on how to set up a standard GmbH.
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Step Two - Draft articles of association
To set up a GmbH, the company needs at least one shareholder - who is either a person or legal entity. It doesn't matter where they are resident or what nationality they are, but the GmbH will need a local representative and a German business address.
You'll then need to draft articles of association. Basically, think of these like a company's constitution. These are highly individual to the company itself but all articles of association need to include the following things at a minimum:
- The company's purpose
- The company's business name
- The company's shareholders and how much they hold
- How much share capital the company has (more on required amounts below)
- The company's registered office (German address)
It's not uncommon for specialised lawyers to be brought in to help draft articles of associations, but there are some sample templates online - some even available in English. Depending on where you are, your local chamber of commerce - or Handelskammer - may have some sample templates you can try using.
READ ALSO: How to start your own Verein in Germany
Whether or not you use a lawyer to draft your articles of association or you get the help of a template to draft them yourself - you will still need to get them notarised. However, using sample templates - particularly if they're from a Handelskammer - might see your notary fee slightly reduced.
Step Three - Notarise articles of association
After you've drafted your articles of association, you'll need to designate the company's managing director or directors before a notary - which you'll need to pay for.
In many cases, you can do this by video as long as you have an EU electronic ID card or a German electronic residence permit.
Step Four - Put up the share capital
After your articles of association are notarised, you can open up the company bank account and transfer the amount of share capital stipulated by the articles of association.
To open a GmbH, your articles of association typically need to specify a minimum share capital of €25,000. At least half of this, or €12,500, needs to be transferred into the bank account. Once done, this isn't a deposit. The money can be used for the company's operations at this point.
If you don't have the required €25,000, you can found an Unternehmergesellschaft for €1. This is often referred to as a "Mini-GmbH". It's meant to be a transition step to a full GmbH where the founders are expected to change over to a full GmbH once they have the necessary €25,000. Until they do, they need to set aside 25 percent of all their profits to build up the necessary capital.
Other than that, the formation process of a mini-GmbH is the same as for a regular GmbH.
READ ALSO: Five well-paid jobs in Germany that no one wants to do
Step Five - Register your company in the commercial register
After your share capital is in the bank, the GmbH's managing director can apply to have the company added to the commercial register - or Handelsregister. This process must be done through a notary and therefore carries additional costs.
As soon as the company enters the commercial registry, it legally exists as a company. However, it cannot yet commence its business operations before taking one final step.
Step Six - Notify the trade office
Before you commence operations, you need to notify your local trade office - or Gewerbe- or Ordnungsamt. In many cases, simply notifying them may be the end of it. In others, you may need to have an appropriate trade licence from them in order to operate.
This, however, is highly dependent on the sector you're in and whether your profession is a protected one. In these cases, you'll need to know more about the specific licencing requirements of that regulated profession and potentially contact a specialised lawyer.
Articles in The Local are not meant to replace professional legal or tax advice. We recommend speaking to an appropriated professional in case of further questions.
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