Founders FAQ: Common Questions About Forming a GmbH or UG

When forming a GmbH or UG, most questions do not arise all at once, but over the course of the formation: from preparation and the notary appointment to the obligations after registration.

The most important questions are answered here briefly and clearly, sorted by the individual phases of the formation.

At a glance

Before formation, the legal form, company name, company purpose, shareholdings and management should be clarified.
Formation requires notarised articles of association and entry in the commercial register.
The share capital is generally paid in after notarisation and before the application to the commercial register.
Registration is followed by, among other things, tax registration, trade registration where applicable, and the report to the transparency register.
Shareholders and managing directors have different tasks, even if both roles can be held by the same person.
Later changes, for example to the company name, registered office, shares or share capital, may again require notarial involvement.

Quick start: the six phases of a formation

The following sections follow the typical chronological order. This way you can quickly find the section that is currently relevant for you:

Before formation
Legal form, shareholders and articles of association
Notary appointment and required documents
Share capital, commercial register and time until registration
First steps after formation
Later changes and special constellations

1. Before formation

What do I need to clarify before I start the formation?

Before the actual formation step, a few decisions on content need to be made: the legal form, the planned company purpose, the company name and the question of who will be shareholder and who will be managing director. You should also think through the amount of share capital and how it is divided in advance. Especially with several founders, shareholdings, management and important decision-making rules should not be settled spontaneously at the notary appointment. Once these points are clarified, the articles of association can be prepared and the notary appointment scheduled sensibly.

GmbH or UG: which suits my situation?

For a GmbH, the statutory minimum share capital is 25,000 euros. A UG can be formed with lower share capital, theoretically from one euro. However, the chosen capital should match the actual financing needs. A UG must generally allocate part of its annual net profit to a statutory reserve. This does not automatically turn it into a GmbH; that requires in particular a corresponding capital increase.

Can I form a GmbH or UG on my own?

Yes. Both the GmbH and the UG can be formed as a single-member company. You are then the sole shareholder and can at the same time appoint yourself as managing director. A single-member company also requires a notarial deed of formation and entry in the commercial register. However, the specific arrangements and the documents required may differ from a formation with several shareholders.

Roughly how much does a formation cost?

Formation costs consist mainly of the statutory notary fees and the court fee for entry in the commercial register. The exact amount depends, among other things, on the share capital, the number of parties involved and whether a model protocol or individual articles of association are used. For a reliable estimate, the specific formation should be looked at.

Do I need a tax adviser before formation?

It is not mandatory, but in many cases it is advisable. Tax questions, for example on structuring, ongoing bookkeeping or tax registration, belong to tax advice and are outside the notary’s remit. The notary handles the legal implementation of the formation, not the tax assessment.

What are the most common mistakes in a formation?

Recurring issues are a company purpose that is worded too generally, a company name that cannot be registered, uncertainties about the rules of representation and overlooking follow-up obligations such as the transparency register or tax registration. Many queries and delays can be reduced if the company name, company purpose, shareholdings and rules of representation are agreed before the notary appointment.

2. Legal form, shareholders and articles of association

Model protocol or individual articles of association: which is better?

The model protocol is a simplified form of formation provided for by law for companies with no more than three shareholders and one managing director. Using the model protocol usually results in lower notary fees. However, individual deviations from the content prescribed by law are not possible in the simplified formation procedure. Individual articles of association are particularly worth considering if you want to make special arrangements on management, share transfers or resolutions.

How do I find a permissible company name?

The company name must be distinctive, must not be misleading and must contain the legal form suffix, i.e. GmbH or UG (haftungsbeschränkt). A preliminary check by the competent Chamber of Industry and Commerce (IHK) can give initial guidance; the register court decides on registration. Checking for conflicting trademark rights is a separate matter and must be distinguished from permissibility under company name law.

How precisely must the company purpose be worded?

The company purpose describes the company’s field of activity and must be specific enough for the main focus to be recognisable. Wording that is too general may be objected to by the register court. A company purpose that is too narrow can mean that activities added later require an amendment of the articles. For certain activities, official permits or other proof may also be required. The wording of the company purpose does not replace these permits.

What roles do shareholders and managing directors have?

Shareholders hold the shares in the company and decide on fundamental corporate matters. The managing director represents the company externally and runs its day-to-day business. Both roles can be held by one person, for example in a single-member company.

Can foreign nationals also become shareholders?

Yes. Neither place of residence nor nationality generally prevents a shareholding. In practice, depending on the constellation, additional proof of identity and, where applicable, certified translations are required. Residence law questions are to be considered separately and are outside the notary’s remit.

3. Notary appointment and required documents

Which documents do I need for the notary appointment?

For notarisation, you generally need valid identity documents of everyone involved as well as details of the shareholders, managing directors, company name, company purpose and share capital. If a draft of the articles of association already exists, it is reviewed in advance. The notary’s office will tell you which additional proof is needed in the individual case.

How does the notary appointment work?

At the appointment, the articles of association are read out and notarised, the managing directors are appointed and the required declarations are made. The notary explains the legal implications and answers questions. The managing directors also sign the separate commercial register application. Once the required capital has been paid in and the other requirements are met, the notary’s office transmits the application electronically to the register court.

Do I need a business account before the appointment?

A business account is not strictly required for notarisation itself. For a cash formation, an account is usually opened for the company in formation after notarisation and the required contribution is paid in. As soon as the statutory contribution requirements are met, the commercial register application can be filed with the corresponding assurance of the managing directors.

Can notarisation also take place online?

The formation of a GmbH or UG can in principle also be notarised in the notarial online procedure via the video communication system of the Federal Chamber of Notaries. For this, the parties must in particular meet the required identification and technical requirements. The notary’s office checks whether the online procedure can be used for the specific arrangement.

4. Share capital, commercial register and time until registration

When is my GmbH or UG legally formed?

The company only comes into existence as an independent legal entity with limited liability upon entry in the commercial register. Between notarisation and registration, the so-called company in formation exists. Only registration legally completes the formation.

When do I have to pay in the share capital?

The share capital is paid in after notarisation and before the application to the commercial register. For a cash formation of a GmbH, at least a quarter of the nominal amount must generally be paid in on each share; in total, at least 12,500 euros must be reached. For a UG, the cash contributions assumed must be paid in full before the application. Contributions in kind are not permitted when forming a UG.

Read more: Paying in the share capital

How long does entry in the commercial register take?

How quickly registration takes place depends on whether the application is complete and registrable, whether queries arise and how busy the competent register court is. A fixed processing time cannot be promised. Depending on the register court and the specific formation, registration can take a few days, but also several weeks.

Who is liable before entry in the commercial register?

Before registration, the company acts as a GmbH or UG in formation. Anyone who concludes contracts or enters into other obligations in the company’s name during this phase can be personally and jointly and severally liable under Section 11 (2) GmbHG. Larger or unusual transactions should therefore be checked legally before registration.

What happens after entry in the commercial register?

After registration, you receive a notice of registration. From this point on, the company exists as an independent legal entity. In addition, further follow-up obligations must be observed, in particular tax registration, any required trade registration and the report to the transparency register.

5. First steps after formation

When do I have to submit the tax registration questionnaire?

The tax registration questionnaire must generally be submitted electronically via ELSTER within one month of opening the business or starting the activity. The tax office then issues the tax number. A VAT identification number can be applied for in the questionnaire at the same time; it is issued by the Federal Central Tax Office. For questions on tax details or tax structuring, a tax adviser should be involved.

Do I have to report the beneficial owners to the transparency register?

Yes. GmbHs and UGs must generally report the legally required details of their beneficial owners to the transparency register without undue delay and keep them up to date. The report is not made automatically through entry in the commercial register. The report itself is free of charge; an annual basic fee is generally charged for keeping the transparency register.

Do I also need a trade registration?

Whether trade registration is required depends on the company’s actual activity and not solely on its legal form. If a trade is carried on, it must be registered with the competent office. Registration is carried out for the company at the competent trade office and is not one of the notary’s tasks.

What mail will I receive after formation, and what should I take seriously?

After a register entry, paid offers that look like official fee notices are often sent out. Do not pay simply because a letter contains a file number, register data or a short payment deadline. In particular, check the actual sender, the payee, the legal basis and the bank details, or ask the notary’s office or the authority actually responsible, using contact details you have obtained independently.

Read more: Important mail after formation

6. Later changes and special constellations

Can I admit another shareholder later?

Yes. A new shareholder can be admitted, for example, through the transfer of shares or through a capital increase. Both routes require notarial involvement, but the necessary deeds and procedural steps differ. The shareholder list must then be updated.

When does the shareholder list have to be changed?

A new shareholder list must be filed when the legally required details change. This applies in particular to share transfers, capital measures and changes to the name, place of residence or other details of a shareholder that must be entered. In relation to the company, only the person listed in the shareholder list included in the commercial register is in principle deemed to be the holder of a share. However, the list does not replace the notarial share transfer and does not make an invalid transfer valid merely by being filed.

When is an amendment of the articles necessary?

An amendment of the articles is required when a provision of the articles of association is changed, for example the company name, registered office, company purpose or share capital. The amending resolution must be notarised and generally only takes effect upon entry in the commercial register. However, not every later change is an amendment of the articles: a new business address or a change of managing director, for example, can be registered without amending the articles of association.

Can I later build a holding structure from my GmbH?

Yes. A holding typically arises when one company holds shares in one or more other companies. Whether and how such a structure can sensibly be built up later depends on your starting position. Forming a holding company and, in particular, transferring or contributing GmbH shares generally require notarial involvement. The tax consequences should be clarified with a tax adviser before implementation.

Back to the Founders Plus overview

Arrange a notary appointment

Once the company name, the parties involved and the desired arrangements are settled, the notarial formation can be prepared. Open questions about the procedure and the required documents can be clarified in advance.

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Well prepared for your formation

This overview gives you initial guidance on the most important questions about forming a GmbH or UG. Which arrangement suits your specific situation and which notarial steps are required can then be clarified in person.