Founding a GmbH & UG: The Complete Guide to the Process, Costs, and Timeline

Are you considering starting a business in Germany? By far the most common legal form for companies in Germany is the limited liability company (GmbH) or its sub-form with lower share capital, the UG (limited liability). Startup founders, in particular, regularly opt for this legal form.

On this page you will find comprehensive instructions on the process of founding a GmbH/UG (limited liability company), including the costs, duration, authorities involved and the further steps required in connection with the founding.

Unfortunately, unlike in other countries, the incorporation process in Germany does not yet offer a one-stop-shop solution. Therefore, numerous providers offer a start-up service, which guides and supports founders through all the necessary steps (e.g., firma.de , fuer-gruender.de , clevver.io/de ).

Alternatively, the acquisition of a shelf company is conceivable. In this case, founders acquire a so-called shelf or shell company already established by a shelf company provider (e.g., cormoran-ag.de , vrb-gmbh.de ). This can have the advantage, among other things, that, unlike the establishment of the company, no notarized power of attorney is required for the acquisition.

Experience shows that a timely incorporation is possible without resorting to such costly additional services. As notaries, we accompany you every step of the way, from the notarial deed to registration in the commercial register. Here, we provide an overview of the necessary further steps and the authorities you need to contact.

The founding process – step by step

1. Preparation

Select the legal form, choose the company name (company) and registered office, agree on the articles of association (= statutes), determine the share capital and shareholder structure, contact the bank for the company account (see section 3 below).

Duration: a few days to weeks

Procedure: The notary requests the necessary information and prepares drafts for further approval (via email, possibly by phone)

Costs: generally none or included in the notarization fee (see immediately 2.); if applicable, additional consulting fees (tax advisor/lawyer)

Good to know: Registered office of the company The registered office of a GmbH/UG (limited liability) can be freely determined within Germany. Therefore, no reference to the company's business premises/address is required. The location of the registered office (also known as the registered office) determines which registry court has jurisdiction for the GmbH/UG (limited liability). The jurisdiction of the registry court can have a significant impact on the time it takes to register the company in the commercial register. In Berlin, the Charlottenburg District Court maintains the commercial register for all companies that have chosen Berlin as their registered office. Unlike many other Berlin authorities, the Charlottenburg District Court is known for its speed.

Just like the registered office, the notary can also be chosen freely (for example, a Berlin notary can certify the establishment of a company with its registered office in Hamburg).

Good to know: Difference between Gesellschaftsvertrag/Satzung/shareholder agreement The German terms Gesellschaftsvertrag and Satzung are used synonymously to translate articles of association. They regulate the company's internal structure (e.g., how decisions are made and who has special rights). The articles of association are like a small law of the company that automatically applies to all shareholders. Therefore, they can be viewed online by anyone via the commercial register. These must be distinguished from shareholders' agreement, which is often concluded in connection with financing rounds for start-ups (shareholders' agreement, or SHA for short). Shareholders' agreement are contractual agreements in which additional provisions are made that one does not want to be visible to everyone via the commercial register (such as liquidation preferences).

Good to know: Share capital for GmbH and UG (limited liability)

A "real" GmbH must have share capital of at least EUR 25,000.00. Of this, at least EUR 12,500.00 must be paid in upon incorporation. The remainder must be paid in at the request of the management as needed. Contrary to popular belief, the share capital does not have to remain in the company's account. After the company is registered in the commercial register, it is accounted for on the balance sheet. Therefore, the share capital can be used, for example, to purchase office equipment.

For a UG (limited liability), the share capital can range from EUR 1.00 to EUR 24,999.00. Legally, it is also a GmbH, but due to the lower share capital, it must be referred to in legal transactions as "UG (limited liability)." A UG (limited liability) can later be "converted" into a GmbH through a capital increase.

Good to know: Implementing a holding structure when founding a company

Particularly for tax reasons, it may be advisable not to become a shareholder in the GmbH/UG (limited liability company) but to participate as an indirect shareholder through a so-called holding company. Particularly with start-ups, it is common practice (also for signaling reasons to future investors) for the founders to initially establish their own holding UG (limited liability company), through which they then become indirect shareholders of the start-up. The establishment of the holding company(s) can take place at the same notarization appointment. A time gap or a separate notarization appointment is not required .

2. Notarial certification

The pre-agreed founding documents must next be notarized. This means the documents will be read aloud by a notary. During the reading, there will be an opportunity to ask questions and clarify any final details.

The certification can also be done online. This requires, in particular, an identity card with an activated eID and the corresponding PIN.

For founders/shareholders who cannot attend the notarization in person and who cannot participate online (due to a lack of suitable personal documents), there is the option of issuing a power of attorney that must be notarized (and, if notarized abroad, may require an apostille).

Duration: 15 minutes to 1.5 hours (duration of the notarization)

Process: Coordination of an online or face-to-face appointment, reading of the incorporation protocol and the articles of association by the notary, signing of the list of shareholders and the commercial register registration by the managing directors

Costs: approx. EUR 200.00 to 1,000.00 (depending on the procedure (model protocol/regular), number of founders, amount of share capital and language version)

Good to know: Documents for online certification

In addition to German identity cards, electronic residence permits and personal documents from the following countries can be used for online certification: Belgium, Bulgaria, Denmark, Germany, Estonia, Italy, Croatia, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Austria, Poland, Portugal, Slovakia, Slovenia, Spain, Czech Republic, Cyprus

In particular, personal documents from the following countries cannot be used: Finland, France, Greece, Great Britain, Ireland, Iceland, Norway, Romania, Sweden, Switzerland, Hungary, USA.

Further information on the online procedure can be found here online.notar.de .

Good to know: Notary fees

Notary fees are regulated uniformly in Germany and are therefore the same for all notaries.

3. Account opening & deposit of share capital

Following the notarization appointment (often on the same day or the following day), the founders receive electronic versions of the founding documents via email (and, upon request, also in paper form). These documents can then be used to open a business account for the company.

It's advisable to select a suitable bank in advance and initiate the account opening process. Otherwise, significant delays often occur. So-called neo-banks (such as qonto.com/de , finom.de/de , fyrst.de ) are often simpler and faster than traditional banks.

After opening the account, the founders transfer their shares in the company's share capital and send a bank statement or other suitable proof of payment to the notary for verification.

Duration: a few days to several weeks (account opening) plus approximately 1–2 days (deposits)

Process: Opening an account, transferring the capital contributions, submitting the proof of payment to the notary

Costs: variable bank fees (between EUR 0.00 and 30.00 per month for standard plans)

4. Registration and entry in the commercial register

After receiving the bank statement/proof of payment (see 3 above), the notary forwards the founding documents to the relevant commercial register and, to expedite the registration process, may declare to the commercial register that they are available to pay the court registration fees as an additional debtor (a declaration of liability for costs). The commercial register examines the documents and then registers the company in the commercial register.

If the notary has not made the above-described statement of costs, the commercial register will send the company a fee invoice and will wait to register the company until the fee is paid.

After the company is registered, the commercial register notifies the notary. The notary informs the founders of the company's registration by email and sends the notification of registration from the commercial register, which, among other things, contains the company's registration number. After registration, the company is established as a separate legal entity with liability protection for the shareholders .

Duration: Depending on the relevant registry, in Berlin often between 1 and 5 working days

Process: Notary forwards documents, Commercial Register checks and enters, Commercial Register informs notary, Notary informs founder

Costs: EUR 300.00 (court fees for registration)

Good to know: Company in formation

Even after the notarization (step 2), the company exists as a so-called pre-company or company in formation. At this stage, the company can already be used with restrictions (e.g., to conclude contracts). However, at this point, there is no liability protection for the shareholders.

Good to know: Fraudulent invoices

The commercial register sends its invoices by mail. Numerous fraudsters attempt to send fraudulent invoices before the commercial register is even registered. These invoices look very similar to those issued by the registry courts/commercial registers. The fraudsters learn about a newly registered company through publicly available commercial register announcements and then write to the company shortly after registration. These letters often contain very short payment deadlines.

E.g. under schummelrechnungen.de A selection of such fake invoices can be found here. We, as notaries, are also happy to answer any questions you may have regarding the authenticity of invoices.

5. Further steps (official notifications)

After the actual founding, the managing directors and/or founders must take a number of further steps.

(1) Entry in the Transparency Register

After registration in the commercial register, the company's management is required to register the company in the transparency register and list the beneficial owners (shareholders with stakes of more than 25%). The company's registration number must also be provided, which is why registration must be postponed until after registration in the commercial register.

Duration: A few minutes

Procedure: Managing director completes online form at transparenzregister.de (create user account, enter company data, enter beneficial owners and their data)

Costs: EUR 21.00 annually (registration free of charge)

(2) Business registration

Unless the company is purely an asset management company, the management must register it with the relevant regulatory or trade office after registration, stating its registration number. The relevant regulatory or trade office can be found, for example, here: gmbh-gruenden.notar.de/ .

Duration: a few minutes (after all documents have been submitted and, if necessary, an appointment has been made)

Process: Management fills out the form at the responsible regulatory or trade office

Cost: approx. EUR 10.00 to 50.00 (sometimes cash only)

(3) Preparation of the opening balance sheet, setting up the accounting system

Accounting for a GmbH is not easy, as simple income and expenditure accounting is not permitted; instead, double-entry bookkeeping or balance sheet accounting is required. At the end of the fiscal year, an inventory must be taken and annual financial statements, including a balance sheet and profit and loss statement (P&L), must be prepared. The annual financial statements must be published in the Federal Gazette. Profits are subject to corporate income tax at a rate of 15%. Trade taxes, and possibly sales and wage taxes, are also payable.

Instructions and examples for preparing an opening balance sheet can be found on start-up and entrepreneur portals such as fuer-gruender.de or gruenderplattform.de .

If founders do not have specialist knowledge in this area, it is usually advisable to entrust a tax advisor with these tasks from the outset.

For accounting, standard accounting software should be used from the outset, allowing the tax advisor to transmit the data for financial accounting and create invoices. If employees are employed, payroll accounting, including the calculation and payment of income tax and social security contributions, also comes into play. This is usually handled by the tax advisor.

(4) Registration with the tax office

The management must also register the company with the tax office. To do so, the tax registration form must be completed via the ELSTER portal ( elster.de/eportal/start ) (after creating an ELSTER user account for the company).

Within a few weeks of business registration, the tax office will inform companies in writing of their obligation to register for tax purposes. However, to more quickly obtain the tax number required for issuing proper invoices, the registration form can be completed before receiving the letter from the tax office. In addition, a number of documents must be submitted to the tax office. These include:

• Extract from the commercial register

• Articles of association

• Opening balance sheet

• Relevant contracts

An extract from the commercial register and the articles of association can be downloaded free of charge at handelsregister.de/rp_web/normalesuche/welcome.xhtml . After entering the company name, the extract from the commercial register will be linked under "CD," and the articles of association will be found in the directory under "DK."

In some circumstances, it may be advisable to seek the assistance of a tax advisor for tax registration.

Duration: approx. 1 to 4 weeks

Process: Creation of an ELSTER user account for the company and completion of the tax registration form

Cost: Between EUR 0.00 (registration by founder) to approx. EUR 400.00 - 1,000.00 (by tax advisor)

Good to know: VAT ID no.

If the GmbH/UG wishes to provide or receive deliveries and services within the European Single Market, it requires a VAT identification number (VAT ID no.) in addition to the tax number. This can only be applied for online after the tax number has been issued: www.formulare-bfinv.de/ffw/form/display.do?%24context=393BD987BEF4ED3AE01C (unfortunately only in German).

Further information can be found here: https://www.bzst.de/EN/Businesses/VAT/VAT_ID/Assignment/assignment_node.html

(5) Membership in the Chamber of Commerce and Industry or Chamber of Crafts

Upon registration in the commercial register or the register of craftsmen, the company automatically becomes a member of the relevant Chamber of Industry and Commerce (IHK) or Chamber of Skilled Crafts (HWK) (mandatory membership). These represent the interests of all businesses in Germany. The Chambers of Industry and Commerce are responsible for trade and service industries, while the Chambers of Skilled Crafts (HWK) are responsible for skilled crafts businesses. The commercial register, trade office, and tax office provide the relevant information directly, so registration is not necessary.

Duration: Regionally varies, contact by the Chamber of Commerce usually takes several weeks

Process: Membership begins automatically with entry in the commercial register, IHK writes to company

Cost: Basic amount between approximately EUR 150.00 and 400.00 annually (depending on business income or profit) + performance-related levy (e.g., approximately 0.19% of business income) (IHK)

(6) Registration with the professional association/accident insurance

A GmbH/UG (limited liability company) is legally required to register with the relevant professional association within one week of commencing actual or preparatory business activity. This generally applies even if no employees are employed.

Registration is done with the relevant professional association (whose field of activity corresponds to the business area of the GmbH/UG). The type and purpose of the company, the number of employees, and the exact start date of the activity must be stated. Registration can be completed online via the relevant professional association portals ( serviceportal-uv.dguv.de/ ).

The professional associations are the providers of statutory accident insurance and are responsible for the prevention of work-related accidents, occupational diseases and work-related health hazards as well as for the care of insured persons in the event of damage.

Duration: a few days to weeks (processing time)

Process: Online application to the company number service of the Federal Employment Agency

Cost: none (possibly costs for tax advisor) (contributions depending on wage sum and risk class)

(7) Application for a company number

As soon as the GmbH/UG employs employees, a company number is required to properly register them with social security. The application is made online via the company number service of the Federal Employment Agency. Since January 1, 2024, the company number of the statutory accident insurance (employer's liability insurance association, see section 6.) is required for this purpose.

The company number can be applied for online: web.arbeitsagentur.de/bno-prod/ui/antrag/hinweise#/start

Approval of the application usually takes only a few days, but must be received before the first employee is hired.

Further information can be found here: arbeitsagentur.de/unternehmen/betriebsnummern-service

Duration : a few days

Procedure: Fill out the (online) form at the company number service of the Federal Employment Agency

Cost: no

(8) Registration for social insurance

If employees are employed, they must be registered for social insurance. Registration is handled through the respective health insurance company. For registration, the GmbH/UG requires an employer's number (see section 7 above).

Whether the managing directors of a GmbH/UG are subject to social security contributions depends on whether they are considered dependent employees (working according to instructions, integration into the work organization). Shareholder-managing directors with significant influence (at least 50% of the share capital or a blocking minority) are generally considered self-employed and are not subject to social security contributions. In cases of uncertainty, a status determination procedure can be ordered.

Registration takes place digitally via the so-called SV registration portal or the electronic registration process sv.net , which is operated by the IT Service Center of the statutory health insurance. After registration, the company receives an electronic membership confirmation from the health insurance company confirming that the information is correct.

It may also be advisable to consult a tax advisor when registering for social security.

Duration: a few days (processing time)

Process: Registration of all employees with the respective health insurance company before starting work

Cost: none (possibly costs for tax consultants); monthly social security contributions depend on the gross salary of the employees

In summary

Duration of the foundation

The total time required to establish a GmbH or UG (limited liability company) varies greatly and depends on several factors (availability of the parties involved/scheduling, complexity of the account opening, notary's willingness to pay, notary's responsiveness, and the staffing of the competent registry court). Particularly when foreign parties are involved, inadequate support can lead to significant delays.

In simple cases, entries can be made on the day of notarization. However, longer periods of approximately 5 to 20 days (from notarization, step 2 above) should generally be planned for.

Costs of founding

In addition to the share capital to be raised (EUR 1.00 to 25,000.00), the following costs arise:

• Notary: approx. EUR 200.00 – 1,000.00

• Commercial Register: EUR 300.00

• Business registration: approx. EUR 20.00 to 70.00

• Transparency Register: approx. EUR 19.80

👉 (one-off) total costs without share capital: approx. EUR 500.00 to 1,500.00

Frequently asked questions about founding a GmbH/UG (FAQ)

How do you set up a GmbH/UG in Germany?

By notarial certification of the partnership agreement and registration in the commercial register.

How long does it take to set up a GmbH/UG?

The duration depends on several factors and is between one day and six weeks, usually around five working days.

How much does it cost to set up a GmbH/UG?

Approximately EUR 400.00 to 1,400.00 (plus share capital of EUR 1.00 to 25,000.00).

What documents are needed to establish a GmbH/UG?

In principle, none. The notary will draft the necessary documents once the required information is available.

Can you set up a GmbH/UG alone?

Yes, it is possible to establish a one-person company.

Can you also set up a GmbH/UG online/digitally?

Yes, the establishment of a GmbH/UG is possible online or digitally.

Do the founders have to speak German?

No, the notary can also translate the founding documents.