How to set up a GmbH?

The limited liability company (GmbH) The GmbH is a corporation and develops its own legal personality (legal entity) in legal transactions, which can sue and be sued. The GmbH is represented by a managing director who is appointed by the shareholders.

A GmbH is founded/established:

  • alone (one-person GmbH)
  • with several shareholders (here it depends on who takes over/pays what share of the capital contribution)

The founding of a GmbH requires a minimum capital of €25,000, whereby (one-person GmbH) at least half of this must be paid in at the time of founding. The partners are personally liable for the unpaid amount.

The Liability for a GmbH is limited to the company’s assets. This basically affects all creditors. However, in many cases (particularly from credit institutions such as Sparkassen, Volksbanken, Deutsche Bank, Commerzbank) a so-called direct guarantee from the shareholder is required for credit requests. This means that the partner is fully liable with his private assets (for the outstanding loan amount of the GmbH).

The 8 steps of setting up a GmbH (GmbH formation)

1. Planning

First, you think about the number of shareholders, their share and the possible name/name (=company) of the GmbH. No company with the same/similar name may be registered in the registration district. To be on the safe side, the GmbH founders should use the information service of the respective Chamber of Commerce and Industry (IHK). The GmbH is a business. Therefore, it must be clarified whether operating a business is permitted at the intended location (headquarters) of the GmbH (commercial operation vs. residential area). Finally, founding is only possible at an address that can be sued or summoned in order to prevent pure letterbox companies.

2. Appointment with a lawyer specializing in corporate law.

A partnership agreement is required to set up the GmbH. Even if there are various contract templates, the founders should use a one-off appointment and legal advice. This also involves details that need to be clarified, such as caducation, confiscation, inheritance law, pre-emption rights, type of contribution, etc.

3. Notary appointment

At this appointment, the notary reads the partnership agreement to the shareholders present. All shareholders sign the partnership agreement, and the agreement is then certified by the notary. He also prepares a list of shareholders. It makes sense to then hold a shareholders‘ meeting immediately and appoint a managing director. For this purpose, you can conclude a managing director’s contract and (e.g. if there are several managing directors) issue rules of procedure.

4. Opening Bank Account

To open a bank account for the GmbH, all managing directors must be present and identify themselves with an identity card/passport. Some banks require all shareholders to appear in person. Please check in advance. Incidentally, it definitely makes sense to make an appointment to open the account before point 3 (notary appointment), as this saves time.

Documents subject to submission:

  • The notarized partnership agreement
  • Identity card/passport of all required persons

5. Payment of share capital

Payment of the share capital by the partner(s) into the business account of the GmbH. This can be done in cash or by bank transfer. We would definitely recommend to pay per wire transfer, not cash due to exisiting money laundry regulations. If there are several shareholders, it is important that the amounts paid in are clearly assigned to the corresponding shareholders.

6. Registration of the GmbH with the commercial register

The deposit is confirmed by the bank’s account statement. This must now be presented to the notary. After presenting the payment confirmation or the account statement, the notary files the documentsd to register the GmbH at the commercial register. This takes place at the responsible local court. During the period of notarization and entry in the commercial register, the company operates as a GmbH i.G., and is therefore allowed to enter into legal transactions but is liable through its shareholders.

7. Payment of registration fee and registration

The registration court sends the GmbH a cost note (approx. 180 – 200 EUR) and checks the registration for errors or inaccuracies within a few days (usually only after receipt of the amount). As a result, the notary then receives the registration confirmation or extract from the commercial register with the commercial register number (HR B for corporations HR A for partnerships HR V for associations).

8. Municipal business registration

With the commercial register extract and, if necessary, proof of location oft he company/address (e.g. rental agreement), the GmbH is finally registered on the municipal Level at the local commercial office/regulatory office by the managing director.

The commercial office/trade office will then inform

  • the responsible Chamber of Industry and Commerce or the Chamber of Crafts,
  • the trade inspection office as well
  • the responsible tax office for corporations.

The GmbH receives correspondence from these institutions quickly.

The founding of the GmbH has now been formally completed. Following these processes, numerous other points need to be checked (or newly set up), here are just the most important ones where the managing director himself has to take action:

    • Professional association
    • Employment agency (special company number)
    • Health and pension insurance providers (for employees)
    • Public order office (for activities requiring authorization)

9. New: Entry in the transparency register

Managing director has to fill out the form on www.transparenzregister.de or by telephone on 0800 1234337.

There are also further initial and ongoing obligations for the GmbH or its managing directors.

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