Setting up a business in Germany is quite a difficult task. You must find out about the five types of German companies, and also familiarise yourself with the legalities, tax requirements and registration process.
The most ubiquitous form of company is GmbH (Gessellschaft mit beschrankter Haftung) that corresponds to a Limited Company in the UK. To become a GmbH, it is necessary for an individual to have a minimum share capital of €25,000.
AG (Aktiengesellschaft) is a joint stock company, similar to a Public Limited Company or PLC with at least five members and €50,000 of starting capital.
GbR (Gesellschaft bürgerlichen Rechts) is a more flexible company model, and can be a one-person company or one with several people.
Zweigniederlassung (or subsidiary) refers to the German branch of a company registered in another country and must be commercially registered as a subsidiary. The parent company is liable for the subsidiary, so there is no minimum equity.
Finally, there is the OHG (Offene Handelsgesellschaft), a simple company model in which partners have unlimited liability and are simply required to operate the business according to the terms of the contract.
To start a business, an individual must register the business for commercial tax at the Gewerbesteueram and the local tax at the Finanzamt. A notary must be hired to register the business at the local court (Amtsgericht). Proof of the German settlement permit (Niederlassungserlaubnis), passport and startup capital for the type of business must be provided.
Business Registration Process
New businesses must be registered at the local trade office (Gewerbeamt). The following documents are needed:
• A valid ID [Personalausweis] or passport
• A residence permit
• A permit or authorisation depending on the sector (e.g. catering)
A craft card (Handwerkskarte) is also needed if you are setting up in business in the craft sector or a trading card (Gewerbekarte) for similar activities, and between 10-40€ for the registration fee.
The trade office will advise you about the other authorities with whom you will need to register, such as the tax office, accident insurance fund, local court etc. It is good practice to make a follow-up visit to check that your company has actually been registered.
Some business enterpises might be eligible for grants and aids provided by the German government. If you are currently unemployed, for example, it might be worth applying for a start-up grant offered by the Federal Employment agency. You will need to have lived in the country for more that a year, howrever, to receive any state aid.
People interested in setting up a business in Germany will benefit from the English Language Online Service, provided by the German Ministry for Economy and Technology (Bundesministerium für Wirtschaft und Technologie). The course traxhes business strategies and gives tips on how to run a successful company.
Individuals can also be offered a private guarantee, as long as they are able to pay off the loan at any given time. Guarantee banks also provide default guarantees, backing a borrower with his bank to cover a loan.