Which legal form is most suitable for my start-up?
April 17, 2023 | 40,00 EUR | answered by Isabel Müller
Dear tax consultant for start-ups,
My name is Helma Widmann and I am planning to start my own business. I already have a business idea that I would like to implement. However, I am facing the question of which legal form is best suited for my start-up.
Currently, I am still unsure about which legal form is the right choice for my business. I have heard that there are different legal forms such as sole proprietorship, GmbH, UG (limited liability) or OHG. Each legal form has its advantages and disadvantages that I would like to consider.
I am concerned that I may choose the wrong legal form and as a result, there could be tax or legal problems. I want to ensure that my decision is the right one in the long run and gives my company the best possible start.
Could you please help me find the appropriate legal form for my start-up? Which legal form offers the best advantages in terms of liability, taxes, and flexibility? Are there specific aspects that I should consider when choosing the legal form?
Thank you in advance for your support and advice.
Sincerely,
Helma Widmann
Dear Mrs. Widmann,
Thank you for your inquiry regarding the choice of the right legal form for your planned business start-up. It is understandable that you are considering this, as the choice of legal form can have a big impact on your company. I will be happy to assist you and explain the advantages and disadvantages of the different legal forms to you.
First of all, it is important to know that each legal form has its own characteristics and legal framework. The choice of legal form depends on various factors, such as the size of the company, the liability of the shareholders, the tax burden, and the flexibility in management.
One possible legal form for your business start-up is a sole proprietorship. In this legal form, you are personally liable as the sole proprietor for all the company's liabilities. However, you have full control over your company and are treated as a sole trader for tax purposes. Another advantage is the simple establishment and low bureaucracy.
On the other hand, the GmbH (limited liability company) offers the advantage of limited liability. This means that your personal assets are not liable for the company's liabilities. However, establishing a GmbH is associated with higher costs and bureaucratic requirements. In addition, GmbHs are subject to a higher tax burden compared to sole proprietorships.
The UG (limited liability company) is a variant of the GmbH that was specifically developed for start-ups with low initial capital. Here too, limited liability applies, but with a minimum share capital of one euro for the UG. The UG thus offers a flexible way to start a business.
The OHG (general partnership) is a legal form where several individuals work together as partners. In this form, all partners are personally and unlimitedly liable for the company's liabilities. The OHG offers high flexibility in management and is particularly suitable for joint business start-ups.
When choosing the legal form, you should therefore weigh the advantages and disadvantages and consider your individual needs and goals. It may also be advisable to seek advice from an experienced tax advisor or lawyer to find the right legal form for you.
I hope this information will help you in your decision and I am available for any further questions.
Best regards,
Isabel Müller, Tax Advisor
