Setting up a new business should be an exciting time but needless to say there is going to be an element of stress, especially if you are trying to do this in a foreign language. We have put together some of the most important things you need to do with a handy tick list to check your progress.
Deciding on the appropriate limited company
How you register your company must comply with the legal requirements. You also need a certain amount of capital.
- Ug- this is a mini GmbH and the minimum capital is 1€ (1000€ is recommended).
- GmbH- You will need 25,000€, 12,500€ must be deposited into a corporate account. If you only have 12,500€, be careful because shareholders will be liable for the remaining 12,500€ in a worst-case scenario.
Choose a name for your company
Sounds pretty simple! Remember to check the Handelsregister (commercial register) to make sure somebody else isn’t using your name.
Focus on the objectives of your company
Again, go back to the commercial register to see what similar companies have used for their Unternehmensgegenstand (company objectives). The German Chamber of Commerce and Industry (IHK) offer a free service to you can check your company objectives.
This, by law, has to be rather specific, a few ideas jotted on a piece of paper isn’t going to be enough. Make the most of the free service from the IHK.
Apply to the IHK
Once you have decided on your company name and company objectives, you can apply to the German Chamber of Commerce to check the suitability.
Choosing a notary for you
It is probably very important that you choose a notary that speaks your language as we are dealing with legal documents. This site will help you find a notary that speaks your language.
Prepare your articles of association
Articles of association are documents that lay out the structure of your company, for example, the tasks of the individuals.
To create your Musterprotokoll (status and registration statement) you can either use a template or a customized version.
Your appointment with the notary
Before you go to your appointment, make sure you have your:
- Articles of Association
- Shareholder’s List
- Founding documents necessary for opening a bank
Turn up to your appointment with your fellow shareholders. If you are not an EU citizen your life might get a bit complicated:
- Shareholder- you are able to be a shareholder. If your parent company is in another country you are going to have to have a notary from your area to provide confirmation of the companies existence and that all is legal.
- Managing director- to relieve you of additional troubles, make sure you either have some type of permanent residence or a visa. Check with a notary in the early stages of setting up your company.
It is not worth skimming over this part, seek legal advice as soon as possible so you know your paperwork will be correct. Ask your notary about the fees for registration with the commercial register, as they might be able to speed up the process. And, check your mailbox has the correct company address. You will waste a lot of time if you don’t receive mail.
Find a suitable bank
You can start looking at banks early on in the process and ensure the bank fulfills all your needs.
Set up an appointment with the bank for straight after the appointment with the notary. Check what documents you will need and don’t forget to take the formation documents your notary gave you.
Deposit the share capital
The Stammkapital (share capital) can be deposited in cash or transferred. In the reference field add “Stammkapitaleinlage (date)”.
Once you have deposited the share capital you should send the proof of payment to your notary.
Pay your notary as soon as possible to maintain a good relationship. You will also need to pay the commercial register fee unless your notary has done this on your behalf.
Watch out for scams
Unfortunately, there are a variety of people who will send fake commercial register invoices. Don’t pay anything unless you know it is legitimate. Here are three signs to look for:
- The recipient name includes long German words
- An IBAN number
- An amount of €150
Find a tax advisor/accountant
This is probably even more important if you are unfamiliar with the German tax system of language. They will:
- Assist you with the Fragebogen zur steuerlichen Erfassung (tax office questionnaire)
- Provide information about the taxes that apply to your business
- Allow you to give them the power of attorney
You will not be able to supply any invoices until you have completed your tax registration.
At the same time, you can submit your Gewerbeanmeldung (trade registration) to your local trade office.
Your company Tax ID
Find out what it is from the Finanzamt (tax office) because you will need this for your invoices.
Don’t just choose the first one, find the best one to suit your needs.
Let’s recap with a simplified tick list:
- Choose the correct limited liability company for your activity
- Choose the name and objectives of your business and check with the IHK
- Find a notary
- Prepare your articles of association
- Meet your notary with all the necessary documents
- Open a bank account and deposit the share capital
- Send proof of payment to your notary
- Pay necessary fees, notary, commercial register
- Find a tax advisor
- Submit trade registration documents to local trade office
- Find out your company tax ID number
- Choose the best business insurance
Paperwork is a fact of life. Even though your company is now set up you will still need to think about bookkeeping, annul accounts and payrolls. You may choose to take on these tasks yourself or find a firm that will do your Buchhaltung (bookkeeping) for you.