7 Things To Do When Forming A Company In Germany

Home to thousands of businesses, Germany houses a large number of small sole proprietorships as well as large conglomerates. The German government is very open to all types of business and this is one of the biggest reasons for the prominence of Germany’s economy on the world stage. If you are Forming a GmbH in Germany, Germany creates a friendly environment and the laws are clearly laid down for everything.
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If you want to be the part of this booming economy, here are 7 things to keep in mind while Forming a company in Germany.

  1. Decide On The Format Of The Company You Want To Form
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Most of the businesses in Germany are formed either as a GmbH which is similar to a limited company or as a partnership. The foremost question you need to ask yourself is how much you want to be involved and do you wish to take a risk of being personally liable? Unless you already have some business set up in Germany, it is strongly recommended to go for GmbH business. In order to form a GmbH, you need a minimum capital requirement of 25,000 Euros at least half of which needs to be paid at the time of the formation. This gives an impression of you being a stable investor and hence gain you credibility and stable business prospects.

While you can open a “small GmbH” in Germany (UG), this is generally seen as untrustworthy.

  1. Register Yourself
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You need to register your business with the tax office, the chamber of commerce and the commercial register. This is very important especially in B2B because they can look you up on www.unternehmensregister.de to check if you are a trustworthy and a credible business. The notary setting up the business will register you in commercial register.

  1. Get An Imprint

As per German law, you need to list many details of the company on your commercial website. Failure to obey these requirements can get you in a lot of trouble as there are thousands of Euros of fines involved for breach of fair competition laws.

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  1. Hire A German Representative

This is extremely important in the earlier phase of your business if you hail from a different country. Hiring a German Representative who can act as a director or an authorized representative. This would make your life easier in terms of banks, courts, tax laws etc. This would also help you have more credibility in the start of your business. The best way to do this is having a German partner. This would also help you understand the business in Germany in a better way.
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  1. Appoint A Good Tax Consultant

It is said that almost 70 percent of all the tax literature in the world is published in Germany. If you try to do it all by yourself, you would probably lose your mind in filling all those forms and would have no time whatsoever to do the most important thing that is run your business. Find yourself a tax consultant who knows about international tax law as well.

  1. Financial Planning

This is universally accepted fact that Cash is the lifeblood of any business even more than profits. It is therefore a must to have a cash flow forecast in place for your business. Make sure to have a minimum of 3 to 6 months of reliable cash flow visibility for your company. You can also hire an experienced financial expert to do the job. There may be dozens of potential costs that you may not think of such as local license tax, corporate tax advance payments, social security deductions and many more.
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  1. Build A Professional Network


Well something of an unsaid yet the most important one. Make friends. Yes a lot of them. The Chamber of Commerce and its regular seminars and information events can be a good start.  It is a great place to not only just meet other entrepreneurs but also tax advisers, accountants, lawyers, and specialist consultants.

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