 If you want to fulfil your entrepreneurial dreams you’ll most
likely need to found a company. German legislation offers different
forms, the most common being the German Limited Company or
, the “Gesellschaft mit
beschränkter Haftung” in short: GmbH.
Formal process - Realizing the dream of becoming your own boss needs formally only a few steps:
1. You have to decide, whether you want to own the company by 100% or share it with partners
2. You rsp the partners have to deposit at least 50% of the minimum
GmbH capital of 30,000 € on a bank account running under the name of
your future company.
3. You will have to see a layer or a notary, who will set up the company’s contract (Gesellschaftsvertrag) documenting:
* the name and the seat of the company
* its objectives
* the shareholders (Gesellschafter) with their shares
* the rules, by which decisions can or should be
taken among the shareholders, e.g. in shareholder meetings
(Gesellschafter-Versammlung), concerning the name and objective of the
company, its management, the future structure of shareholders rsp. the
treatment of the shares in case of changing capital, number of
shareholders or a relative change of their shares and hopefully in the
end the employment of profits
* the structure of the management
There is nothing exciting about these contracts, as they will generally
follow a standard form that has proved its expediency for generations.
A lawyer will – if competent – also serve as a consultant with respect
to the economical, taxation and managerial aspects or even the legal
form of the company, while the notary will just guarantee, that the
contract is formally correct. For signing the contract in front of the notary you will have to take
your shareholders along. And you’ll have to show the notary the bank
receipts of your capital deposits before he will have the company
enlisted in the register of companies (Handelsregister).
Attention: - The enlistment procedure may well take a couple of months. The time
requirement may increase by the communication between the court
(Amtsgericht) and the chamber of commerce (Industrie- und
Handelskammer), whether the company name is free or acceptable and the
objectives are sufficiently defined.
Before the company is enlisted, the managing director is personally
fully liable for any economic decision he takes. I.e. the protection of
a company limited will not become effective during the enlistment
process, during which the company will be a GmbH i.G. (in Gründung/in
the founding process). Unfortunately it’s just the period when the
start up rsp. first investment decisions have to be taken and capital
is still short.
4. The employment contract (Geschäftsführer-Vertrag) for
the managing
director (Geschäftsführer) has to be signed by the share holders,
defining his rights and responsibilities incl. his relationship to the
shareholders and the financial terms. In general it should be signed
together with the Gesellschaftsvertrag,
because all relevant persons are together at this occasion and the
managing director(s) will also be entered in the companies register,
plus the deputies (Prokuristen), a specific German management function.
Again the notary may provide you with a standard text, which just has
to be adapted to the specific circumstances. If there are several
shareholders or a board of directors, you don’t have to sign the
contract by yourself, i.e. in the role of the shareholder and the
employee.
** Attention: - If you need a work permit be sure that you are allowed to work as a
managing director as well. The authorities assess this role as
comparable to a freelancer job (selbständige Tätigkeit), which may be
forbidden.
5. Payment of bills - The only bills you have to pay are those by the notary and the Amtsgericht, exactly 2.
** Attention: - It may happen that after publication of your registration in the
newspaper you will receive bills from people you don’t know, and for
services that you havn’t asked for. The senders are just trying to
cheat you taking advantage of your possibly limited familiarity with
formalities in Germany. So throw these letters into the paper basket.
6. Additional prerequisites - There are just two formal ones:
1. The company letter form. - Of course it’s your choice, what this
letter should look like. But it has to present some obligatory
information:
- Name and address of the company
- Name of the managing director(s)
- The competent court and the company’s registration number, e.g. Amtsgericht München, HRB 87 986
your VAT number , e.g. Ust.-IdNr.: DE 129 458 092 - Of course you may
add any other information you like to such as tel.com numbers, email
address and URL etc.
- A rubber stamp with the companies name. - You will not need it very often, but there are still some organisations
that ask for it on papers to be signed, especially from abroad. So you
should order it right away.
For the rest it’s your decision how much you want to invest in
presenting your company like business cards, homepages, brochures or PR
activities rsp. in your computer system.
7. Protection of brand name or logo - If the name of your company or your logo is a very special one, you
should consider to have it protected with the German or European patent
office. If you don’t do it in time, it will be too late, if somebody
else decides to use it and has it registered.
After settling the above formalities you are ready to go!
Preparatory work - This is not quite true however. The real work lies beforehand. Before settling the formalities you should have carefully:
1. Defined your business objectives
2. Developed your product, marketing and sales strategies
3. Providing the basis for the business and financial plan
These activities, that may take you many months, are the basic essentials for:
1. A successful start of your business
2. Keeping control of the start up period
3. Negotiations with potential share holders, banks or VC companies.
Support - As a small company, especially when not familiar with the German
bureaucracy, you will also certainly be dependent on outside support.
The most important will be the tax consultant, who will generally also take care of your bookkeeping
The next important may be a lawyer, that you can rely on. If you are
lucky you can mostly do without him, but if you need one you should
know right away whom to ask. And sometimes its cheaper to ask the
lawyer first before having to pay for expensive “lessons”. This is
specifically true for any contracts that you want to negotiate.
It might also be helpful to rely on a personnel consultant, not only
for recruiting personnel, but also to take care of the peculiarities of
the German labour law. Again wrong decisions in selecting staff,
formulating work contracts, or organizing work may turn out to be
extremely costly. The personnel consultant may also help you in
administering personal matters.
Office - Last not least you’ll need an office. For the start this may well be a
home office, especially if you are still alone and don’t have to deal
with customer visits.
The next step may be to rent a fully equipped office with a service
provider, probably including all the clerical services that you need.
During the rental period this will keep you free of long term fixed
overhead costs. Especially foreign companies will often stay in these
premises for a long time.
For the first months GotoBavaria, an agency of the Bavarian state, may
also offer you a fully furnished room as a “first touch down base”, s.
www.gotobavaria.de . And they will help you finding your way though the
jungle of German bureaucracy.
If you know friends in a similar situation another alternative may be
to start with an office sharing, which means sharing the overhead costs.
This way you gain time to make a good choice in selecting your first
exclusive company office, depending on the growth of your company,
considering important factors such as cost, location, accessibility,
quality standards, growth potential, periods of notice ect.
 Dr. Dietrich Fischer
SELECTEAM
+49 (0) 89 6146 5634
www.selecteam.de
SELECTEAM is a private, independent Personnel and Management Consulting
company with head offices in Berlin, Dresden, Dusseldorf, Frankfurt,
Hamburg and Munich.
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