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Setting up a company in Germany can come up with a lot of challenges. There are usually three types of corporations you can set up:\n\nGmbH—Gesellschaft mit beschränkter Haftung also known as “company with limited liability”\n\nAG—Aktiengesellschaft also known as “public limited company”\n\nUG—Unternehmergesellschaft haftungsbeschänkt also knownas a “mini-GmbH”\n\nSetting up a GmbH in Germany limits your liability. In case anything at all goes wrong, the responsibility lies in your company and not with you personally. When you own a GmbH or in other words a limited company, the liability rest with your corporation. Your private life does not get subjected to any liabilities of the company. It can be as big or as small as you like. You could be a massive conglomerate or a one-man show, without any support staff. There are some exceptions to this limiting in liability, mainly having to do with taxes and social security taxes. You may be liable for these despite everything.\n\nHow Taxes Work With A GmbH\n\nYour VAT would stay the same irrespective of whether you’re a GmbH or sole proprietor. But that is the only similarity between the two. Taxes involved in a GmbH are much more complicated and have a lot of formalities. So you should hire a tax consultant for yourself as it is not easy to do GmbH taxes yourself. \n\nFinally, the tax rate for GmbH companies varies, but at the corporate level, there are two types of taxes, a GmbH must pay: \n\nCorporate Tax which takes around 15%\n\nThe Trade tax which is also around 15%\n\nIf there are shareholders involved there may be another tax you might have to pay, but that does not apply to every company.\n

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a funnel to setting up a gmbh in germany

A Funnel To Setting Up A GmbH In Germany

Tel: +49 (0) 2173 / 2039568, Fax: +49 (0) 2173 / 206963

mail@payroll-services-germany.com

a funnel to setting up a gmbh in germany 1

A Funnel To Setting Up A GmbH In Germany

Setting up a company in Germany can come up with a lot of chall

enges.

There are usually three types of corporations you can set up:

GmbH—Gesellschaft mit beschränkter Haftung also known as “c

ompany with limited liability”

Tel: +49 (0) 2173 / 2039568, mail@payroll-services-germany.com

a funnel to setting up a gmbh in germany 2

A Funnel To Setting Up A GmbH In Germany

AG—Aktiengesellschaft also known as “public limited company”

UG—Unternehmergesellschaft haftungsbeschänkt also knownas a “

mini-GmbH”

Out of these three, the most popular is a GmbH. Setting up a GmbH

in Germany limits your liability. In case anything at all goes wrong, t

he responsibility lies in your company and not with you personally.

Tel: +49 (0) 2173 / 2039568, mail@payroll-services-germany.com

a funnel to setting up a gmbh in germany 3

A Funnel To Setting Up A GmbH In Germany

When you own a GmbH or in other words a limited company, th

e liability rest with your corporation.

Your private life does not get subjected to any liabilities of the co

mpany. It can be as big or as small as you like.

You could be a massive conglomerate or a one-man show, witho

ut any support staff.

Tel: +49 (0) 2173 / 2039568, mail@payroll-services-germany.com

a funnel to setting up a gmbh in germany 4

A Funnel To Setting Up A GmbH In Germany

There are some exceptions to this limiting in liability, mainly havi

ng to do with taxes and social security taxes.

You may be liable for these despite everything.

If this sounds like a good option to you, here is a step by step gui

de for you to set up your business:

Tel: +49 (0) 2173 / 2039568, mail@payroll-services-germany.com

a funnel to setting up a gmbh in germany 5

A Funnel To Setting Up A GmbH In Germany

Step 1 - Find A Notary

In Germany, the contract related to setting up a GmbH will not b

e valid until a notary signs.

So, to start such a corporation you would need to find a notary.

Tel: +49 (0) 2173 / 2039568, mail@payroll-services-germany.com

a funnel to setting up a gmbh in germany 6

A Funnel To Setting Up A GmbH In Germany

Step 2 - Have Money In Your Bank Account

In order to be a GmbH, there is an initial amount of €25,000 you

need in the bank.

In the start, you need at least half of it that is €12,500. You can u

se this money for your business but it has to be there.

Tel: +49 (0) 2173 / 2039568, mail@payroll-services-germany.com

a funnel to setting up a gmbh in germany 7

A Funnel To Setting Up A GmbH In Germany

Step 3 - Come Up With A Proof Of Deposit In Front Of A Notary

Once you have the notary and have the money deposited, all yo

u need to do is show the notary the bank statement which is a pr

oof that you have transferred the money to your account.

Once you show this, he will register your business with the trade

register.

Tel: +49 (0) 2173 / 2039568, mail@payroll-services-germany.com

a funnel to setting up a gmbh in germany 8

A Funnel To Setting Up A GmbH In Germany

How Taxes Work With A GmbH

Your VAT would stay the same irrespective of whether you’re a G

mbH or sole proprietor. But that is the only similarity between th

e two.

Taxes involved in a GmbH are much more complicated and have

a lot of formalities.

Tel: +49 (0) 2173 / 2039568, mail@payroll-services-germany.com

a funnel to setting up a gmbh in germany 9

A Funnel To Setting Up A GmbH In Germany

So you should hire a tax consultant for yourself as it is not easy t

o do GmbH taxes yourself.

German fiscal authorities are pretty strict and everything needs t

o be at “arm’s length”.

Therefore, if you are not careful about this, you could get yoursel

f in a mess you did not mean to create.

Tel: +49 (0) 2173 / 2039568, mail@payroll-services-germany.com

a funnel to setting up a gmbh in germany 10

A Funnel To Setting Up A GmbH In Germany

For example, if you are the director of your company you would

need an employment contract which also stipulates your salary.

In case you ever change your salary, you would need to officially

make an amendment to the existing contract.

But as it is your GmbH, you might have a lot of other business to

take care of and you probably would not set aside the time for s

uch a small formality.

Tel: +49 (0) 2173 / 2039568, mail@payroll-services-germany.com

a funnel to setting up a gmbh in germany 11

A Funnel To Setting Up A GmbH In Germany

But, if you do not get it done, the government would simply say,

“Hey, looks like that contract isn’t valid,” and that could lead to a l

ot of fun things like double taxation and much more and you surel

y do not want to get involved in that.

So in other words, “With great power comes great responsibility.”

Tel: +49 (0) 2173 / 2039568, mail@payroll-services-germany.com

a funnel to setting up a gmbh in germany 12

A Funnel To Setting Up A GmbH In Germany

Finally, the tax rate for GmbH companies varies, but at the corpo

rate level, there are two types of taxes, a GmbH must pay:

Corporate Tax which takes around 15%

The Trade tax which is also around 15%

If there are shareholders involved there may be another tax you

might have to pay, but that does not apply to every company.

Tel: +49 (0) 2173 / 2039568, mail@payroll-services-germany.com