Creation of a UG in Germany

The creation of a UG (Unternehmergesellschaft) in Germany, often referred to as a “Mini GmbH”, is a simplified form of limited liability company. Its low minimum share capital requirement (1 euro) makes it ideal for small businesses and start-ups. Here are the main steps involved in setting up a UG in Germany:

Choose a company name :

The name must be unique and not cause confusion with other companies.

Check the availability of the name with the local Chamber of Industry and Commerce (IHK).

Draw up the company’s articles of association :

The Articles of Association define the company’s operating rules and the rights and obligations of the associates.

Share capital :

The minimum capital required is 1 euro.
The capital must be deposited in a bank account in the name of the UG in formation.

Notary :

Have the articles of association and the company incorporation deed notarized.

Register the documents with the German Commercial Register (Handelsregister).

Commercial Register :

Once the documents have been submitted, the UG must be entered in the Commercial Register.

Registration makes the company officially existing and operational.

Opening a bank account :

Open a bank account in the UG’s name to manage the company’s finances.

Deposit share capital in this account.

Register with tax authorities :

Register the company with the local tax authorities (Finanzamt).

Obtain a tax identification number (Steuernummer) and, if applicable, a VAT number (Umsatzsteuer-Identifikationsnummer).

Insurance and licenses :

Take out the necessary insurance (civil liability, professional insurance, etc.).

Check whether specific licenses or authorizations are required for the company’s activity.

Social Security registration :

Register the company with the social security funds if it employs staff.

Advantages of a UG

Low initial capital: Only 1 euro minimum capital.
Limited liability: Protection of partners’ personal assets.
Simplified structure: Suitable for small businesses and startups.

Disadvantages of a UG

Mandatory legal reserve: 25% of profits must be set aside until share capital reaches 25,000 euros.

Perception of Reliability: Less credibility than a GmbH due to low initial capital.

Associated costs
Notary fees: Variable.
Commercial register fees.

Insurance and licenses: Dependent on business activity.

Setting up a UG in Germany is therefore a relatively accessible and flexible process for entrepreneurs, offering a cost-effective option for starting up a business while enjoying the protection of limited liability.