Private Limited Liability Company (GmbH)


The private limited liability company (GmbH) is still the most popular legal form in Germany. This is partly because it can be established for any purpose and offers freedom in the choice of company (name of the company). On the other hand, the legal form of the limited liability company (GmbH) makes it possible to principally exclude the liability of the shareholders with their private assets for company liabilities. Thereby, the personal risk of the entrepreneurial activity is limited, even though the banks regularly require personal guarantees from the shareholders for the loan that they grant.

The rights of the private limited liability company (GmbH) are extremely flexible, so that individual ideas can be incorporated into the articles of incorporation. For example, a person that is not a shareholder (so-called third-party management) can be appointed as the managing director. This allows you to engage dedicated and knowledgeable people, in leading positions, within your company without them having a stake in the company. Finally, under certain circumstances, the path to social security is also open, by concluding an (non-controlling) associate a corresponding employment contract with the company. Someone who participates in a private pension plan, can claim it for tax emption purposes.

The disadvantages of the private limited liability company (GmbH) lie in the 25,000 EUR minimum start-up capital required, and the annual costs expenditures financial statements, accounting and tax returns. Only half of the start-up capital must be paid when the company is founded. If the minimum investment requirement of 12,500 EUR cannot be raised, then the option for the foundation of a co-called small private limited liability company (small GmbH), the entrepreneurial company (UG) (limited liability) must be utilized, which theoretically can be founded with a share capital of 1.00 Euro.

On the other hand, tax disadvantages may arise from the fact that the limited liability company (GmbH) itself is subject to corporation tax: Unlike the private limited partnership (KG), the losses of the limited liability company (GmbH) cannot be offset against shareholder’s other income. In certain cases, the establishment of a limited liability company & private limited partnership Co. (GmbH & Co. KG) is therefore recommended. There are also tax disadvantages with the inheritance taxes. Therefore, you should always seek the advice of a tax adviser.

The founding of a private limited liability company (GmbH) requires notarial certification. Together with the actual foundation, the articles of association are passed and an initial shareholders’ meeting is held, in which the managing director is appointed.

Generally, the articles of association should specify exactly if and when a partner can resign, whether the business shares should be freely disposable, how high the severance pay will be with the departure of a partner, and what happens if a partner were to pass away. We notaries advise you in detail about all of these topics, as well as problems in connection with the establishment of a private limited liability company (GmbH).

Once the company has initially been founded, I, as a notary, am available as a consultant for the continued “life” of the limited liability company (GmbH). For adjustments to the articles of incorporation, transfers of business shares, conversions into other legal forms (ex: into a public limited company (AG)) or other questions, I, as a specialist, am your contact person.


Prior to the meeting with the notary to found a private limited liability company (GmbH), you should have considered the following points:

  • Property of the company
  • Seat of the company
  • Firm (= name of the company) private limited liability company (GmbH) – if necessary, consultation with the local chamber of commerce to see whether the company name is still free or if there is a risk of misdirection or confusion
  • Amount of the start-up capital
  • Full name, date of birth, address of the shareholders
  • Nominal amount of the shares
  • Inheritance possibility of shares
  • Termination possibilities of the shareholders
  • Amount of the severance pay upon the departure of a shareholder
  • Full name, date of birth, address of the managing director


Notary fees cannot be levied or negotiated at the will of the notary; they are strictly regulated by law. Decisive is the Court and Notary Fees Act that applies throughout federal territory. Therefore, the same fees are always charged by each notary for the same notarial activity.

The notarization fees are based on the so-called commercial value, for the founding of a limited liability corporation (GmbH), therefore, according to the initial capital. In the above-mentioned fees, the costs for consultation and draft creation as well as changes are included. In addition, there are usually some additional small expenses for copies, postage and telephone as well as the statutory value-added tax.

Example for the costs of founding a limited liability corporation (GmbH), without commercial register registration:

Initial capital: € 25.000,00 Net notary costs: ca. € 670,00