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Economic Development Dortmund
Which is the Suitable Legal Form?
It cannot be answered here which of the legal forms is the *best* one
for your business. But – you will find here a series of important
questions which will help analysing your own situation respectively the
situation of your enterprise. In this way, you will get a first orientation
and you will be able to discuss the decision in more detail with your
management and tax consultant.
Will you lead the enterprise together with partners?
If yes, select a suitable legal form.
Do you want to release your private capital from the enterprise liability?
This argues for a capital company since the shareholders only are liable
for their capital contributed to the enterprise, but not for their private
capital.
How much can be the costs of an enterprise’s foundation?
While the foundation of a one-man business is rather favorable in general,
you will have to raise a minimum capital for the foundation of a capital
company (LLC: 25,000 €, corporation: 50,000 €). Additionally,
charges for registrations as well as for notary’s fees, attorney’s
fees, management consultant’s fees become due according to the legal
form and the structure of the enterprise.
Are you ready to give public insight into your company?
Especially corporations are subject to a requirement of disclosure,
i.e. they are committed to publish certain company and business data.
Which data are meant here is dependent on the regulations of the particular
stock exchange where the shares are dealt. But also the entry in the public
register of companies gives insight into the company, e.g. the names of
the shareholders and the share capital contributed.
Which kind of tax burden will come up to you?
This is certainly a very important factor for many enterprises. Enterprises
with different legal forms are subject to different
tax regulations and go different ways of influencing the amount of
their own tax due. As mentioned already, you should absolutely discuss
this topic with a competent tax consultant.
Which formalities will come up to you?
The foundation of a one-man business generally causes the lowest effort,
whereas the foundation of a corporation probably means the most extensive
procedure. But the formalities are also dependent on the specific circumstances
of your enterprise, e.g. the number of shareholders and the complexity
of the company agreement (“Gesellschaftervertrag”)
How much effort will be the accounting?
If you are a businessman according to the German Commercial Code (“Handelsgesetzbuch”
– “HGB”) or if the revenues will surmount a certain
dimension, you are committed to have an adequate and orderly accounting
(“ordnungsgemäße Buchführung”).
Which *image* does the legal form have?
A restaurant as a corporation? That does not sound very plausible. The
selected legal form should suit the activities of your enterprise.
Are there investors for your enterprise?
The selection of the legal form and the formulation of the company agreement
gives you the chance to determine the right to say of investors and shareholders.
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Consultancy
Comparison
of legal forms