Comparison of legal forms
| One-man business |
Partnership at will / General partnership |
Limited partnership |
Limited Liability Company |
Corporation |
|
|
Legal basis |
German Civil Code (“BGB”); in case of entry in the Register of Companies: German Commercial Code (“HGB”) |
§§ 705-740, German Civil code (“BGB”), additionally §§ 105-160, German Commercial Code (“HGB”) |
§§ 161-171a, German Commercial Code (“HGB”) and §§ 705-740, German Civil Code (“BGB”) |
German Limited Liability Company Law (“GmbH-Gesetz”) |
German Stock Corporation Law (“Aktiengesetz”) |
|
Legal form |
Business partnership |
Business partnership |
Business partnership |
Capital company |
Capital company |
| Initial capital / partner’s share |
--- |
--- |
--- |
25.000 € |
50.000 € |
|
Liability |
Entrepreneur is liable to full extent of his private assets |
Jointly owned assets: all partners are liable with their whole private assets for all liabilities of the company |
General partners are liable without restrictions, limited partners only with the amount of their contributed capital |
Liability of the company is restricted to the capital stock, i.e. the members only are liable with the amount of their contributed capital. The company is liable with the entire business assets. |
Liability of the company is restricted to the capital stock, i.e. the shareholders only are liable with the amount of their contributed capital (shares). |
|
Management |
Owner |
Each partner, unless otherwise ruled by contract |
General partner(s) |
CEO |
Executive Board |
|
Advantages |
Creditability by personal liability Few foundation formalities and costs Owner has authority to decide Clearing of losses with other income sources is possible |
Creditability by personal liability Clearing of losses with other income sources is possible |
Creditability by personal liability Clearing of losses with other income sources is possible |
Separation of private and company assets Limited liability Material assets for foundation possible CEO needs not be founder Salary of CEO is operating expenditure |
Separation of private and company assets Facilitation of foundation by the so-called “small corporation (“Kleine AG”) |
|
Disadvantages |
Liability of the owner with private assets Low social security |
Liability of all partners with private assets for the total liabilities |
Liability of the general partners with private assets for the total liabilities |
high foundation effort stock capital legally obliged to accounting and publication creditability defined by liability limits |
higher foundation efforts as LLC stock capital legally obliged to accounting and publication no direct influence by shareholders |
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Guided Tour |
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Branch office | Decision factors |  |