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ESTABLISHMENT OF GESELLSCHAFT MIT BESCHRÄNKTER HAFTUNG (GmbH)
Gesellschaft mit beschränkter Haftung (GmbH) has a minimum capital of € 25.000,00.
A quarter of the nominal capital, but at least 12.500,00 EUR must be paid when the company is established and before the application for registration in the commercial register is submitted.
If GmbH has only one partner who also serves as a board member,GmbH gründen must provide a guarantee for the outstanding balance. In November 2008, a new kind of baby-sized GmbH was introduced. Called Unternehmergesellschaft (haftungsbeschraenkt) or UG (haftungsbeschraenkt). It initially operates with equity capital of € 1,00-24.999.
However, partners of such operating companies with limited liability are obliged to invest a quarter of the company’s future annual profits in capital reserves.
This is until the statutory minimum share capital of € 25.000 is reached.
Company agreements are subject to notary records. The notary also manages the application for registration of the company in the commercial register for the partner.
However, a notary’s record if the partner chooses the standard set of provisions stipulated by law in the articles of incorporation.
This set specifies only the minimum required for entry into the company’s registry.
In that case, the cost of establishing GmbH depends on the nominal capital.
For GmbH with a minimum capital of € 25.000.
The costs are as follows:
- 168 euros; notarized draft of company charter
- 168 euros; for notarized records of the first general meeting (not really required)
- 42 euros; entry in the register, publication in the official bulletin
- 100 euros; published in the official bulletin
Notary establishment of the company’s articles of incorporation also requires the involvement of a sworn translator unless the founder waives this requirement.
The exemption is only accepted by a civil notary public if the founder is otherwise guaranteed to have adequate knowledge of the company’s articles of incorporation.
IMPLEMENTATION OF GMBH
The start of business should be reported to the local Department of Trade and Industry.
We will notify the tax office immediately and send a survey to the employer to obtain the data required for taxation.
Questions refer to data that is of particular importance to taxation, from general information such as industry, address, and banking data.
Whether the business is subject to VAT due to the size of the business, or whether the tax office needs to assess income tax, corporate tax, and business tax prepayment. If a cross-border business is planned, the employer can apply for a transaction ID.
You must fill out the questionnaire and return it to the tax office within one month.
GmbH must maintain proper and orderly accounting in the form of double-entry bookkeeping, regardless of size.
You must also prepare an annual report consisting of at least a balance sheet, accounting description,
and income statement within three months of the start of the new fiscal year. For smaller GmbHs, this period will be extended to 6 months. The annual report must be submitted to the commercial register for publication.
The Managing Director (Geschäftsführer, GF) will act as the legal representative of GmbH.
As a result, they are exposed to various responsibilities, especially if the GmbH business is not prosperous.
In general, damages caused by intentional acts contrary to public policy may be the personal liability of the GF. By placing an order when GmbH is already over-debt and cannot later pay for the rendered work.
In connection with GmbH’s excessive debt, the criminal delay by the managing director in filing a bankruptcy filing is virtually very relevant.
Such a petition must be filed without delay in the event of either GmbH’s over-debt or illiquidity (at the latest three weeks later).
However, if you don’t have a plausible solution to save your business, There’s no reason to postpone your submission until the three-week deadline expires.
Monetary obligations arising after illiquidity or debt can cause GF’s personal liability to GmbH’s contractors.
In addition, if you do not pay tax withholding or social security contributions to your employees, you will often be charged for each. Therefore, the GF recommends reducing staff salaries or wages as needed to maintain sufficient cash to meet statutory obligations. If not, even GF’s imprisonment could be imminent.
BUSINESS INCOME TAX AND TAXATION ON PARTNERS
The German government not only supports entrepreneurship, but also offers various tax incentives.
GmbH is obliged to pay corporate and business income tax, including solidarity surcharges.
The current corporate tax rate is 15%.
Losses incurred by GmbH in one fiscal year may be carried forward further or in the opposite direction,
which may reduce the underlying profits of corporate tax valuation during the early or late tax valuation period. ..
In addition to corporate tax, GmbH’s profits are subject to local government business tax at a tax rate that is the result of multiplying the local government tax rate set by the local government by 3.5%. Business taxes are a determinant of the location of a company, as tax rates vary considerably from town to town.
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