Company Formation
for foreign Entrepreneurs
in Germany

Starting or expanding a business in Germany offers many opportunities, but it is also a complex, legally challenging, and financially demanding process. Germany is one of the largest economies in the world and has a strong reputation as a global trading partner. As a result, there are many advantages for entrepreneurs. However, laying the foundation for success requires careful attention. Expert legal assistance specializing in German commercial, corporate, and immigration law is essential for foreign entrepreneurs or those wishing to become self-employed in Germany. The German law firm O. Law, based in Düsseldorf, Germany, has many years of experience in business immigration and company formation in Germany for foreign companies. We analyze your business plan, develop a strategy for the establishment or expansion of your company, eliminate all obstacles that could jeopardize your success, and accompany you until a successful outcome is achieved.

Want to start a business or freelance in Germany?
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Starting a Business

In general, the process for third-country nationals to start a business in Germany consists of three main steps:

  • Applying for a business visa or residence permit.
  • Choosing the appropriate legal form for the company and signing the articles
    of association.
  • Registering with the commercial register and obtaining a business license.

A company is considered established when it is registered in the Commercial Register but is not yet operational. Tax registration is also required at this stage. However, for entrepreneurs and self-employed individuals who want to start their businesses in Germany, these steps are more complex than they appear on paper. Important preparations are necessary to make the right decisions. As your legal advisor, we are committed to presenting you with all possible options for starting a business and finding the one that best fits your business plan. For example, rather than going through the arduous process of starting a business from scratch, you may be able to get started more quickly by acquiring an existing business. You may need appropriate legal advice before taking the necessary steps.

Do you need assistance in setting up a business in Germany?
O. Law is here to help! Contact us for a consultation!

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Market Analysis
and Business Idea

A comprehensive market analysis and business plan are essential before starting a business or becoming self-employed in Germany. The analysis will help you understand the German market, your competitors, your target audience, and the potential demand for your product or service. This will lay the foundation for future business success or avoid unpleasant surprises if there is no demand for your business in Germany. In addition, it is crucial to apply for the necessary self-employment visa: You can obtain this type of visa if you can prove that your business has a chance in the German market. A well-thought-out business plan serves not only as a guide for your future business activities but also as an important document for funding or permit applications. A solid market analysis may include

  • Market research: Analysis of industry trends, consumer behavior, and the competitive environment.
  • Business Idea: Development of a clear and unique business idea that meets a specific need or fills
    a gap in the market.
  • Business Plan: Preparation of a detailed business plan that includes your business idea, market analysis, financial planning, and marketing strategies.

Need legal assistance with your business formation?
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Choosing a Business Location

Choosing the right location has a significant impact on your business success. In addition to local factors such as transportation, infrastructure, workforce, and rent, business tax rates vary from municipality to municipality. Therefore, it is important to take your time and calculate your search carefully. Our experts will search the market and evaluate the available offers according to the following criteria

Location
  • Transportation and Infrastructure: If your business requires customer traffic or regular deliveries, you should choose a location that is well-connected to the transportation network or has adequate pedestrian traffic.
  • Cost: Rental and operating costs in Germany vary by region and city. Major cities such as Munich, Frankfurt, Berlin, Hamburg and Düsseldorf are generally more expensive than rural areas.
  • Labor Force: If your business requires a skilled workforce, consider locating in an area with a sufficient population.
  • Incentive Areas: Some regions offer special incentives and tax breaks for business relocation.
  • Business Tax Rates: Business taxes are the most important source of revenue for German municipalities. Some communities are more business-friendly in terms of taxes.

Looking for an ally in Germany for your company formation?
Contact us for a consultation!

Starting a business or
buying a business?

The process of starting a business in Germany presents many challenges and hurdles, even for local entrepreneurs. For entrepreneurs who do not speak German and are unfamiliar with the local bureaucracy, the process is much more complex. As an alternative to starting a company, acquiring an existing company can be considered to avoid all the bureaucratic preparations required for incorporation. O. Law can help you achieve this goal by helping you find suitable companies for sale and ensuring that there are no hidden liabilities or risks.

 

Overview of the most common types of companies

There are several types of companies in Germany, each with its own legal and tax implications. The type of company has a significant impact on business and accounting management, business size, tax and documentation obligations, liability and the potential for public trading. It is therefore crucial to choose the right type of company for the medium term. A wrong decision can be costly and significantly affect your business success. O. Law has extensive experience in German law and business law and will assist you in making an informed decision.

The most common types of companies are

Sole Proprietorship

This type of company is easy to set up and manage but involves personal liability. It cannot be established from abroad by non-residents of Germany.

Limited Liability Company (GmbH)

A popular type of company due to its limited liability to the company's assets. It requires a minimum capital of 25,000 euros.

Entrepreneurial company with limited liability

A simplified form of the GmbH that offers similar liability advantages with a minimum capital requirement of just one euro.

Joint-stock company

Suitable for large companies due to its significant capital requirements and complex structure. It requires a minimum capital of 50,000 euros.

Partnership under Civil Law (German: Gesellschaft bürgerlichen Rechts (GbR))

The simplest form of partnership, consisting of at least two parties. It cannot be formed from abroad by non-residents of Germany.

Limited Partnership

A partnership consisting of at least two natural or legal persons. At least one partner has unlimited liability (general partner), while the other partners (limited partners) have liability limited to their capital contribution

Lost in the maze of German law?
O.Law is ready to guide you!

register

Company registration

The company registration process consists of several steps:

  • Notarization: The Articles of Association and the incorporation documents must be certified by a notary public.
  • Opening of a business account and capital investment: A business bank account must be opened for registration in the Commercial Register.
  • Registration in the Commercial Register: Registration is carried out by the relevant court.
  • Business registration: The business must be registered with the relevant municipality.
  • Transparency Register: As of August 2021, almost all businesses must register with the Transparency Register.
  • Tax office: A tax number and VAT identification number must be applied for at the tax office.

Financing options
for businesses

Financing is a critical factor in the success of your business.
Here are some financing options that may be available to you:

  • Equity/Capital: Investment of your capital or that of partners.
  • Debt: Bank loans, debt, or guarantees. German banks usually require a solid business plan and collateral.
  • Grants and subsidies: Many government incentive programs focus on entrepreneurship. These incentives can take the form of grants, low-interest loans, or guarantees.
  • Investors and Business Angels: Private investors or venture capitalists who invest in innovative and promising startups.

Work with an experienced partner in your entrepreneurial journey!
Your business is safe with O.Law!

 

Bureaucracy and legal requirements

Germany is known for its complex and demanding bureaucracy. O. Law can assist you in your venture, but it's essential to understand the legal and administrative requirements to successfully establish and operate your business.

  • Social Security and Taxes: Employers in Germany must pay premiums for health insurance, pension insurance, unemployment insurance, and long-term care insurance for their employees. Businesses must also pay various taxes, including corporate income tax, trade tax, and value-added tax.
  • Business registration: Any business with employees must register with the appropriate authorities.
  • Workers' compensation insurance: If you have employees, you must join the relevant workers' compensation insurance fund.
  • Chambers of Commerce: Membership in the Chamber of Industry and Commerce (IHK) or the Chamber of Crafts (HWK) is mandatory. These institutions provide support and advice to entrepreneurs.
bureaucracy

Labor Law Framework

Germany is an employee-friendly country with strict labor laws that employers must abide by:

  • Employment contracts: Written employment contracts are standard and should clearly outline all basic terms of the employment relationship.
  • Minimum Wage: The legal minimum wage must be applied and updated regularly.
  • Working hours and holidays: Generally, the maximum working week is 48 hours. Employees are entitled to a minimum of 20 vacation days per year based on a five-day workweek.
  • Dismissal Protection: There are strict rules regarding dismissal, especially for long-term employees.

Let's build a successful company together. Contact us now!

labor law

Tax obligations and
financial accounting

To avoid legal problems and manage financial health, meticulous financial accounting and compliance with tax obligations are critical in Germany.

  • Accounting: Keep regular accounting records and retain all documents. You can get help from a bookkeeper or accounting software.
  • Tax Returns: File tax returns regularly and pay taxes on time. This includes sales tax, corporation tax, and business tax.
  • Annual financial report: Depending on the type and size of your business, you may need to prepare and publish an annual financial report.

Are you looking for comprehensive legal support in your process of setting up a business in Germany? Then contact us!

O.Law
Your strong partner for
company formation in Germany


O. Law, based in Düsseldorf, Germany, has been assisting international companies to establish and expand in the German market for many years. We speak your language, are experts in immigration and business law, and provide all kinds of support in setting up your company in Germany. As our client you can expect honesty, reliability, transparency, and equal communication. With this philosophy, we have built trusted relationships with numerous clients over the years.

 
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