When should we set up

a company in Germany?

The second stage after location analysis is the establishment of the company. Although this is not always the case, in most cases this will happen. In fact, this makes sense because your business development team has approved the location based on the chance of residence and business success.

Especially for companies with high opportunity costs, this is the best time to form a company. Setting up a company at this stage also allows you to start your business even before obtaining the right of abode. For businesses that do not require any complex licenses, this may be a good strategy, because once the business owner is confident that his business will take him somewhere and is financially sufficient to support family life, he can continue to obtain residence license.

Like many other countries, the establishment of a company includes basic steps, including initial inquiries about the company ’s name and activities, preparation of the company ’s draft contract (draft contract of establishment and articles of incorporation), and finding the company ’s address (in some cases the residence address).

You may have noticed that there are many types of legal entities, but the most popular are:

• UG (entrepreneur company) does not require a large amount of nominal capital
• GmbH (Limited Liability Company), requires a share capital of at least 12,500 €
• AG (stock company) is really not recommended to anyone, especially those who want to be a startup
• GBR (company established under civil law), in this case, two or more partners reach an agreement, but are not registered in the business register

Depending on the type of business and the goals behind it, people should choose the correct legal format for their business. It should be noted that those who are willing to obtain German residency through their business philosophy should consider more about the choice of legal form. Sometimes, the enterprise itself does not need any specific legal entity, but in order to increase the chance of residence, people may consider having a higher reputation and more attractive in the chamber of commerce of the target city.

Our team at On Demand International will help you choose the best legal format for your business that best suits your residence and business. Contact us for more information about Germany Company Formation.