Home/company formation/Founding in Germany – how much capital you should have

With the UG (haftungsbeschränkt), the legislator has created an attractive and comparatively inexpensive alternative to the GmbH in Germany for founders. Theoretically, one euro is sufficient as a contribution, but one should nevertheless carefully consider how much share capital must be available at the time of formation.

The foundation of a UG (limited liability) is especially interesting for new entrepreneurs with a tight budget. You can easily found a UG online, using the sample articles of association and 5,000 euros in share capital, the fees for the notary are relatively low at 190 euros for one partner, or 260 euros for two or three partners. For the registry court costs arise again 152 euros. In addition also not like with a GmbH from the outset a capital stock at a value of 25,000 euro must bring up. In theory, a UG (limited liability) can be founded with a share capital of just one euro – hence the name “1-Euro-GmbH”. What sounds tempting, however, is hardly feasible in practice.

Ensure solvency

Too little share capital can quickly lead to major problems. For example, if a company has only one euro of share capital when it is founded, only one euro is available to pay the first liabilities. In mathematical terms, the company would therefore be insolvent as soon as it bought a pack of printer paper. And this can also have legal consequences for the managing director, who would have to initiate insolvency proceedings in this case. It is therefore urgently recommended to choose the share capital according to the expected needs of the company.

How much share capital is reasonable?

Notaries usually require a share capital of at least 500 euros. It is not possible to generalize how high the share capital should really be and it is highly dependent on the type of company. If you have to make an expensive advance payment on your very first order, you will also need a correspondingly high level of company assets. Less capital-intensive industries can calculate somewhat more tightly with the deposit.

In any case, possible start-up difficulties and cyclical fluctuations should be considered, and buffers for unforeseen events should also be planned for.

Conclusion: If the share capital is too low, the company runs the risk of sliding into insolvency at a very early stage.