Business structures in Germany: your guide to making the right choice
Choosing the right business structure is a milestone for any company. It determines your liability, flexibility, and how your business is perceived externally. To help you get started with confidence, here’s an overview of all the main business structures in Germany – clear, practical, and straight to the point.
Summary
- What is a business structure?
- The main business structures at a glance
- Comparison of company types in Germany
- Brief explanations of the key business forms
- FAQ: Your most important questions about business structures
What is a business structure?
A business structure defines the legal foundation of your company. It determines how many people are involved, your liability, the required start-up capital, and which taxes apply. Your decision directly affects your day-to-day life as an entrepreneur.
The main business structures at a glance
In Germany, there are three main types:
- Sole proprietorships – for solo founders, easy and fast to establish..
- Partnerships – for teams, e.g. GbR, OHG, KG – ideal if you want to share responsibility.
- Corporations – for bigger plans, with limited liability, e.g. GmbH, UG, AG, SE.
You’ll also find hybrid models like the GmbH & Co. KG and special company forms, for example the KGaA or SE.
Comparison of company types in Germany
| Business structure | Liability | Minimum capital | Accounting | Taxes | Suitable for |
|---|---|---|---|---|---|
| Sole proprietorship | Unlimited (including personal assets) | None | Simple accounts (EÜR) | Income tax | Solo founders, freelancers |
| GbR | Joint and several, unlimited | None | Simple accounts (EÜR) | Income tax | Teams, projects, liberal professions |
| OHG | Unlimited | None | Double-entry | Income tax | Trading businesses with partners |
| KG | General partner: unlimited, limited partner: limited | None | Double-entry | Income/corporation tax | Family businesses, investors |
| GmbH | Limited to company assets | €25,000 | Double-entry | Corporation tax | Start-ups, SMEs, investors |
| UG (haftungsbeschränkt) | Limited | From €1 | Double-entry | Corporation tax | Low-cost start-ups with liability protection |
| AG | Limited | €50,000 | Double-entry | Corporation tax | Large companies, stock market |
| GmbH & Co. KG | GmbH: limited, limited partners: limited | €25,000 (GmbH) | Double-entry | Income/corporation tax | Family businesses, holdings |
| Limited (Ltd.) | Limited | From £1 | Double-entry | Corporation tax | Rarely relevant, legally complex |
The most important business structures – briefly explained
Sole proprietorship
Quick to set up, no bureaucratic hurdles. However, you are always personally liable – including with your private assets. Perfect for freelancers and solo self-employed.
More details can be found in our article Sole proprietorship in Germany: what it is and how to start one.
GbR (civil law partnership)
Ideal for teams wanting to start together. Setup is simple, but you are all fully and jointly liable.
OHG (general commercial partnership)
For trading businesses with several partners. You are personally liable, but can act flexibly.
KG (limited partnership)
Here, general partners are fully liable, while limited partners (e.g. investors) are only liable up to their contribution. Practical if you want to bring in investors.
GmbH (limited liability company)
The classic: liability only with company assets, professional appearance, but higher setup effort and €25,000 share capital.
All details on requirements, advantages and obligations can be found in the article GmbH in Germany: requirements, setup, benefits & costs 2025.
UG (haftungsbeschränkt) (entrepreneurial company)
The “mini-GmbH”: possible from just €1, with full liability protection. Building reserves up to €25,000 is mandatory.
Learn more in Setting up a UG: Mini-GmbH for founders.
AG (public limited company)
For big plans and stock market listings. High requirements, clear structures, but maximum flexibility in raising capital.
GmbH & Co. KG
Merges the security of a GmbH’s limited liability with the versatility of a KG. Particularly popular among family businesses and holding companies.
Limited (Ltd.)
British legal form, hardly relevant for German founders since Brexit.
SE (Societas Europaea)
Want to operate across Europe? The SE is the European public limited company for cross-border activities.
FAQ – Your most important questions about business structures
Which business structure is best for founders?
That depends on your goals and start-up capital. For a quick, low-cost start: UG or sole proprietorship. For more credibility and investors: GmbH.
How do UG and GmbH differ?
Both have limited liability. UG: from €1, reserve requirement. GmbH: €25,000, immediately higher standing.
Which form is the easiest to set up?
The sole proprietorship – straightforward and quick to register.
Step-by-step instructions are in Sole proprietorship in Germany: what it is and how to start one.
Which form protects against personal liability?
GmbH, UG, AG and GmbH & Co. KG – here you are only liable with company assets.
More info in GmbH in Germany: Requirements, advantages, obligations and costs.
Which business structure is the cheapest?
The UG – from €1 start-up capital, a bit more formalities, but lots of protection.
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