An agency of two, an online shop in its first year, consulting work next to a job: plans like these soon bring up the word Mini-GmbH. It means the Unternehmergesellschaft (haftungsbeschränkt), UG for short. It is a variant of the German limited liability company (GmbH), and its share capital starts at €1. The term “Mini GmbH” itself appears nowhere in the law.
This guide is for founders who start alone or in a small team. It explains the legal basis, the formation in seven steps, the costs and the later switch to a full GmbH.
The key points at a glance:
- Mini-GmbH is the colloquial name for the UG (haftungsbeschränkt) under § 5a GmbHG.
- The share capital starts at €1 and is paid in full, in cash, before registration. Contributions in kind are excluded.
- As a rule, only the company’s assets are liable for its debts.
- Every year a quarter of the annual surplus goes into a statutory reserve until the share capital reaches €25,000.
- With the model protocol the formation usually costs €350 to €800. A notary and the commercial register are mandatory.
What is a Mini-GmbH?
What is a Mini-GmbH exactly? A GmbH that starts with less than €25,000 of share capital (Stammkapital) and therefore trades as an Unternehmergesellschaft (haftungsbeschränkt). Its special rules are in § 5a of the German Limited Liability Companies Act (GmbHG), and everything else follows ordinary GmbH law: articles of association, management, commercial register, balance sheet. Among the legal forms in Germany it is a sub-form of the GmbH. Anyone asking what a small GmbH is usually means exactly this.
The company’s assets cover its liabilities, not the private accounts of its shareholders. UG, Mini GmbH and Unternehmergesellschaft are three names for the same corporation. The law sees it as an entry point: through the reserve it is meant to grow into a full GmbH.
Mini-GmbH and GmbH compared
Legally, both are a GmbH. The differences lie in the capital, the name and how profit is handled. The table puts them side by side:
| Feature | Mini-GmbH (UG) | GmbH |
|---|---|---|
| Minimum share capital | from €1 | at least €25,000 |
| Paid in before registration | in full | at least €12,500 |
| Contributions in kind | excluded, cash only | allowed, for example vehicles or machines |
| Statutory reserve | a quarter of the annual surplus | no obligation |
| Name | with the suffix “UG (haftungsbeschränkt)” | with the suffix “GmbH” |
| Standing with banks and partners | depends heavily on the paid-in capital | established legal form with a noticeable capital buffer |
| Conversion | capital increase to €25,000 | not applicable |
In short: the Mini-GmbH is a GmbH with small starting capital and two special rules, full cash payment and the reserve. The liability protection is the same.
Advantages of a Mini-GmbH
The advantages of a Mini-GmbH show in the first months, when money is tight:
For entrepreneurs whose jobs carry real liability, that is a genuine relief.
Disadvantages of the Mini-GmbH
The disadvantages of the Mini-GmbH are easy to plan for once they are known. Most of them come from the small capital or from the duties of a corporation:
Realistic share capital and clean bookkeeping from day one absorb most of these points.
Setting up a Mini-GmbH: a guide in 7 steps
Setting up a Mini-GmbH follows a fixed order: the account comes before registration, because the register court wants to see proof of the capital.
With the suffix “UG (haftungsbeschränkt)”.
From €1, ideally with a buffer.
Model protocol for up to three shareholders and one managing director.
In person or by video call.
The account statement serves as proof.
The notary files the UG.
The tax number follows.
Name, share capital and articles of association
A lot is allowed for the company name, as long as it differs from other companies and is not misleading. The suffix “Unternehmergesellschaft (haftungsbeschränkt)” or “UG (haftungsbeschränkt)” is mandatory. “Mini-GmbH” or a bare “GmbH” may not appear in the name. On request, the chamber of commerce (IHK) checks in advance whether there is a risk of confusion.
Every contribution is paid in full and in cash before registration. There are two routes for the agreement: the inexpensive model protocol (Musterprotokoll) or individual articles of association. These cost more, but they regulate voting rights, vesting or the exit of individual partners. With unequal roles in the team they are usually the better choice.
Notary appointment and commercial register
A notary certifies the agreement, and since August 2022 this also works by video call for a cash formation. After that, the account is opened in the name of the UG in formation and the capital is paid in. With this proof, the notary files the company with the commercial register (Handelsregister). Until then it trades with the suffix “i. G.” (in formation).
Larger contracts are best left until after the entry, because before it the people acting are personally liable (§ 11(2) GmbHG). After that, the extract from the commercial register is available, and from now on it is what contracts and authorities rely on.
Business account, trade registration and tax office
At Vivid, a business account for GmbH and UG is available before the entry as a founder account: you choose “company in formation”, then UG i. G., and get a money account with a German IBAN. The shareholders pay the share capital into it as a cash contribution. The account statement as a PDF serves as proof, and there are no fees during the formation phase.
After the entry, sub-accounts with their own IBAN keep the reserve apart from day-to-day business, and receipts go to bookkeeping via DATEV export. The trade registration costs €20 to €60 depending on the municipality, and the tax registration questionnaire goes to the tax office via ELSTER. The UG is subject to trade tax by virtue of its legal form, in every industry.
Setting up a 1-euro GmbH: does it really work?
Legally, yes: a GmbH with 1 euro of share capital is permitted as a UG (haftungsbeschränkt). In practice that one euro does not go far, because the formation alone costs many times more. With the model protocol the company covers formation costs only up to €300 and at most up to the amount of its share capital, so at €1 the founders pay the rest privately.
The disadvantages of a 1-euro GmbH show by the first rental agreement at the latest. As a rule of thumb, the share capital covers the formation costs and the fixed costs of the first three months. Anyone who wants to set up a GmbH with €1 is better off planning a four-figure sum.
Can you buy a GmbH for 1 euro?
Searching for “buy a GmbH for 1 euro” usually leads to two kinds of offer: shelf companies and company shells. A shelf company has never traded and is sold together with its paid-in capital. For a shelf GmbH that means €25,000 plus a service fee of usually €1,500 to €2,500. Nothing like this exists for one euro.
A price of €1 tends to appear with shell companies whose business has gone dormant. Old liabilities or unpaid taxes can come along with them, and legally the takeover often counts as an economic new formation. A new Mini-GmbH is usually cheaper and easier to oversee.
What does a Mini-GmbH cost?
The costs of a Mini-GmbH are spread over a few items: notary, commercial register, trade office, account and, optionally, advice. They match those of the GmbH but turn out lower. The biggest lever is the agreement. With the model protocol the notary calculates the fee on the actual share capital, with individual articles of association on a minimum value of €30,000.
| Item | Typical cost | What it depends on |
|---|---|---|
| Notary (certification and filing) | about €100 to €400 | model protocol or own agreement, number of shareholders |
| Entry in the commercial register | €225 | fixed rate for a cash formation |
| Trade registration | €20 to €60 | fee rate of the municipality |
| Business account | from €0 a month | provider and plan |
| Tax or legal advice | optional | scope of the advice |
| Total with model protocol | usually €350 to €800 | mainly notary and advice |
Anyone who wants to set up a 1-euro GmbH also ends up with these costs, because the notary and the register charge hardly anything based on the capital.
In short: with the model protocol the formation usually stays below €800. Individual articles of association cost more and pay off as soon as several partners with different roles are involved.
Converting a Mini-GmbH into a GmbH
The small GmbH is built for growth. As soon as the share capital reaches €25,000, the special rules of § 5a GmbHG fall away: no more reserve obligation, no more duty of full payment. No new formation is needed for this. The company stays the same, including contracts and accounts.
Two routes lead there, and they can be combined:
The shareholders’ meeting resolves the capital increase, and a notary certifies the amendment to the articles and files it with the commercial register. The increase takes effect with the entry. The company may keep the name “UG (haftungsbeschränkt)”, as § 5a(5) GmbHG expressly allows. Most switch to “GmbH” anyway.
Who is the Mini-GmbH suitable for?
A typical case is a start-up with real liability risk and little starting capital. Anyone who wants to set up a small GmbH but cannot yet put aside €25,000 ends up with the UG almost automatically. Common constellations:
Not every start-up needs a corporation. As an alternative, the sole proprietorship is the fastest to set up, with the owner personally liable. The GbR suits two or more people with manageable risk. The full GmbH pays off when €25,000 is available and major customers or lenders look for an established legal form.
Conclusion
The Mini GmbH is not a legal form of its own but the UG (haftungsbeschränkt): a full corporation with starting capital from €1. It protects private assets and in return requires bookkeeping, a balance sheet and a reserve from every profit. The small capital still shows with image and credit, and a realistic starting amount makes up for that well.
With the right amount, a model protocol and a business account set up early, the company is in the register within a few weeks. And the path to the GmbH stays open: year by year, the reserve grows from the company’s own profits.
Founder account for the Mini-GmbH
Pay in the share capital before the UG is in the commercial register: with the Vivid founder account you get a money account with a German IBAN, with no fees during the formation phase.
Frequently asked questions (FAQ)
How long does it take to set up a Mini-GmbH?
Anyone who wants to set up a Mini GmbH is best off planning three to six weeks. The name and the model protocol are often ready within a few days, and a notary appointment is usually available within one to two weeks. Opening the account and paying in the share capital then take only a few days. The biggest difference comes from the register court: depending on its workload, the entry follows after a few days or only after several weeks.
Can a Mini-GmbH use contributions in kind instead of cash contributions?
No. When a Mini GmbH is set up, contributions in kind are excluded, as § 5a(2) GmbHG states. A laptop, a vehicle or an existing sole proprietorship therefore do not count as share capital, and the money is paid in cash and in full before registration. The company can buy or rent items afterwards. Only with the capital increase that brings the share capital to €25,000 are contributions in kind possible again.
Can formation costs be deducted?
Formation costs that the company bears itself generally count as immediately deductible business expenses, for example for the notary and the commercial register. The condition is that the articles of association regulate the assumption with a maximum amount. With the model protocol this is up to €300. Anything beyond that is borne by the shareholders, and for tax purposes it then usually counts towards the acquisition costs of their shareholding. A tax adviser clarifies the classification in the individual case.
Is it possible to sell GmbH shares below value?
Yes, the parties to the contract can freely agree on the price of GmbH shares, even below market value. A notarised contract under § 15(3) GmbHG and an updated list of shareholders in the commercial register are required. For tax purposes, a price well below value can count as a mixed gift. The gifted part is then subject to gift tax, with allowances depending on the degree of kinship. For sales within the family, a valuation in advance is therefore worthwhile.
How much does it cost to convert a sole proprietorship into a GmbH?
More than the formation costs of a GmbH from scratch, because the business is valued and contributed. Two routes are common: a hive-down (Ausgliederung) under the German Transformation Act or a formation with a contribution in kind, in which the sole proprietorship serves as the contribution. For the entry, the commercial register charges €360 for a formation with a contribution in kind and €390 after a conversion. On top of that come notary fees, a contribution balance sheet and often a valuation report. A UG is ruled out for this route, because contributions in kind are not allowed for it.
Please note: the content of this blog is for general information only and does not constitute legal, financial, investment or tax advice. It is not a recommendation or a basis for financial decisions. Before acting on this information, please seek advice from qualified professionals who can take your personal situation into account.
