Two siblings take over their parents’ wine shop, and suddenly the letterhead reads “Berger OHG”. The OHG meaning, explained simply: OHG stands for offene Handelsgesellschaft, a general partnership of at least two people who run a commercial business under a shared company name. All of the partners are personally liable for its debts.
This guide is for founders and family businesses who want to know what an OHG is and whether it suits them. It explains liability, management, profit, taxes and formation, including the changes made by the 2024 reform.
The key points at a glance:
- OHG is short for offene Handelsgesellschaft, the German general partnership, governed by sections 105 to 160 of the German Commercial Code (HGB).
- At least two partners run a commercial business under one company name. No minimum capital is required.
- The OHG is not a legal entity, but it can still sign contracts and hold assets in its own name.
- All partners are liable personally, without limit and jointly and severally.
- Commercial register entry and a balance sheet are mandatory. The partners pay tax on the profit, the OHG pays trade tax.
What does OHG mean? The abbreviation explained
What does OHG mean, and what does it stand for exactly? Offene Handelsgesellschaft, sometimes written oHG. Whether the question is spelled “Was heißt OHG?” or, the Swiss way, “Was heisst OHG?”, the answer is the same: merchants who run a business together. “Offen” means open: from the outside it is visible who stands behind the business and who is liable.
The legal OHG definition is set out in section 105 HGB. The OHG is one of the oldest company forms in German commercial law: the General German Commercial Code already recognised it in 1861, and the HGB has governed it since 1900. Since 1 January 2024 the version amended by the Act to Modernise the Law on Partnerships (MoPeG) has applied.
The OHG explained simply: the key features
The shortest OHG explanation: the OHG is a partnership in which several people run a commercial business together and stand behind it in full. Seven features define the legal form:
The OHG as a legal form: what kind of business structure is it?
Classifying the OHG legal form takes two terms. As a company form, the OHG is a partnership (Personengesellschaft), because the people behind it count rather than a fixed capital. And it is a commercial company, because its purpose is operating a commercial business. Together with the KG it belongs to the commercial partnerships.
It is not a legal entity like the GmbH and has no separate legal personality. It still has legal capacity: under section 105(2) HGB the OHG can acquire rights and take on obligations. It signs contracts, holds property and accounts, and the partnership assets belong to it.
What does OHG mean in company names?
The abbreviation often appears on invoices and websites, for example in “Krause & Yilmaz OHG”. So what does the suffix say? It names the legal form and shows business partners that people are personally liable here. So what is OHG in a company name? A mandatory element, not a seal of quality.
In the HGB, the Firma is the name under which a merchant trades. Under section 19 HGB it must contain “offene Handelsgesellschaft” or an understandable abbreviation such as OHG. The partners choose the name itself freely, as long as it is distinctive and not misleading. Under section 125 HGB, business letters also state the registered office, the register court and the number in the commercial register, section A.
OHG examples: which businesses are OHGs?
Anyone who pictures large corporations when looking for OHG examples is looking in the wrong place. The typical OHG is a medium-sized business with two to five partners who work in it every day. These cases are common:
In wholesale, purchasing, supplier invoices and customer payments often run through dozens of partners. A business account for wholesalers keeps them apart with separate accounts per supplier or product line, each with its own IBAN.
OHG, GbR and KG: the differences
The three legal forms often merge into one another. By law, a GbR becomes an OHG as soon as its business needs a commercially organised operation, for example because of high turnover, staff and stock. Commercial register entry is then mandatory. The KG, in turn, is an OHG in which the limited partners are liable only up to their contribution. A special form is the GmbH & Co. KG: there a GmbH takes on the role of the partner with unlimited liability, so that in the end no natural person stands behind the debts with private assets.
| Feature | GbR | OHG | KG |
|---|---|---|---|
| Law | BGB | HGB | HGB |
| Register | voluntary | commercial register mandatory | commercial register mandatory |
| Liability | all partners personally | all partners personally | general partners personally, limited partners up to their contribution |
| Bookkeeping | usually cash-basis accounting | balance sheet | balance sheet |
OHG liability: who is liable for the debts?
OHG liability is where the biggest difference from the GmbH lies. Under section 126 HGB the partners are liable to creditors personally and jointly and severally. Creditors can therefore turn to a single partner, reach their private assets and demand the full amount.
An example: an OHG with three partners owes a supplier €30,000. The supplier can claim the whole sum from one partner, who then recovers €10,000 from each of the other two internally. Agreements that limit liability towards the partnership’s creditors are ineffective against third parties.
A change of partners changes little here. Anyone who joins is also liable for older debts under section 127 HGB. When a partner leaves, section 137 HGB applies: liability for obligations incurred up to that point continues for five years. Since the MoPeG this period starts as soon as the creditor learns of the departure, at the latest when it is entered in the commercial register.
In short: In an OHG all partners are liable personally and without limit, new partners also for existing debts and departing partners for another five years. Business liability insurance and clear contracts keep the risk small in everyday business.
OHG management and representation
Who decides, and who signs? The rules on OHG management and representation separate exactly these two questions. Management concerns the internal relationship, representation means acting externally.
Unless agreed otherwise, every partner may manage the business alone (section 116 HGB). If another managing partner objects, the transaction does not go ahead, and extraordinary projects such as buying a warehouse need a resolution of all partners. Every partner may also represent the OHG alone (section 124 HGB). The agreement can provide for joint representation, but a limit on its scope has no effect externally.
Profit and loss distribution in the OHG
Who is entitled to the result at the end of the year? The partnership agreement comes first. Without a rule, section 120 HGB refers to section 709(3) BGB: profit and loss are split according to the agreed shares, otherwise by the value of the contributions, and finally in equal parts.
The old rule found in many guides, 4% interest on the capital share first and the rest per head, no longer applies since 2024. Every partner can demand payment of their share as long as this does not obviously harm the OHG (section 122 HGB). Pay for working in the business can be set in the agreement.
OHG taxes and bookkeeping
For OHG taxes, the transparency principle applies. The OHG pays no income tax: the tax office determines its profit separately, and each partner pays tax on their share personally.
| Tax | Who pays | What applies |
|---|---|---|
| Income tax | each partner on their share | trade tax is partly credited (section 35 EStG) |
| Trade tax | the OHG | €24,500 allowance on trade income |
| VAT | the OHG | except under the small business scheme (previous year up to €25,000, current year up to €100,000) |
| Corporate income tax | only on application | option under section 1a KStG |
As a commercial company, the OHG keeps double-entry books (section 238 HGB) and prepares a balance sheet every year. Cash-basis accounting is not enough. With bookkeeping in Vivid, transactions go to the tax adviser via DATEV export, with the receipts linked to each booking.
Advantages and disadvantages of the OHG
Whether the OHG fits depends on the trust within the team and on the risks of the business. The advantages of an OHG lie in the start and in its reputation, its weaknesses in liability and duties. The OHG advantages and disadvantages at a glance:
| Advantages | Disadvantages |
|---|---|
| no minimum capital | personal, unlimited liability of all partners |
| agreement without a notary and freely drafted | shared responsibility for the others’ decisions |
| high creditworthiness | double-entry bookkeeping and balance sheet |
| simple structure, every partner can act alone | commercial register and chamber of commerce (IHK) membership |
| €24,500 trade tax allowance | close ties to the fellow partners |
| continues when a partner leaves | shares transferable only with the others’ consent |
In short: The OHG scores with few formalities around capital, a flexible agreement and a good reputation with suppliers and lenders. In return, all partners carry the full risk. For a well-established team, that is often a fair trade.
Who is the OHG suitable for?
What kind of legal form is the OHG in practice? One for people who trust each other and act together. The OHG legal form suits family businesses, partnerships of experienced merchants and small trading companies whose risks can be well insured.
A business structure other than the OHG makes sense where liability risks are high, for example because of large orders or many staff: a GmbH or GmbH & Co. KG then limits the risk. Since 2024, teams of freelance professionals can also form an OHG, provided their professional rules allow it.
How do you set up an OHG?
How do you set up an OHG without missing a step? Forming an OHG often takes just a few weeks, in this order:
At least two people agree on the business and on their contributions.
It can be made without any formal requirements, but in writing it is much safer.
The name with the suffix OHG must be distinguishable locally. The IHK checks this in advance on request.
All partners sign before a notary, who sends the application electronically to the register court.
After the trade registration, the tax registration questionnaire follows within one month.
A separate account keeps the partnership assets apart from private money.
Requirements and partnership agreement
You need at least two partners, a commercial business and a company name. The partnership agreement has no formal requirements, only if land is contributed does a notary have to record it. In writing, it adapts the statutory default rules to the business. These points belong in it:
Commercial register, trade registration and business account
All partners sign the application to the commercial register before a notary. It states the company name, registered office, all partners and their powers of representation. Externally, the OHG takes effect on registration or, with the consent of all partners, from its first transaction.
A separate account is not mandatory, but it is hard to do without for double-entry bookkeeping. A business account with Vivid can be opened by the OHG fully online, with a German IBAN. All partners get their own cards and access rights, and on the Free Start plan the account costs €0 a month.
Formation costs
The costs stay manageable because neither share capital nor a notarised agreement is needed. For an OHG with two partners, roughly:
| Item | Typical cost |
|---|---|
| Notary for the application | around €150 to €250 including VAT |
| Entry by the register court | €150 for up to three partners, €60 for each additional partner |
| Trade registration | about €20 to €60 depending on the municipality |
| Legal and tax advice | optional, fee depending on scope |
Ongoing costs include bookkeeping and annual accounts, the IHK fee, insurance and account fees. Anyone who puts these items into the first financial plan knows the real costs of the first year.
Conclusion
The OHG meaning in one sentence: at least two people run a commercial business under a shared company name and are personally liable for it. Since 2024 the OHG has expressly had legal capacity, it is entered in the commercial register and draws up a balance sheet. The partners pay tax on the profit themselves.
For family businesses and well-established trading teams it is a respected legal form without minimum capital. With a clear agreement and a separate business account, the joint business stands on solid ground from the start.
One account for all partners
With the Vivid business account, every partner in the OHG gets their own cards and access. The bookkeeping goes to the tax adviser via DATEV export.
Frequently asked questions (FAQ)
How is an OHG taxed?
The general partnership (OHG) is transparent for income tax: each partner pays tax on their profit share as business income. The OHG itself pays trade tax, with a €24,500 allowance, and VAT. Part of the trade tax is credited against income tax under section 35 EStG. On an irrevocable application, the OHG can also be taxed like a corporation (section 1a KStG). How high the trade tax is depends on the multiplier (Hebesatz) that each municipality sets itself.
How is an OHG financed?
It starts with the partners’ contributions, meaning money, machinery, goods or work. There is no minimum capital. Later, an OHG is often financed from profits that stay in the business. For investments, loans, leasing or KfW development loans are an option, and because every partner stands behind the debts in person, lenders often rate an OHG well. New partners bring in additional capital, but unless the agreement says otherwise, they need the consent of all partners.
How many people do you need to form an OHG?
At least two, and there is no upper limit. Natural persons can take part, but so can a GmbH or another partnership with legal capacity. If no natural person is liable without limit, as in a GmbH & Co. OHG, the company name must show this. If only one person remains, the OHG ceases to exist and its assets pass to that person. Married couples, siblings or parents with adult children often form an OHG together.
Which is better, an OHG or a GmbH?
It depends on the risk. The GmbH needs €25,000 of share capital and a notarised agreement, and in return only the company assets are liable. The OHG starts without minimum capital and with an informal agreement, and all partners are personally liable. Both must draw up a balance sheet, and the GmbH also publishes its accounts. For small risks the OHG is often leaner, for large orders or investors the GmbH fits better. If the business grows, an OHG can later be converted into a GmbH by a change of legal form.
Which is better, an OHG or a GbR?
Often the business decides. If, by its nature and size, a business needs a commercial set-up, it is an OHG. The GbR suits small trades and teams of freelance professionals, without a commercial register and usually with cash-basis accounting. The OHG is registered, draws up a balance sheet and has a protected company name. In both forms, the partners stand behind the debts with their own assets. If a GbR grows into a commercial business, it automatically becomes an OHG and must register.
Who gets the profit in an OHG?
The partners, split according to the partnership agreement. Without a rule, section 709(3) BGB applies: first the agreed shares, then the value of the contributions, and finally equal shares. Based on the annual accounts, every partner can have their share paid out, as long as this does not obviously harm the OHG. Pay for working in the business is often added. Losses are split by the same key and reduce the capital share.
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.
