As Walmart’s failed attempt to crack the German market demonstrate, size and resources are not prerequisites for success when it comes to doing business in Germany. However, an in depth understanding of the cultural nuances associated with doing business in Germany are.
With German law making no distinction between Germans and foreigners in the establishment of companies and no restrictions on the repatriation of profits, nothing stands in the way of ambitious entrepreneurs with a little capital.
The basics of German company law have many similarities to those in English-speaking countries. It distinguishes between limited liability companies (equivalent to a British limited company), joint stock companies (equivalent of a British Public Limited Company), and various forms of partnerships. It is normally advisable to have a lawyer help you decide which is the most suitable for your needs and help you with the necessary paperwork.
Whilst starting your own company in Germany can be the most advantageous move, we recommend that together we evaluate your business’s chances and risks and to prepare a market entry business-plan. Such a business-plan is mandatory when talking to banks or applying for benefits at German authorities.
The kind of business and financial strength in most cases determines the form of company for your business.
Whatever form of company you choose, you will need to tackle a number of bureaucratic hurdles. The first important steps are to contact a financial or tax advisor. They will know if it is necessary to hire a notary and how to register the business at the local court (Amtsgericht). Shortly thereafter, the chamber of commerce should contact you, having received your details from the commercial register.
You will then need to organise two sets of tax registration, one for commercial tax at the so-called Gewerbesteueramt and one at the local tax office (Finanzamt). After this it is possible to obtain a certificate of registration (Gewerbeanmeldeschein) and to commence business.
The most common form of company is the limited liability company, mostly known by the acronym GmbH, which corresponds to a British Limited Company (Ltd.). Share capital must be at least EUR 25,000.
Since 2008, entrepreneurs have been able to start a so called Mini-GmbH (Unternehmergesellschaft haftungsbeschränkt). This form of company was developed especially for start-ups, as the bureaucratic efforts are simplified and the minimum share capital is reduced to EUR 1.00.
Since we are located in Germany itself and have extensive experience of doing business in Germany, we understand what it takes to succeed in the German market, and will help you every step of the way.