UG vs. GmbH: 1 € or 25.000 € to start your company
Both limit your liability. The real difference is the share capital - 1 € for a UG, 25.000 € for a GmbH - and what that signals.
UG vs. GmbH
Both cap your personal liability. The real difference is the share capital: 1 € versus 25.000 €. That number decides which one fits.
UG: start on a shoestring, convert later
- Found it with as little as 1 € of share capital, though 500–1.000 € is more workable in practice.
- You must retain 25% of annual profits until reserves reach 25.000 €, at which point you can convert to a GmbH.
- Partners and investors sometimes read it as less established.
GmbH: the form investors expect
- Needs 25.000 € share capital, of which 12.500 € must be paid in at formation.
- The default for venture-backed startups.
- Carries more weight with banks, enterprise customers, and investors.
Which one to pick
Bootstrapping and short on cash? Start as a UG and convert once reserves hit 25.000 €. Raising venture capital soon? Go straight to a GmbH and skip the restructuring later. Either way, confirm the setup with a Steuerberater and Notar before you sign.
General information for founders in Germany, not legal or tax advice. Rules and figures change - verify against official sources or a qualified advisor before acting.
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