Which legal form is right for my company?
The decision of choosing a legal form for the company will leave impact on personal, financial, fiscal and legal arrangements. The optimal legal form does not exist.
Every legal form has both advantages and disadvantages. Before determining the legal form, the following questions should be clarified:
- With how many people will the company be founded?
- Who should run the company?
- How much equity can be raised?
- Is the project risky?
- Should personal liability be limited?
- Should formalities be created as few as possible during the foundation phase?
- Should the company have a high credit rating?
- Does it have to be entered in the commercial register?
- Should the right of registration be made available in the commercial register?
An overview of company legal forms:
- Sole proprietory
- Civil law society (GbR)
- Registered merchant (e.K.)
- Open trading company (OHG)
- Limited partnership (KG)
- Limited Liability Company (GmbH) or Entrepreneurial society (limited liability)
- Stock company (AG)
- Limited partnership (GmbH & Co KG)
The choice of legal form is a decisive basis of the company. However, a form of business that is currently performing in favour of the company can become detrimental due to subsequent changes such as expansion, higher liability risk, etc. Therefore, it is necessary to check periodically whether the company's legal form still fits or if changes are required.