Advantages and disadvantages of a GmbH
It is well known that every business idea has advantages as well as disadvantages. It is of course the same with founding a GmbH. The greatest advantage can be seen that the shareholders are never personally liable and liability cannot be higher than the business assets are high, i.e. a maximum of 25,000 euros.
The GmbH can conclude transactions and also hold shares in other companies. A limited liability company is allowed to set up hidden reserves as it does not necessarily have to be a profit distribution. The articles of association can also be designed flexibly and if the company is to be sold once, there only has to be an assignment of the shares held by the shareholders.
One of the biggest disadvantages of establishing a GmbH is that everything has to be notarized and that an entry is made in the commercial register. Any assignments by the shareholders must also be notarized. All regulations from the commercial code must be strictly adhered to, this concerns the keeping of commercial books, the preparation of balance sheets, a commercial obligation to notify and much more.
In order to be able to found a GmbH at all, an amount of 25,000 euros must be available and at least half of it must be paid into an account on the day of formation. If the company does not act strictly according to regulations, severe sanctions from the legislature may well result.
Should a company ever have to go into bankruptcy, the reason is not only insolvency, but also direct over-indebtedness. This means that if the assets can no longer cover the liabilities, bankruptcy must be filed immediately.
The non-profit GmbH
According to TOPBBACOLLEGES.COM, a GmbH can be founded as a non-profit company. Tax advantages can be used here and here, too, liability is limited solely to the company’s assets. However, anyone who believed that founding a GmbH is difficult will be taught better, because there is a high bureaucratic effort for the person or persons.
Anyone who has not dealt too much with the establishment of a GmbH will hardly be able to distinguish between the entire legal forms . That is why only the most important points are listed here.
- Only one person is required to set up a g GmbH, and of course there can also be several.
- Here, too, a share capital of 25,000 euros is required.
- The liability only relates to the company’s assets.
- There are some requirements that must be met, which must be of a non-profit nature.
- Formal requirements are extremely high in accounting.
For a non-profit GmbH, a articles of association must also be concluded in which all the necessary information is listed. The statutes must also be certified by a notary, but before that you should ask a tax office to provide binding information.
In any case, the charitable status must be comprehensible and proof must be provided that half of the capital contribution has been paid into an account. If all points are met, the notary can also have the GmbH entered in the commercial register. Then, after a few days, confirmation will be given by the competent local court.
A partnership agreement is decided on one important point, from that of the classic GmbH, namely a specific mention of the non-profit purpose must be made. No distributions may be made from a GmbH and no high remuneration may be paid out. In the event of the GmbH being dissolved, no money may be paid out to the shareholders.
If you want to set up a GmbH, you should know that there are different costs. Various factors are dependent here, not only relating to the value of the object, but also to the creation of a social contract. The following costs should be expected:
- The amount of the costs depends on whether the articles of association are drawn up yourself or a lawyer draws it up
- The notarial certification entails costs and registration is not free
- If further documents are to be created by a notary, costs of around 400 euros must be expected.
Once a GmbH has been founded, work can begin. There are now all the more obligations that must be complied with. This includes, among other things, regular bookkeeping, whereby it is no longer sufficient to make an income-excess calculation, but it is necessary that there is double-entry bookkeeping.
GmbH formation fees
Nothing is free and certainly not the establishment of a GmbH, this of course requires a notary who calculates certain costs.
The amount is primarily about the amount of the paid-in share capital, that must be 25,000 euros, but may also be a higher amount. At 25,000 euros, a 1-man GmbH costs 375 euros, which is then already with a managing director appointment.
If the capital contribution is 500,000 euros, there are already costs of 1,185 euros and then there are also costs for registration in the commercial register. The following amounts still have to be paid to the notary, these are enforcement fees and supervision fees. Furthermore, writing expenses, other expenses, such as postage, telephone and fax charges and of course the statutory value added tax must be paid.
Of course, every GmbH also needs a name, which can either consist of the name of the partner or some other form of letters. But it can also be just a fantasy term; the legislature has not made any requirements for this. The only requirement is that the addition “limited liability company” must be included.
A partnership agreement that has been notarized is absolutely necessary, regardless of whether it was drawn up by a lawyer or whether it is a normal model contract. A formation protocol is also required, which must have a list of the shareholders in addition to a model contract, as well as the appointment of a managing director.
Everyone who wants to set up a GmbH must provide information about the company and its registered office. Furthermore, of course, the share capital must be available. An entry in the commercial register can only be made after the share capital has been paid into a business account. In any case, this must be carried out by a notary.
If you want to employ more than 500 people, you have to know that a supervisory board has to be established; this is even required by law. However, a supervisory board can be established right at the beginning, but this is not an absolute must.
Tax law of a GmbH
The bookkeeping at a GmbH is relatively extensive. The profit is subject to corporation tax, which must also be subject to a solidarity surcharge. If profits are to be distributed, they must be charged with capital tax. A GmbH is definitely subject to trade tax.
There are of course alternatives to a GmbH, which then consist of an entrepreneurial company or mini GmbH, a non-profit GmbH, a limited company or a stock corporation .
What a budding founder should consider
If you want to found a GmbH, you have to be aware that the tax burden is higher and therefore does not have any calculatory hurdles. The founding costs, which can amount to between 450 and 1,000 euros, must be raised and of course the necessary share capital must also be available.
If several people want to set up a GmbH, it must be determined beforehand who will be shareholders and under which name the company should run. What exactly should the purpose of the company be? Who will be the managing director? If there is to be a mixed overall representation, then an authorized signatory would have to be employed.
In advance, a regulation should also be made as to what the profit will be used for. What salary should a managing director be paid and whether long-term investments are up for discussion.
Half of the share capital must always be paid in, it does not necessarily have to be a sum of money, it can also be a tangible asset, such as a plot of land built on with an office building, but then an appraiser must determine the exact value of it.