Convert a sole proprietorship into a GmbH - online, immediately, easily and quickly
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- Fixed price package: €1,069.00 net
Converting a sole proprietorship into a GmbH at a fixed price
With Recht 24/7 , you can convert your sole proprietorship into a GmbH quickly, easily and online. Directly from the lawyer and with no hidden costs. We have been helping founders to get their business off to a legally secure and bureaucracy-free start since 2003.
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Diadem Europe Services GmbH
Recht 24/7 provided us with excellent support and advice, even though it was not the standard procedure for a GmbH companycompany formation . No questions were left unanswered."
www.diademsports.eu
Elenita Cafe
All my questions were answered in detail and competently within 24 hours and the brand registration was completed quickly. Many thanks for the professional support!"
www.elenita-cafe.com
Black Label Coffee
"First of all, I would like to say a big thank you for the super support and the fast response time from Recht 24/7.
At the beginning, we had the founding documents drawn up by Recht 24/7 , which were accepted by the notary without any effort on our part. As time went on, we kept coming back to them with legal questions and we were always helped quickly and easily."
www.black-label-coffee.de
Signum Label Marketing UG
Recht 24/7 helped us to found our start-up without any stress."
www.ihr-private-label.de
Jellies
Recht 24/7 carried out an identity search and a similarity search for our trademark and thus showed us both risks and opportunities. The registration was completed quickly and efficiently without any problems."
www.jellieswear.com
Di-Lara
We would particularly like to emphasize the quick feedback from the Recht 24/7 team on questions and challenges during the research and application phase of our trademark trademark."
www.Di-Lara.de
Pfeiffer wooden toys
The opening of our Amazon store was one of our main reasons for filing our trademark application."
www.holzspielzeug-pfeiffer.de
Animal paradiseFB
The cooperation has proven to be very helpful and friendly."
www.tierparadiesfb.de
Your village life
Competent advice and support on various legal issues relating to the offering and sale of experiences and products on the Internet was provided from the very first minute."
www.deindorfleben.de
Flight simulator Dresden
Many thanks for the very nice contacts during our UG foundation phase."
www.flightsimulations-dresden.de
Schmiedeberger
"As a coach, I need individual legal texts that suit my work and my services. Recht 24/7 created customized legal texts for me, which I am very satisfied with.
The legal texts were created individually for me. They took the time to listen to me and create really suitable texts. 5 stars - I can recommend Recht 24/7 to anyone!"
www.lebensdreieck.de
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Change sole proprietorship to GmbH: Advantages and disadvantages of the conversion
E.K., GbR or GmbH? Founders must consider which legal form is the right one. A sole proprietorship initially offers attractive tax allowances with little administrative effort. But companies change. The initial legal form is not always the right choice. As turnover increases, so does the liability risk. Many entrepreneurs decide to take the next step: the GmbH. This article shows what needs to be considered when changing legal form. Important to know: What are the advantages of switching to a GmbH and how does it work?
Rethinking conversion: What are the advantages and disadvantages of the legal form of a sole proprietorship?
Are you planning to start your own business and considering the company formation of a sole proprietorship? There are many advantages to this legal form.nullAs a sole proprietor, you are completely flexible. You make decisions alone at all times - without any agreement with other managing directors or shareholders. The profits you make belong to you. In addition, as a sole proprietor who is not entered in the commercial register, you are not required to prepare a balance sheet. You do your bookkeeping using a revenue-surplus account. This saves time and work. The company formation of a sole proprietorship also requires no minimum or share capital. You start with the money you need to set up the company.nullOn the other hand, there are some disadvantages. As a solo founder, you bear full responsibility. You are liable with your entire personal assets. In the worst case scenario, this could result in personal insolvency. And: without an entry in the commercial register and the associated obligation to keep double-entry accounts, you are not allowed to operate as a sole trader. The name of your company must include your first name and surname; a purely imaginary name is not possible.
Liability: How exactly are sole proprietors liable?
Unlike the GmbH and UG legal forms, liability is not limited. This means that as a sole trader, you are liable for all of your company's liabilities with your entire private assets. If you can no longer pay invoices, your cash assets can usually be seized immediately. If the worst comes to the worst, you will have to sell your car, house or other assets in order to pay the proceeds to your creditors.
Founding a GmbH: When is the change possible for tax purposes?
If you want to limit your liability as an entrepreneur, switching to a GmbH or a GmbH und Co. KG is the logical step. When exactly the conversion makes sense depends on the economic and tax conditions. In principle, it is possible to switch to a GmbH if the turnover of the sole proprietorship exceeds the statutory tax allowances and at least EUR 25,000 is available for the required share capital of a GmbH.
| Advantages of a GmbH over a sole proprietorship | Disadvantages of a GmbH compared to a sole proprietorship |
|---|---|
| Liability is limited to the company's assets | company formation is more complex and more expensive |
| The legal form of a GmbH inspires confidence | Share capital of at least 25,000 euros required |
| company formation by individuals possible | Double-entry bookkeeping, accounting obligation |
| Save taxes, the managing director's salary is deducted as a business expense | Obligation to publish annual financial statements |
| Investors can participate in the GmbH without liability risk | Tax advisor required to explain the tax and social risks of a GmbH-companycompany formation |
Advantages of a GmbH over a sole proprietorship
- Liability is limited to the company's assets
- The legal form of a GmbH inspires confidence
- company formation by individuals possible
- Save taxes, the managing director's salary is deducted as a business expense
- Investors can participate in the GmbH without liability risk
Disadvantages of a GmbH compared to a sole proprietorship
- company formation is more complex and more expensive
- Share capital of at least 25,000 euros required
- Double-entry bookkeeping, accounting obligation
- Obligation to publish annual financial statements
- Tax advisor required to explain the tax and social risks of a GmbH-companycompany formation
How can I convert a sole proprietorship into a GmbH?
Keeping the business running and changing the legal form at the same time? It is possible. The conversion of a GmbH can take place parallel to the business activities of the sole proprietorship. The actual company formation takes place in three steps:
Step 1: Adoption of a partnership agreement
At the beginning, an initial informal meeting of all future GmbH owners is required. This is where the company formation and articles of association are adopted. This forms the basis of the GmbH and regulates the rights and obligations within the company. These include, for example
- Registered office and company name, purpose of the company
- Amount and composition of the share capital
- Names and contact details of the shareholders
- Rights and duties of the managing director
- Reasons for dissolution
- Succession arrangements in the event of death
If you provide the legally required share capital of at least 25,000 euros, you are the sole shareholder of your GmbH. Each additional shareholder must contribute to the share capital and agree to the articles of association. Finally, the contract is notarized and kept in safekeeping by a notary.
Step 2: Pay in share capital
The next step is to open a business account. You can find out exactly what you need to bear in mind in our guide "Business account for GmbHs and UGs".nullThe share capital of at least EUR 25,000 must be deposited in the business account. At least half of the amount must consist of cash. The remaining amount can be provided as a contribution in kind, e.g. in the form of:
- Goods
- Real estate
- Buildings
- Machines
Please note: The value of a contribution in kind is estimated. If it is too low, the tax office may suspect hidden profits. If the estimate is too high, there is a risk of additional payments.
Step 3: Deregister sole proprietorship
After the articles of association have been adopted and the share capital has been paid in, the GmbH is registered with the following offices:
- Trade office
- Commercial register
- Tax office
company formation and subsequent registration with the tax office is possible online. Our article "Forming a GmbH and UG online" explains how this works.nullAfter registering with the authorities, you must gradually transfer the assets and liabilities of your sole proprietorship to the GmbH. This means that you conclude each new contract in consultation with the respective contractual partner (e.g. your employees, customers or suppliers).nullThe final step is to dissolve your sole proprietorship. This includes deregistering your business, reporting to the social security authorities and notifying the tax office. Early deregistration is worthwhile. The reason: this way you avoid the double administration of a sole proprietorship and GmbH.
Summary
- Converting a sole proprietorship or a UG into a GmbH requires planning. Weigh up the tax and social advantages and disadvantages of the new legal form in advance.
- As a sole proprietor, you are liable with your private assets. The legal form of a GmbH limits your legal liability to your business assets.
- An individual entrepreneur who is not entered in the commercial register is not required to keep accounts. With the company formation of a GmbH, you are subject to the obligation of double-entry bookkeeping and accounting. In addition, as a GmbH managing director you are subject to social security contributions, but in return you can deduct your managing director's salary from your taxes.
- The legal form of the GmbH is internationally recognized and trusted. The company formation requires a share capital of at least 25,000 euros.
- When converting to a GmbH, existing contracts of the company must be concluded anew. This means a great deal of work.
- Specialist experts are a great help when converting the legal form. A lawyer and a tax consultant will inform you about tax and legal pitfalls.
- In order to discuss all the opportunities and risks of a GmbH company formation in detail, you should consult a lawyer before the company formation and entry in the commercial register - with us at favorable conditions.
Questions and answers about converting your sole proprietorship
The notary fees depend on the value of the transaction and cannot be given as a lump sum. We will be happy to clarify the notary fees for the individual case with the notary.
The direct conversion of a sole proprietorship into a UG is unfortunately not possible due to certain regulations. While contributions in kind are permitted for a GmbH, they are prohibited for the company formation of a UG in accordance with Section 5a (2) sentence 2 GmbHG. In addition, both contribution and spin-off procedures are generally excluded for this transfer.nullThe only way for a sole proprietorship to transfer to a UG is therefore to transfer the existing company to a newly founded UG (haftungsbeschränkt).
As a rule: Yes. In the event of a spin-off, employment contracts are usually transferred to a GmbH. This transfer relates to all liabilities and claims arising from the contracts that become the responsibility of the new company. In the case of non-cash formations or sales, employment contracts can be transferred as part of a transfer of business pursuant to Section 613a BGB. Although this ensures that the contract is recognized by the new company, the same working conditions must apply as before the transfer.nullIt should be noted that employees have the right to object to such a transfer and refuse legal recognition.
With Recht 24/7 , you receive all services at a fixed price, no hidden costs, no packages with additional costs. Our fixed-price offer includes everything you need for the professional, smooth conversion of your sole proprietorship into a GmbH.
at a fixed price of EUR 1,069.00 net
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