The company formation of a UG - advantages and disadvantages

Those who opt for the UG (haftungsbeschränkt) as their legal form can benefit from many advantages, but must also accept some minor disadvantages. We explain the most important factors that can speak for or against a company formation .

The decision to form a UG (haftungsbeschränkt) is usually characterized by two key aspects: The entrepreneur does not want to be liable with his private assets, but does not have the share capital of €12,500 that would be required for the company formation of a GmbH .

Uncomplicated and favorable company formation

In addition to limited liability and low share capital, the UG offers further advantages. There are only a few relatively simple steps to follow for company formation . If there are no more than three shareholders, the formation costs - for the lawyer or notary - can be kept low by using the so-called model protocol.

One disadvantage is that the profit may not be distributed in full; at least 25 percent must be transferred to the share capital each year until this amounts to €25,000. And because business customers and banks are also aware that a newly founded UG often only has a small share capital, its image is sometimes somewhat lower than that of a GmbH.

You can easily set up your UG online and we will prepare your contracts and documents within 24 hours.

The most important advantages and disadvantages of the UG at a glance

We have briefly summarized the advantages and disadvantages of the Unternehmergesellschaft (UG) for you here. You can find out what you need to consider when company formation and what obligations arise from this in our article Self-employed with a UG - a success story.

Advantages:

• company formation possible with as little as €1 share capital (notaries generally only notarize from €300.00)
• Shareholders are not liable with private assets
• also possible as a single person
• Fast, uncomplicated company formation

Disadvantages:

• Savings obligation: at least 25% of the surpluses must flow into the share capital until € 25,000 is reached.
• The capital contribution must be paid in cash, contributions in kind are not possible
• Creditworthiness can be classified as lower
• Slightly worse image than the classic GmbH

Conclusion: The company formation of a UG (haftungsbeschränkt) can be the right step, especially for start-ups.