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One person limited liability company (Ein-Personen-GmbH)

A sole proprietor can also conduct his/her business in the form of a GmbH. In this case, he/she becomes the managing director employed by the GmbH. The so-called one-person GmbH combines the advantages of the two legal forms. The entrepreneur can make all of the decisions alone. The company is liable to the extent of the share capital. The entrepreneur’s private fortune is not included in the liability. This does not apply to liability with respect to the bank; the entrepreneur is liable in this case to the extent of his/her personal securities as well.

Formalities

The partnership agreement must be notarised by a civil-law notary. A GmbH can be formed by means of a simple standard formation (such as cash formation, no more than three partners) on the basis of a standard record which must be certified. The standard record combines the partnership agreement, list of partners and appointment of the managing director. The standard records — one for formation by one person, another for formation by more than one person — are provided as appendices to the GmbH-Gesetz (German Act Regarding Limited Liability Companies).
The one-person GmbH must be entered in the Commercial Register.

Advantages

Entrepreneur is largely independent; limited liability.

Disadvantages

Minimum capital of €25,000 required.

For more see: Limited Liability Companies Act

A sole proprietor can also conduct his/her business in the form of a GmbH. In this case, he/she becomes the managing director employed by the GmbH. The so-called one-person GmbH combines the advantages of the two legal forms. The entrepreneur can make all of the decisions alone. The company is liable to the extent of the share capital. The entrepreneur’s private fortune is not included in the liability. This does not apply to liability with respect to the bank; the entrepreneur is liable in this case to the extent of his/her personal securities as well.

Formalities

The partnership agreement must be notarised by a civil-law notary. A GmbH can be formed by means of a simple standard formation (such as cash formation, no more than three partners) on the basis of a standard record which must be certified. The standard record combines the partnership agreement, list of partners and appointment of the managing director. The standard records — one for formation by one person, another for formation by more than one person — are provided as appendices to the GmbH-Gesetz (German Act Regarding Limited Liability Companies).
The one-person GmbH must be entered in the Commercial Register.

Advantages

Entrepreneur is largely independent; limited liability.

Disadvantages

Minimum capital of €25,000 required.

For more see: Limited Liability Companies Act