Which form of society is the best choice for my start-up?
January 8, 2024 | 40,00 EUR | answered by Otto König
Dear lawyer,
I am Piotr Kraftner and I am planning to establish a start-up in the digital health sector. Currently, I am faced with the important decision of determining the best legal form for my company.
Background information:
- My start-up is aimed at developing and bringing innovative solutions in health technology to the market.
- I am the sole founder of the company and do not plan on taking on any additional shareholders at the moment.
- It is important to me to lead my company to long-term success and profitability.
Current situation:
- I am considering between a GmbH, a UG (limited liability), and a sole proprietorship.
- I am unsure which legal form offers the best legal, tax, and financial advantages for my start-up.
- Additionally, I am concerned about the liability risks associated with the different legal forms.
My concerns:
- I fear that choosing the wrong legal form could have long-term negative effects on the development and success of my start-up.
- As I am not knowledgeable in this area, I want to ensure that I make the right decision.
My question:
Which form of company is the best choice for my digital health start-up to maximize legal, tax, and financial benefits and minimize liability risks?
Thank you in advance for your support and advice.
Kind regards,
Piotr Kraftner
Dear Mr. Kraftner,
Thank you for your inquiry regarding the choice of the appropriate legal form for your planned start-up in the digital health sector. The choice of the right legal form is indeed a crucial step in starting a business, as it has legal, tax, and financial implications that can affect the long-term success of your company.
In your case, as the sole founder without any other shareholders, you basically have three options available: the GmbH (Limited Liability Company), the UG (limited liability) and the sole proprietorship. Each of these legal forms has its own advantages and disadvantages that need to be considered.
The GmbH (Limited Liability Company) offers the advantage of a clear separation between your personal assets and the company's assets. This means that in case of financial difficulties of the company, you only liable with the company's assets and your personal assets are protected. Additionally, the GmbH gives your start-up a certain level of credibility and seriousness towards business partners and investors.
The UG (limited liability) is a variant of the GmbH, specifically designed for founders with limited starting capital. The minimum share capital amount is only 1 EUR, making it easier to enter the GmbH form. However, there are also some disadvantages, such as image problems associated with the designation "entrepreneurial company".
On the other hand, the sole proprietorship gives you as a sole entrepreneur full control over your company, as you are the sole decision-maker. However, in this case, you also liable with your personal assets for the company's debts, which can pose an increased risk.
To alleviate your concerns about choosing the wrong legal form, I recommend you to thoroughly examine the legal, tax, and financial aspects of each legal form. A personal consultation with a specialized lawyer or tax advisor can help you find the optimal legal form for your start-up.
In conclusion, I would like to emphasize that the choice of the appropriate legal form is an individual decision that depends on various factors, such as your personal goals, your starting capital, and your long-term plans for the company. I hope that my response is helpful to you in your decision-making process and I am happy to answer any further questions you may have.
Best regards,
Otto König
