UG (haftungsbeschränkt)

In practice

The UG is the GmbH for those on a small budget. It has long since shed its poor early reputation and is quite common among start-ups. The low minimum capital does not mean, however, that incorporating with a token euro makes sense. The notary, the Handelsregister (commercial register) and the first few months all cost money, and a company that is over-indebted from the outset quickly brings its management close to the duty to file for insolvency under German law. Landlords, banks and suppliers also usually require the shareholders of a UG to give a personal guarantee. The suffix belongs on the letterhead, invoices, the legal notice (Impressum) and the email signature. Anyone who omits it creates the appearance of unlimited liability and may be held personally liable. The route to becoming a GmbH is a capital increase to EUR 25,000 recorded by a notary, which can also be funded from the accumulated reserve or by contributions in kind.