UG vs. GmbH

When considering whether a GmbH or UG (also known as a mini-GmbH) is the right legal form for you, you should first look at your capital. The UG only requires share capital of €1 when it is founded, whereas the GmbH requires at least €12,500 share capital when it is founded. So if you have fewer financial resources, the UG is more suitable. However, it must also be taken into account here that potential creditors and investors are informed about the low share capital contribution of a UG and therefore place less trust in the liquidity and creditworthiness of a UG, whereas the GmbH appears more reputable. There is no difference between the two legal forms in terms of liability; in the case of a GmbH and UG, the company is only liable with the company assets.

Another point that should be taken into consideration is the formation costs, which are much lower with a UG than with a GmbH, as standard templates can be used here. So if you want to save money here too, you should consider the UG. However, one of the biggest disadvantages of the UG is that it is not possible to distribute the company's profits in full at the end of the year, as is the case with a GmbH. The shareholders of a UG are legally obliged to retain at least 25% of their annual profits as a legal reserve. This is required until a sum of € 25,000 has been reached. As a result, the UG becomes a GmbH. In summary, it can be said that if you have a small amount of start-up capital, a UG is a good choice, but if you have the necessary capital and want to scale your start-up quickly, a GmbH is the more sensible choice.