UG vs. GbR

Both the UG (haftungsbeschränkt) and the GbR are popular legal forms for small businesses. The advantages of both legal forms are definitely the low starting capital. While a UG only requires a share capital of €1, a GbR does not need this at all. Despite all this, the reality is of course different. From a legal perspective, there is no or only a very small amount of share capital required, but you should still have a certain buffer in your business account when you set up the company, otherwise you could end up insolvent when you receive your first invoices.

The biggest difference between these two legal forms is definitely that the UG (haftungsbeschränkt) is a corporation and the GbR is a partnership. Due to this fact, the two companies differ in particular in terms of their liability. While the partners of a partnership, in this case the GbR, are personally and jointly and severally liable, the liability of a corporation, in this case the UG, is limited to the company's assets.

As part of this differentiation between company forms, there are also significant differences in the formation process. While a GbR can be formed informally, the formation of a UG requires a partnership agreement or at least a model articles of association that is notarized. A GbR is formed from the moment that two or more persons join together and jointly pursue an economic purpose. This does not require a written contract. However, this would be advisable. However, it is important to note: A GbR must consist of at least two partners, so this legal form is not suitable for anyone who wants to form a company alone. Another special feature of the GbR is that it is not obliged to keep balance sheets and double-entry bookkeeping because it is a partnership. A pure revenue-surplus calculation is carried out here. The obligation to prepare a balance sheet only arises when a GbR achieves a turnover of more than € 600,000 or a profit of more than € 60,000 (§ 141 AO).

This may initially sound as if the GbR is a very simple legal form that is well suited to start-ups. But be careful: the low formation costs, no start-up capital and no obligation to prepare accounts seem tempting, but investors are unlikely to invest in a GbR as they usually lack security. In addition, a GbR also represents an increased risk for the shareholders, as there is no limitation of liability with this legal form.

The legal form of a GbR is much more suitable for business founders who have little or no capital and want to start their own business with a GbR.