An Expat’s Guide To Founding A Company In Germany
The first steps to founding a new company in Germany, by two non-German speakers who found out the hard way.
A Web Developer and an ex-Corporate Banker walk into a ‘Sprachschule’… It already sounds like the beginning of a bad joke, but this is really how it all began. Storm (the Web Developer) and I (the ex-Corporate Banker), after a couple of afternoons of sampling the local Helles, put our heads together and struck upon the idea of founding a company. That was how Mietwise was born.
We then did what many other German founders had done before us, registered our company in the UK. Forty-eight hours later and £12.95 well spent, Mietwise Ltd was officially registered. No notary appointments, no capital contributions, and no bank accounts opened, it was simple. That was until we needed to register Mietwise as a German company. Things started to get complicated, and this is what we had to do next.
Step 1: Decide your company’s legal form; UG, GmbH, Co KG, etc.
As a startup in Germany, you need to pick a legal form when incorporating. Startups commonly incorporate as an UG as capital contributions (from €1) and notary fees (circa €400) are considerably less than other legal forms. For example, registering a GmbH requires capital of €25,000 and incurs higher notary fees. However, there are pros and cons to all legal forms. Here’s a link for a general overview.
Step 2: Arrange your notary appointment, think ‘small town’ equals ‘small bill’, and do it soon
Bureaucracy is infamous in Germany, and in using a notary you get to experience it first-hand. Start by booking an appointment, which you should arrange as soon as possible as you may have to wait a few weeks. Then there are the costs to consider, which can range from several hundred to several thousand Euros. Therefore, it is important to choose your notary wisely, think ‘small town’ as opposed to ‘big city’.
Step 3: Have a translator ready (not a relative), or make sure that your notary is able to do this for you
The notary appointment itself is straightforward, that is if you speak German fluently. Unfortunately, we don’t, so having found a local ‘translator’, we managed to get through the three-page standardised incorporation document in little under an hour. Once signed, witnessed and stamped, you are free to leave and make your capital contribution. Until this is done, the notary will not register your company.
Step 4: Open a business bank account and pay your capital (‘Stammkapital’) contribution
Now it’s time to open a business bank account and make your capital contribution. You could arrange an appointment with one of the more traditional brick-and-mortar banks. However, we recommend using one of those new online-only banks, such as Penta, Hufsy or Holvi. We personally chose to use Holvi, as opening an account and paying the Stammkapital took about 2–3 days, instead of 2–3 weeks.
Step 5: Notify your notary once you have paid your Stammkapital
With a business account opened and capital contributions made, one final confirmation email to the notary should be enough. They should then do the rest; finalising the incorporation documents, notifying the local commercial register, and providing original copies of incorporation to all shareholders. This last step shouldn’t take longer than a week, and once completed, you are finally ready to go.
The above five steps are core to what you need to do to found and register a company in Germany. Hopefully, this shouldn’t take longer than three weeks to complete. However, bear with the process, as it can take anywhere up to six weeks. Be patient and make sure to arrange as much as possible in advance. Also, pester your bank and notary whenever you see fit — it speeds things up.
I hope this will be of some use to you, as knowing this ahead of time could have saved us much delay and headache. As you might have guessed, this article is somewhat of a plug for us and our startup, Mietwise. Even so, we are two founders going through the (sometimes testing) steps of founding and running a new company in Germany. As such, we intend to share our experiences in the hope that they help others doing the same.
The Mietwise team,
Jonathan & Storm (yes, that’s his real name)