Long-term strategies: How to make your company more sustainable with the right company form

The right choice of company form is crucial for the long-term success of your company. It not only influences liability and tax aspects, but also your flexibility and future prospects. Imagine you set up a sole proprietorship and later realise that this is not the best decision for your company. Growth was - that can be painful! According to a survey by the Federal Ministry for Economic Affairs and Energy, 60% of founders stated that they were insufficiently informed when choosing their legal form.

Here are some key points to consider when making your decision:

• Liability: In the case of a GmbH, your personal liability is limited to the company's assets, whereas in the case of an OHG or KG, shareholders are personally liable.
• Foundation costs: The formation of a GmbH requires a minimum capital of 25,000 euros, whereas an AG starts with 50,000 euros. Sole proprietorships, on the other hand, can be founded with minimal costs.
• Tax aspects: Each type of company has its own tax rules. Advantages and obligations - a point that many founders often overlook!

These considerations are important not only to achieve short-term goals, but also to sustainable to survive on the market.

"Choosing the right type of company can make the difference between success and failure."

So if you are asking yourself: "Incorporate a GmbH or AG?", make sure you have done your research well - you may also want to take a look at our article on the digital transformation in Germany to see how digital solutions can support your decisions.

When we analyse the various Company forms in Germany it quickly becomes clear that there is no "one size fits all"! Every legal form has specific characteristics that affect your Corporate strategy and development. Let's take a look at the most common forms: AG, GmbH, OHG, KG and the sole proprietorship.

Public limited company (AG):
The AG is ideal for larger companies that want to raise capital through the sale of shares. The minimum capital requirement here is 50,000 euros. Advantages are the simple transferability of the shares and a broad capital base. However, this also means more regulatory requirements and more complex administration.

Limited liability company (GmbH):
The GmbH is probably the most popular legal form for small and medium-sized companies in Germany. With a minimum capital of 25,000 euros, it protects the shareholders by limiting liability - ideal if you want to minimise risks! One disadvantage, however, is the higher start-up costs and bureaucratic hurdles compared to a sole proprietorship.

General partnership (OHG):
In an OHG, all partners have unlimited personal liability - which can quickly become problematic in the event of a financial mishap! This form can be particularly advantageous for personal transactions or client relationships, as it offers flexibility in decision-making.

Limited partnership (KG):
With a KG, you combine elements from the OHG and the limited partnership of an Anglo-American model. There are general partners (who are fully liable) and limited partners (who are only liable for their contribution). This structure offers interesting flexibility when raising capital.

Sole proprietorship:
The sole proprietorship is the easiest form of company to set up with minimal costs. But beware: here you are personally liable with all your assets! It is therefore important to carefully weigh up whether this is really the right choice. Model for your long-term Growth is.

Here is a brief overview of the advantages and disadvantages:

• AG: High capital procurement vs. high regulatory requirements.
• Ltd: Limitation of liability vs. bureaucratic effort.
• OHG: Flexible decisions vs. personal liability.
• KG: You can see that the choice of legal form not only determines the financial landscape of your company, but also shapes its operating dynamics and your personal risk exposure - no pressure, right?

"The choice of company form is like a good coffee - the better the selection, the more enjoyable it is to drink!"

If we look at the Differences between partnerships and corporations it quickly becomes clear that each legal form has its own unique characteristics and challenges. The choice between company forms such as OHG, KG and sole proprietorship versus GmbH or AG can have a significant impact on your day-to-day business. Here are some key differences and similarities at a glance:

• Liability: While shareholders of a general partnership and limited partnership have unlimited liability, the liability of a limited liability company or public limited company is limited to the company's assets. This means that as a shareholder in a GmbH, you are not liable with your private assets - a clear advantage!
• Foundation costs: The formation of a GmbH requires a minimum capital of 25,000 euros, while 50,000 euros are required for an AG. In contrast, a sole proprietorship can be founded without large amounts of capital - ideal for a quick start!
• Bureaucracy: Corporations such as the GmbH and AG are generally associated with higher bureaucratic requirements, while partnerships such as the OHG or KG require fewer formal requirements.
• Profit distribution: In the case of partnerships, profits are usually distributed according to heads or contractual agreements, whereas in the case of corporations, profits are distributed according to shares.

To summarise: the choice of the right legal form should be carefully considered! "Starting a business is like starting a marathon; you have to be well prepared to reach the finish line," says the famous entrepreneur Richard Branson. At the end of the day, the decision depends on what risks you are prepared to take and what vision you have for your company.

"The choice of corporate form is not only a question of money but also a question of philosophy."

When it comes to tax and profit distribution, you should be aware that these factors are crucial to the long-term health of your business. Each Company form has its own tax obligations and opportunities that can have a significant impact on your decision-making. Here is an overview of important points you should consider:

• Tax burden: Corporations (such as AG and GmbH) are subject to corporation tax, which currently stands at 15%, plus solidarity surcharge. In contrast, profits of partnerships (such as OHG and KG) are directly attributed to the partners and are therefore subject to income tax - this can lead to a higher tax burden!
• Profit distribution: In a GmbH or AG, distributions are made according to shares, which means that a clear structure is created for investors. In partnerships, on the other hand, profits are often distributed equally or according to contract - this can quickly lead to conflicts.
• Losses: A major advantage for corporations is the ability to offset losses against future profits. Partnerships, on the other hand, can only claim losses in their income tax return up to a certain point.

Another aspect should not be underestimated: the administrative costs! While a GmbH or AG has more documentation obligations and therefore incurs higher administrative costs, partnerships are often simpler in their management structure and therefore less expensive to administer.

"The choice of company form is not just a question of money, but also a strategic decision for your company. The future."

Ultimately, the decision as to whether you want to use a Found a limited liability company or AGstrongly depends on your personal goals and the planned Corporate development from. It is advisable to obtain comprehensive information and, if necessary, consult a tax advisor - because nobody wants to be surprised by unexpected tax claims at the end of the year!

Long-term Sustainability is not just a buzzword, but a Strategywhich can be strengthened by setting up the right company. A well-founded decision about the Company form has far-reaching consequences for your entrepreneurial The future. Whether you set up an AG, a GmbH, a OHG or a sole proprietorship - each of these forms has the potential to support or hinder your sustainability goals.

Here are some considerations that may help you:

• Capital procurement: A public limited company allows you to raise capital through the sale of shares. This is particularly advantageous for companies that want to expand and invest in sustainable projects.
• Liability risks: The GmbH offers limited liability, which means that your personal assets are protected. This gives you the financial leeway to realise innovative and sustainable ideas.
• Tax advantages: Certain company forms offer tax advantages Advantagesthat you can reinvest - ideal for projects that promote Sustainability and environmental protection.

"A smart choice of corporate form can be the key to a sustainable company."

An example: If you decide to set up a GmbH and want to reinvest your profits, you benefit from the opportunity to make tax-favoured investments in sustainable technologies. According to the Federation of German Industries (BDI), companies with a clear sustainability strategy have significantly higher growth rates than those without (source: BDI). This clearly shows that long-term success goes hand in hand with a clear focus on sustainability.

Also consider how your choice will affect the flexibility of your company. An OHG or KG can give you more freedom in decision-making, while an AG may have more bureaucratic hurdles. Again, the better prepared you are and the more information you have, the more strategically you can act.

Ultimately, you should ask yourself: Which business model best suits your long-term goals? Whether it's financial stability or social responsibility, your choice will have a direct impact on the success of your entrepreneurial vision.

"Sustainability requires innovation and commitment - so choose wisely!"

Deciding on the right type of company can feel like solving a puzzle. Especially for founders, it's important to have practical decision-making tools at hand to make the best choice. Here are some useful tips that can help you keep track of the Comparison of company forms to keep:

• Analyse your goals: Think carefully about what you want to achieve with your company. Do you want to expand? Or are you looking for a flexible structure? These considerations are decisive for the choice between an AG, GmbH or another form.
• Keep an eye on costs: Make a list of your start-up costs! A GmbH or AG entails higher start-up costs than a sole proprietorship. Don't forget to factor in running costs and administration costs - as these can add up over time.
• Consider liability risks: Think about your personal liability! With a GmbH, your personal assets are better protected than with a sole proprietorship or a general partnership. This can be an important factor for your long-term Security be.
• Clarify tax aspects: Find out about the tax obligations of each type of company. An informed choice can help you save a lot of money and, if necessary, reinvest in your company.
• Take bureaucracy into account: Some company forms require more bureaucratic hurdles than others. A GmbH, for example, has more documentation requirements than a sole proprietorship - this can influence your decision-making!

Founder and entrepreneur David Karp provides another valuable tip:

"The best decisions are not made overnight; they result from good thinking and thorough research."

Also consider consulting a management consultant! It worthwhile It is often advisable to seek expert advice in order to recognise potential pitfalls at an early stage and make strategic decisions.
Get ready - the choice of your Legal form will be decisive in determining whether your company flourishes or falters in the coming years!

Finally, remember: even if it seems tempting to simply make a quick decision - take the time to reflect! The more informed and strategic you are, the more successful your entrepreneurial journey will be.

Choosing the right Company form for your company is not just a formality, but has a decisive influence on your long-term strategy. Whether you set up an AG, opt for a GmbH or start as a sole trader - each option brings its own opportunities and challenges.

Remember that there is no "one-size-fits-all" solution. What works for one founder may not necessarily work for the next. Therefore, utilise all available resources and consult experts if necessary. And don't forget: a smart decision today could pay off tomorrow in the form of a flourishing company

Ultimately, the choice of your Legal form is not a one-off process, but should be reviewed regularly - especially as your company grows and develops.