UG or GmbH? A clear comparison for your start in Germany.
Both protect your personal assets, but they differ a lot on capital, cost and credibility. I'll help you choose the legal form that fits your business.
A decision with consequences, and one you don't have to make alone.
The UG and the GmbH are close relatives: both are limited liability companies (Kapitalgesellschaften), both limit liability to the company's assets, and both need a notary and the commercial register (Handelsregister). The big difference is the starting capital and how you come across to the outside world.
The UG (haftungsbeschränkt), the “mini-GmbH”, is the capital-light way in, startable from €1; the GmbH is the reputable standard, with €25,000 in share capital and top creditworthiness. Which one fits you depends on your plans, your market and your business partners. That's exactly what we look at together.
How we make the call between UG and GmbH together
Clarify your plans & capital
How much starting capital do you have, who are you founding with, and how fast do you want to move? That alone already paints a clear picture of whether a UG or a GmbH fits better.
Weigh up liability & credibility
Both forms protect your personal assets. We weigh up how much creditworthiness, outward image and business partners matter for your market.
Calculate costs & ongoing obligations
Notary, commercial register, accounting: we work through the real formation and running costs, so you won't get any surprises.
Form now, or convert later
You decide, I make it happen. If you start as a UG, we map out the later path to a GmbH cleanly from the start.
UG and GmbH side by side
| Criterion | UG (haftungsbeschränkt) | GmbH |
|---|---|---|
| Share capital | From €1 | €25,000 (at least €12,500 paid in) |
| Liability | Limited to the company's assets | Limited to the company's assets |
| Notary & commercial register | Yes, both required | Yes, both required |
| Formation cost (approx.) | approx. €400 to €500 (standard protocol) | approx. €600 to €800 (standard protocol) |
| Profit reserve | Must reserve 25% until €25,000 is reached | No statutory reserve requirement |
| Accounting | Must file balance sheets (double-entry bookkeeping) | Balance sheets + annual accounts / public disclosure |
| Image & creditworthiness | Solid, but perceived as a “mini-GmbH” | High standing, top creditworthiness |
| Conversion | Can later be converted into a GmbH | Already the target form |
When the UG is the right choice
The UG (haftungsbeschränkt) shines when you want to start with little capital and still protect your personal assets. You get going without raising €25,000, and build up equity step by step through the reserve requirement. The price: you have to set aside 25% of your profit until you reach €25,000, and some business partners see the UG as a “mini-GmbH”.
When the GmbH is worth it
The GmbH is the established standard among limited liability companies. It signals stability, holds up in credit checks, and opens doors with banks, larger clients and public-sector contractors. It requires €25,000 in share capital (at least €12,500 paid in). If you've got the capital and depend on outward image, you're usually better off with a GmbH.
UG first, then GmbH: the growth path
You don't have to commit forever. A proven route is to start as a UG and later convert it into a GmbH, once your reserves reach €25,000. That way you combine the capital-light start with the image you're aiming for. I plan this path right at formation, so the switch later runs smoothly. You can see the exact formation costs in the formation cost calculator, and which funding supports your start in my overview of startup funding in Germany.
Frequently asked questions about the UG and GmbH
UG or GmbH: which is better for my start?
Both protect your personal assets. The UG (haftungsbeschränkt) starts from as little as €1 in share capital and is ideal if you want to get going with little capital. The GmbH requires €25,000 (at least €12,500 paid in), but is seen as more reputable and has the better creditworthiness. If you're approaching larger business partners, banks or public-sector clients, you're often better positioned with a GmbH.
What does it cost to set up a UG or GmbH in Germany?
A UG with a standard protocol costs approx. €400 to €500, a GmbH approx. €600 to €800, in each case excluding share capital. On top of that come the commercial register (Handelsregister) entry (€225 since 1 June 2025) and the business registration (Gewerbeanmeldung) in Bremen (currently €32). In the formation cost calculator you can set up your own case in detail.
What is the UG's reserve requirement?
A UG has to set aside 25% of its annual net profit as a statutory reserve until its capital reaches €25,000. Only then can it be converted into a GmbH, though it doesn't have to be. This profit retention is the price for the low capital entry.
Can I later convert a UG into a GmbH?
Yes. Once your capital reaches €25,000 through the reserves you've built up, you can convert the UG into a GmbH. It's a proven route: start with little capital and grow into it. The switch involves a notary and some effort, which is why I plan for it from the start.
With a UG and a GmbH, is it really only the company's assets that are liable?
In principle, yes: with both, liability is limited to the company's assets, and your personal assets stay protected. A caveat: during the formation phase, with personal guarantees, or where management breaches its duties, there can be exceptions. We'll clarify your specific case in your free first call.
Which legal form fits me if I'm unsure?
Try the legal form finder: in a few questions you get a first read on the UG, the GmbH and other forms. Then, in a free first call, we look at your specific case together, because this choice has tax and legal consequences.
Orientation only, not legal or tax advice. Figures as of 2025/2026 and without guarantee. The choice of legal form has tax and legal consequences; I'll review your case specifically in your free first call. More answers in my FAQ.
UG or GmbH? Make the call with a clear head.
In a free first call we'll sort out capital, liability and costs, and choose the legal form that fits your business. If you like, I'll coordinate the whole formation with the notary, the bank and the authorities.
Find your legal form