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Choice of legal form – What is suitable for your car wash?

If you want to start your own business with a car wash, you have to choose one of the possible legal forms. And so that you don't get lost in the maze of legal forms for companies, we will give you an overview of the most common ones here.

What is a GmbH?

The abbreviation GmbH stands for "Gesellschaft mit beschränkter Haftung" (limited liability company, Ltd.). You can start them with several people or alone. The incorporation is notarised and the company is entered in the commercial register. The great advantage of GmbH as a form of company is that it limits the liability of the partners. This means that none of them is liable with their private assets if someone sues or claims damages. Only the company assets are used for liability. A disadvantage, however, is that the minimum share capital of a GmbH is 25,000 euros.

The corporate form UG

The Unternehmergesellschaft UG (entrepreneurial company) functions very much like the GmbH form of company: It is also limited in liability, so your private assets are safe here. However, you only need one euro as the minimum share capital, but you are obliged to save up towards the minimum sum of the GmbH. Once the company makes a profit, a quarter of it must be saved.

Sole trader

If you are setting up a sole trader business, this can be done quite informally. You do not need a minimum share capital, but register a trade or choose the type of enterprise e. K., which also counts as a sole proprietorship – this stands for registered sole trader. You alone are able to make decisions, but are also liable with your private assets for any damages.  

The corporate form GbR

Just as simple as the sole proprietorship is the form of company GbR (Gesellschaft des bürgerlichen Rechts), i.e. the company constituted under civil law. It always comes about when at least two persons come together professionally to pursue a common purpose. The GbR can be founded completely informally – you need no starting capital and no entry in the commercial register. However, in the event of damage, you are all liable with your private assets.

The corporate form KG

In a limited partnership (Kommanditgesellschaft, KG) there is a so-called general partner and any number of limited partners. The latter increase the company's finances with deposits, but are not authorised to issue directives. In the event of damage, they are not liable with their private assets, but only with their deposits. The general partner, on the other hand, is liable with their private assets. No minimum share capital is prescribed for this, only the entry in the commercial register must be paid.

The legal form OHG

Nor does a general partnership (Offene Handelsgesellschaft, OHG), founded by at least two entrepreneurs, require a minimum share capital. However, it must be entered in the commercial register, and in the event of damage, all partners are liable with their personal assets.

These types of companies are suitable for car wash businesses

The legal form of a company depends first of all on whether you wish to set up as an individual or team up with others. It is particularly easy to set up as a sole trader, but it has the disadvantage that you are liable for damages with your private assets. The same applies to the GbR if you are two or more. If you are financially fully stretched after establishing your company, it is not so easy to raise the 25,000 euros minimum share capital for the GmbH (limited liability company). Accordingly, you can first set up a UG (entrepreneurial company, which is also limited in liability, and convert the legal form into a GmbH at a later date when the capital is available. 

Learn here how to put together a suitable business plan to secure the financing!