GmbH

We’ve decided to pursue our lifelong dream of pulling up stakes, moving to Germany, and starting a glassmaking company. We’ve got some sweet ideas about alien-and-UFO-inspired Christmas ornament designs, and we’re pretty sure this venture is going to be a huge success. How could it not? Buuuut just in case, we want to set up our company so that our personal assets are protected if the organization goes bust.

In this United States, we’d probably set up an LLC, or limited liability company. But we’re not in the U.S. anymore, Toto, so we’re probably going to end up forming a GmbH instead.

GmbH is short for “Gesellschaft mit beschränkter Haftung,” which means “company with limited liability,” and it’s basically the German and Austrian equivalent of an LLC. The organization’s assets and debts are separate from the assets and debts of its shareholders; if the company ends up tanking, shareholders’ personal financial holdings can’t be seized to pay those debts.

Like LLCs, GmbHs are super common, though GmbHs can be a little more complicated to set up. In the U.S., it’s pretty easy to form an LLC. A lot of times, depending on the state, it can be done over the internet in a matter of minutes. But in Germany, the process is a little more complex. For one, we’ve got to prove we’re financially solvent; which means we have to come up with a minimum of €25,000, half of which has to be immediately available. And two, we have to have our director and shareholders named before we can apply for incorporation.

But once we get all of those pesky details out of the way, we’re ready to get down to business. And we can breathe easier while we do, because we know that, just in case the world goes absolutely insane and doesn’t fall in love with our extraterrestrial ornament line, thus causing our GmbH to go bankrupt, our personal assets will still be safe.