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The choice between a GbR (civil law partnership) and a UG (limited liability company) depends on various factors, including the size of the company, liability considerations, flexibility, tax implications and long-term plans. Here are some of the pros and cons of both legal forms:
Advantages and disadvantages of a GbR:
Advantages:
Easy formation: Forming a GbR is relatively straightforward and does not require any formal notary contracts.
Flexibility: GbRs offer more flexibility in the drafting of contracts and the internal relationships between the shareholders.
Lower costs: The start-up costs and running costs are usually lower than for a UG.
Shared Control: All shareholders have an active role in the management and control of the company.
Cons:
Unlimited liability: The partners are personally and unlimitedly liable for the obligations of the GbR, which represents a financial risk.
Limited financing options: It may be more difficult to attract investment or borrowing as the risk of liability is higher.
Lack of seriousness: GbRs are often seen as less serious than legal entities such as GmbHs or UGs.
Limited legal personality: A GbR does not have its own legal personality, which can potentially lead to legal challenges.
Advantages and disadvantages of a UG (limited liability):
Advantages:
Limited liability: The personal liability of the shareholders is limited to the capital contributed to the UG.
Seriousness: UGs are often considered more serious than GbRs because they offer limited liability.
Low start-up capital: Founding a UG requires less start-up capital than a GmbH.
Fast foundation: The UG can be founded faster than a GmbH.
Cons:
Limited flexibility: Establishing and managing a UG is subject to more formal requirements than a GbR.
Lower funding opportunities: The UG may have a harder time attracting investors or obtaining credit compared to a GmbH.
Long-term planning: As the company grows, the UG may need to be converted to a GmbH to support larger business activities.
The choice between a GbR and a UG depends on the individual goals and needs of the company. It is recommended that you seek professional legal and tax advice in order to make the best decision for your specific situation.