“What is … ?” – A legal form

The legal form refers to the legal structure of a company or organisation and determines how the company is legally organised, what rights and obligations it has and how it can act in a legal sense.
The choice of legal form has an impact on various aspects, including
liability,
taxation,
financing
and internal organisation.

There are various legal forms that differ in their characteristics.
The most common legal forms include:

• Sole proprietorship: One person runs the company and is personally liable for all liabilities.
• Partnership under civil law (GbR): A partnership in which two or more persons jointly manage a company and are personally liable
• General partnership (OHG): A partnership entered in the commercial register in which all partners have unlimited liability.
• Limited partnership (KG): A partnership with at least one fully liable partner (general partner) and one or more partners who are only liable up to the amount of their contribution (limited partners).
• Stock corporation (AG): A corporation whose capital is divided into shares. The liability of shareholders is limited to their capital contribution.
• Limited liability company (GmbH): A corporation in which the liability of the shareholders is limited to their capital contributions.
• Entrepreneurial company (UG): A UG is a special form of limited liability company (GmbH) in Germany, often referred to as a ‘mini-GmbH’. It was introduced to offer founders a simpler and more cost-effective way of choosing a limited liability company form

The choice of legal form is an important decision for founders and entrepreneurs, as it has legal, tax and operational consequences.