| Founding and Formal Complexity | · Sole proprietorshipLow effort, no minimum capital requirement. Registration in the commercial register (e.U.) is optional, but required once accounting obligations apply. | · Open Society (OG)Articles of incorporation with no formal requirements, registration in the commercial register, no minimum capital requirement. | · Limited Partnership (KG)Same as for a general partnership (OG). At least one general partner with unlimited liability and one limited partner. | · GmbHArticles of incorporation as a notarial deed, registration in the commercial register, minimum share capital currently €10,000 (of which at least €5,000 must be in cash). | · Flexible Corporation (FlexCo)Similar to a GmbH (minimum share capital of €10,000; shares starting at €1). Shares may also be transferred by means of a deed drawn up by an attorney or notary. | · GmbH & Co. KGTwo entities (general partner LLC and limited partnership) – higher costs associated with formation and contracts. |
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| Liability and Risk Segregation | · Sole proprietorshipUnlimited personal liability, including with personal assets. | · Open Society (OG)All shareholders are liable without limitation, personally, and jointly and severally for the company's obligations. | · Limited Partnership (KG)General partners have unlimited liability; limited partners are liable only up to the liability amount entered in the commercial register. | · GmbHLiability is generally limited to the company's assets. Personal liability (e.g., guarantees, director liability) remains possible. | · Flexible Corporation (FlexCo)As with a GmbH, liability is generally limited to the company's assets. | · GmbH & Co. KGOnly the GmbH has unlimited liability; limited partners are liable only up to the amount of their capital contribution—which effectively limits their liability. |
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| Taxation of Companies and Owners/Shareholders | · Sole proprietorshipProfits are subject to progressive income tax (up to 55 %). The profit exemption may be claimed. | · Open Society (OG)No corporate income tax. Profit distributions are subject to income tax for the shareholders. | · Limited Partnership (KG)Tax-transparent: Profit distributions are subject to income tax for the shareholders. | · GmbH23 % Corporate income tax on profits; an additional 27.5 % withholding tax on dividends. Minimum corporate income tax applies even in the event of a loss. | · Flexible Corporation (FlexCo)As with a GmbH: 23 % corporate income tax; 27.5 % withholding tax on distributions. | · GmbH & Co. KGDividends paid to individuals are subject to income tax, while the GmbH's share is subject to corporate income tax. |
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| Withdrawals, Remuneration, and Distributions | · Sole proprietorshipWithdrawals are possible at any time. Tax is levied on the profit, not on the withdrawal. | · Open Society (OG)Withdrawals in accordance with the articles of association. The profit share is taxed, regardless of the withdrawal. | · Limited Partnership (KG)Withdrawals in accordance with the articles of association. Limited ability for limited partners to offset losses. | · GmbHFunds are distributed through the managing director's compensation or profit distributions. There are no unrestricted personal withdrawals. | · Flexible Corporation (FlexCo)As with a GmbH, through management compensation or profit distributions. | · GmbH & Co. KGWithdrawals in accordance with the articles of association, similar to a partnership. |
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| Ongoing Accounting and Administration | · Sole proprietorshipMost often, a cash basis accounting system. Double-entry bookkeeping is required only once certain revenue thresholds are reached. | · Open Society (OG)Cash-basis accounting is permitted; double-entry bookkeeping is required once certain revenue thresholds are reached. Annual determination of profits. | · Limited Partnership (KG)As with the OG, there is additional work involved with capital accounts and profit distribution. | · GmbHDouble-entry bookkeeping, annual financial statements, and disclosure in the commercial register are mandatory. | · Flexible Corporation (FlexCo)As with a GmbH. Resolutions can be adopted more flexibly, for example, in writing. | · GmbH & Co. KGSubject to accounting requirements regardless of revenue. Bookkeeping and annual financial statements for two companies. |
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| Financing, Investors, Growth, and Succession | · Sole proprietorshipPartners or investors only through a change in legal structure. The business can be sold as a whole. | · Open Society (OG)New shareholders are possible through an amendment to the articles of association. This is not very attractive to investors due to unlimited liability. | · Limited Partnership (KG)Investors can participate as limited partners without being subject to unlimited liability. | · GmbHEquity investments and share transfers are possible (notarized deed). Suitable for growth, sale, and succession. | · Flexible Corporation (FlexCo)Intended for investors and employee ownership, e.g., through non-voting shares based on enterprise value. | · GmbH & Co. KGInvestors can join as limited partners. This is common in family-owned businesses and succession planning. |
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| Social Security and Personal Circumstances | · Sole proprietorshipAs a general rule, insurance is mandatory under the GSVG. Special rules apply to certain independent professions. | · Open Society (OG)Shareholders are generally subject to mandatory insurance under the GSVG. | · Limited Partnership (KG)Generally covered under the GSVG. For limited partners, coverage depends on their level of involvement and influence. | · GmbHShareholder-managing directors with a stake of more than 25 % are generally covered by the GSVG; otherwise, they are often covered by the ASVG. | · Flexible Corporation (FlexCo)As with a GmbH, this depends on the size of the ownership stake and the management structure. | · GmbH & Co. KGDepending on the role, such as serving as a member of the management board of the general partner GmbH or acting as a limited partner. |
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