The most suitable form of organization for a mid-sized enterprise in Germany is the “Gesellschaft mit beschränkter Haftung” (in short: GmbH), a limited liability company which requires a minimum share capital of 25,000 Euros (however, only half of this amount must be paid in to start business). The reason for this quite high minimum capital requirement: The German legislator wants to prevent dubious and unsound entrepreneurs from using the GmbH, so the general public does not lose trust in this legal form. Thus, having to come up with at least 12,500 Euros in cash is meant as a “sobriety test”.
For very small start ups, there is an alternative company form, the so called “Unternehmergesellschaft mbH”, commonly referred to as “mini GmbH”. However, the mini GmbH is not taken quite seriously in the business world, so we cannot recommend going that route.
For English speaking clients we have prepared a guideline which explains the necessary steps for establishing a GmbH in Germany: Guideline for the Formation of a German Limited Liability Company (GmbH). For an overview of German company forms see here.