Choosing the right legal structure for your business in Germany has personal, financial, tax and legal consequences. The two basic structures are shown below:

• Sole proprietorships and partnerships with personal liability
• Corporations with limited liability

Sole proprietorships and partnerships are mainly divided into the following types of businesses:

• Gesellschaft des bürgerlichen Rechts (GbR – company constituted under civil law)
• Kommanditgesellschaft (KG – limited partnership)
• Offene Handelsgesellschaft (OHG – general partnership)
• Gesellschaft mit beschränkter Haftung & Co. KG (GmbH & Co. KG – limited commercial partnership with a general partner and a limited partner)

Types of corporations with limited liability include mainly the following:

• Gesellschaft mit beschränkter Haftung (GmbH – limited liability company)
• Unternehmergesellschaft (UG – entrepreneurial company), also referred to as “Mini-GmbH” (mini LLC)
• Aktiengesellschaft (AG – joint stock corporation)
• Societas Europaea (SE – European company)

The most advisable structure for establishing a subsidiary in Germany is a limited-liability corporation, particularly in the form of a Gesellschaft mit beschränkter Haftung (GmbH).

A German GmbH is the equivalent to an American limited liability company (LLC) or a private company limited by shares (Ltd.) in the UK.