How to Form a UG in Germany 2026: Steps, Costs and Timeline

The UG (haftungsbeschränkt) (often called the mini-GmbH) is Germany's most accessible limited liability company. Unlike the GmbH, which requires a minimum of €25,000 in share capital, a UG can be founded with as little as €1. That makes it attractive for founders on a small budget or anyone testing a business idea cheaply, but it carries the same bookkeeping obligations as a GmbH from day one.

Key Facts at a Glance

• Share capital: from €1 in theory, realistically €500–2,000. Must be paid in fully and in cash before the commercial register entry (contributions in kind are excluded under §5a(2) GmbHG).
• Costs: a solo formation with the Musterprotokoll starts at roughly €300–420 in pure fees; a custom articles of association runs €1,100–3,000.
• Timeline: typically 2 to 6 weeks from the notary appointment to registration.
• Notary is mandatory: the articles of association must be notarized, since August 2022 also by video.
• Reserve requirement: 25% of annual profit must be retained until share capital + reserve reach €25,000.
• Bookkeeping: double-entry bookkeeping, a balance sheet and monthly VAT returns apply immediately, just like any GmbH.

What Is a UG (haftungsbeschränkt)?

The UG is a special form of GmbH under §5a GmbHG. As a Kapitalgesellschaft, it provides full limited liability, creditors can only pursue the company's assets, not your personal assets. The key difference from the GmbH: the minimum share capital is €1 instead of €25,000.

Legally, the UG is a full limited liability company. It can sign contracts, hire staff, take out loans and sue or be sued. The suffix "(haftungsbeschränkt)" is mandatory, it must appear in full in the company name, the imprint, invoices and business letters. Leaving it off can expose you to personal liability toward business partners.

Whether a UG or a GmbH is the better choice depends on your capital, your customers and your growth plans. For the full comparison (including reputation, the reserve rule and conversion) read UG vs GmbH compared.

Requirements for Forming a UG

To form a UG you need:

• At least one shareholder, a natural person or legal entity. The one-person UG is expressly allowed.
• A managing director, of legal age, legally competent and not convicted of certain insolvency or economic offences. The shareholder and the managing director can be the same person.
• A registrable company name, with the suffix "UG (haftungsbeschränkt)".
• A company seat in Germany and a clearly defined business purpose.
• A business bank account in the company's name for paying in the share capital.

How to Form a UG: Step by Step

1. Choose the name and business purpose: Check the name's admissibility with the IHK (chamber of commerce) in advance. Keep the purpose broad enough to cover later activities.
2. Draft the articles of association: Use the simplified Musterprotokoll (up to 3 shareholders, 1 managing director) or a custom agreement.
3. Notary appointment & notarization: The articles must be notarized. Since August 2022 this can also be done by video conference.
4. Open the bank account & pay in share capital: The entire share capital must sit (fully and in cash) in the company account before the notary files with the commercial register.
5. Commercial register entry (Handelsregister): The local court (Amtsgericht) registers the UG. It's legally formed only from this point, before that you are personally liable as a "UG in formation".
6. Trade registration (Gewerbeanmeldung): Register with your local trade office. As a capital company, the UG is always commercial, even if the activity would otherwise be freelance.
7. Tax registration: File the tax registration questionnaire electronically via ELSTER. You then receive your tax number and, if needed, the VAT ID.

Musterprotokoll or Custom Articles of Association?

The Musterprotokoll is a statutory template (§2(1a) GmbHG) that bundles the articles of association, the managing-director appointment and the shareholder list into one document. It cuts notary costs sharply because §105(6) GNotKG excludes the usual €30,000 minimum transaction value here, fees are calculated on your actual share capital.

But the Musterprotokoll is only permitted if your UG has at most three shareholders and exactly one managing director and you need no custom clauses. As soon as you want vesting, multiple managing directors, a holding structure or special voting rights, you need custom articles of association, and the €30,000 minimum value at the notary applies again.

Rule of thumb: For the typical solo or two-person formation, the Musterprotokoll is enough. If you're planning investor rounds or a holding, save yourself the later restructuring and start with custom articles.

What Does Forming a UG Cost?

Formation costs split into one-off fees and the share capital (which is not a cost but a contribution to your own company). Unlike the GmbH, notary fees under the Musterprotokoll scale down with your actual share capital.

The commercial register entry is a flat €150, regardless of share capital, invoiced by the local court about two weeks after the notary appointment. The trade registration fee varies by municipality: Berlin €26, Munich €50, Hamburg €20, smaller towns often €15–25.

Worked example: solo UG with €500 share capital

Jonas forms a UG alone for his web-design work. He uses the Musterprotokoll, pays in €500 of share capital and opens a business bank account with a promo period.

Real out-of-pocket cost: about €310. Important: once the UG is registered, the €309 in formation costs come straight out of the share capital, Jonas is left with just €191 in liquid funds. That's exactly why practitioners recommend starting with at least €1,000 in share capital.

How Long Does Forming a UG Take?

From preparation to registration typically takes 2 to 6 weeks. The stages:

You can speed up the preparation most: open the account beforehand, transfer the share capital right after notarization (the notary waits for the deposit confirmation before filing with the register) and bring all documents to the appointment.

Share Capital: from €1, Realistically €500–2,000

Share capital is not a cost but a contribution to your own company. In theory €1 is enough, in practice that's risky, because the roughly €300 in formation fees come straight out of it. A sensible floor is €500, better €1,000–2,000.

Paying in a UG's capital follows stricter rules than a GmbH:

• Full payment required: the entire share capital must be in the account before the register filing (a GmbH needs only 50% at first).
• Cash only: §5a(2) GmbHG excludes contributions in kind, you cannot bring in a laptop or a car as share capital.
• Freely usable after registration: once the UG is in the register, you may immediately spend the money on software, rent, equipment or marketing.

More on paying in, using and increasing capital is in our detailed guide to GmbH share capital, the rules apply to the UG by analogy.

The 25% Reserve Requirement, the Real Price of the UG

The item UG founders most underestimate: under §5a(3) GmbHG you must place a quarter of your annual profit (less any loss carryforwards) into a statutory reserve. This money cannot be distributed, only used for a capital increase from company funds or to offset losses.

Once the reserve plus share capital reach €25,000, the requirement ends, and you can convert to a regular GmbH via a capital increase and amendment to the articles. It doesn't happen automatically; it needs a notary appointment and a register entry. Exactly how that works and what it costs is in converting a UG to a GmbH. At €20,000 annual profit it takes roughly five years to reach the threshold, budget the 25% as real money you cannot withdraw.

Ongoing Obligations and Costs from Day One

Formation fees are the easy part. As a capital company, the UG is subject to HGB bookkeeping requirements from the start, regardless of revenue or headcount:

• Double-entry bookkeeping instead of the simple EÜR (cash-basis P&L)
• Annual financial statements (balance sheet + profit and loss)
• VAT advance returns, monthly in the first two years, then depending on your tax burden
• Corporate and trade tax returns, annually
• Disclosure of the annual statements in the Bundesanzeiger

Tax-wise, the UG pays the same as a GmbH: 15% corporate income tax + 5.5% solidarity surcharge on top + trade tax (roughly 7–17% depending on the multiplier), around 30% combined, and that's before the 25% reserve. How to lower the burden is covered in our guide to trade tax for GmbH and UG.

The biggest ongoing cost lever is bookkeeping: a fully managed UG bookkeeping with an accountant costs €150–300 a month, plus €800–2,500 for the annual statements. Doing the ongoing bookkeeping yourself with software cuts exactly that line item.

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Expert opinion

Founding a UG for €1 is a myth – neither the notary nor the commercial register will accept it. Realistically, you pay in at least around €500 of share capital. But that isn't even the real cost: the real cost is the far more expensive bookkeeping from a Steuerberater that a UG needs from day one.

Frequently Asked Questions (FAQ)

Can I form a UG on my own?

Yes. The one-person UG is expressly allowed, a single shareholder is enough, and they can also be the sole managing director. The Musterprotokoll is designed for exactly this case and makes a solo formation especially cheap.

What does forming a UG really cost?

With the Musterprotokoll and one shareholder you're looking at roughly €270–420 in pure fees (notary, commercial register, Bundesanzeiger, trade registration). With two or three shareholders it's €380–560, and with custom articles plus advice €1,100–3,000. On top comes the share capital from €1, which still belongs to your UG.

How long does forming a UG take?

Usually 2 to 6 weeks. The longest step is the entry in the commercial register (2–4 weeks after the notary appointment). The wait for a notary slot and the court's processing time set the pace.

Can I form a UG online?

Yes. Since August 2022, notarization by video conference has been possible. You no longer need an in-person appointment, identification and signing happen digitally via the notary platform. The notary then files with the commercial register as usual.

How much share capital does a UG need?

Legally €1 is enough. In practice you should budget at least €500, better €1,000–2,000, so the formation fees are covered and the UG isn't immediately insolvent after registration. The full amount must be paid in cash and in full before the register filing.

Do I need a notary to form a UG?

Yes. Without notarization of the articles of association, no UG can come into existence, it's required by law. The notary notarizes the agreement and files the UG with the commercial register.

Do I always have to state "(haftungsbeschränkt)"?

Yes. The suffix "(haftungsbeschränkt)" must appear in full in the company name, on invoices, in the imprint and in business letters. Abbreviating or omitting it can expose you to personal liability toward business partners.

Conclusion

The UG is a cheap, legally full-fledged entry into the world of capital companies: limited liability from a few hundred euros, formed in a few weeks. The price is the 25% reserve requirement and the full bookkeeping and tax rules of a GmbH, from day one. Founders who meet these obligations cleanly lay the foundation for sustainable growth all the way to a GmbH.

Norman supports UG and GmbH founders with AI bookkeeping, VAT returns and tax filings, fully digital. Learn more: AI Bookkeeping and Taxes for GmbH and UG.