Profit strongly influences the optimal legal form

Activity: , founder.

€/year

The director's salary reduces the corporation's taxable profit

Share capitalUG €2,000 · GmbH €25,000
€
€

Recommendation for you

Sole proprietorship

With €60,000 profit you keep about €43,815 net per year as Sole proprietorship; formation costs about €50.

Costs Sole proprietorship

Trade registration
€50.00
One-time formation costs
€50.00
Bookkeeping
€1,800.00
Tax advisor
€1,200.00
Chamber of Commerce (IHK) dues
€150.00
Ongoing costs (annual)
€3,150.00

From what profit does a GmbH pay off?

From about €5,000 annual profit a GmbH leaves more net than a sole proprietorship – with your director's salary.

€50,000€100,000€0€50,000€100,000€150,000€200,000
Sole proprietorshipUG (haftungsbeschränkt)GmbHOngoing years without formation costs; director's salary at most the profit. Tap to set the profit.
ComparisonSole proprietorshipUG (haftungsbeschränkt)GmbH
Formation costs€16,235€11,490€36,974
Costs from year 2€16,185€8,615€10,249
Tax/year€13,035€1,440€744
Net/year€43,815€40,687€39,899
Effective tax rate22.9%29.8%29.8%

Advantages · Sole proprietorship

  • Almost no formation costs
  • No minimum capital required
  • Simple cash-basis accounting (EÜR) possible
  • Full decision-making freedom

Disadvantages · Sole proprietorship

  • Unlimited personal liability
  • The company cannot be sold
  • Progressive income tax at high profits
  • Less professional image
How this was calculated

Tax burden (annual) · Sole proprietorship

Income tax
€8,065.00
Trade tax
€4,970.00
Effective tax rate
22.9%

Characteristics

LiabilityYou are personally liable with your entire private assets
Unlimited
BookkeepingSimple cash-basis accounting (EÜR) is sufficient
EÜR
Reserve requirementNo reserve requirement
–

Which legal form suits me?

  • Sole proprietorship: Ideal for starting out at low cost
  • UG: Limited liability with little capital
  • GmbH: Professional, tax-optimal from about €100,000 profit

Startup Cost Calculator 2026 by Rechnerzentrale(opens in a new tab)2026 values