Sole Proprietorship (Einzelunternehmen)

A sole proprietorship is a business solely owned by an individual. The sole proprietor operates the business autonomously without receiving directives and does not need to consult with others for business decisions. All profits go directly into the owner’s pocket. As a sole proprietor, you enjoy maximum flexibility and independence. However, you also bear all the risks. The owner is solely responsible for any business mistakes and losses. In such cases, the sole proprietor is liable not only with the business assets but also with personal assets, with no limit to the liability. It is not possible to limit liability in a sole proprietorship.

Sole proprietors are generally required to participate in social insurance. The proprietor must personally enroll and pay for statutory health insurance, long-term care insurance, pension insurance, and unemployment insurance.

Limited Liability Company (GmbH)

What Does the Abbreviation "GmbH" Mean?
The abbreviation "GmbH" stands for "Gesellschaft mit beschränkter Haftung," which translates to "limited liability company." This is a common legal form for corporations in Germany, as well as in Austria and Switzerland.

In a GmbH, shareholders are not personally liable with their private assets but only with their contributions to the company's share capital. This offers a degree of protection for shareholders in the event of financial difficulties or insolvency of the company.

What is a GmbH?
A GmbH, short for "Gesellschaft mit beschränkter Haftung," is a corporation and one of the most common legal forms for businesses in Germany, Austria, and Switzerland. It is characterized by the following features: