Formal registration of companies has many immediate benefits for the companies and for business owners and employees. Legal entities can outlive their founders. Resources are pooled as several shareholders join forces to start a company. Formally registered companies have access to services and institutions from courts to banks as well as to new markets. And their employees can benefit from protections provided by the law. An additional benefit comes with limited liability companies. These limit the financial liability of company owners to their investments, so personal assets of the owners are not put at risk. Where governments make registration easy, more entrepreneurs start businesses in the formal sector, creating more good jobs and generating more revenue for the government.
Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in Germany. It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.
| No. | Procedure | Time to Complete | Associated Costs |
|---|---|---|---|
| 1 | Clear the name of company at the local chamber of industry and commerce | 1 day | no charge |
| 2 | A notary notarizes the articles of association and memorandum of association | 1 day | EUR 1104 |
| 3 | Open a bank account | 1 day | no charge |
| 4 | Notary public files the articles of association with the local commercial register, kept at local courts | 7 days | EUR 426 |
| 5 | Notify the local office of business and standards of the establishment of the company | 1 day | EUR 31 |
| * 6 | Register with the professional association of the relevant trade | 1 day (simultaneous with procedure 5) | no charge |
| * 7 | Notify the local labor office of the establishment of the company | 1 day (simultaneous with procedure 5) | no charge |
| * 8 | Register employees for health and social insurance | 1 day (simultaneous with procedure 5) | no charge |
| * 9 | Mail out the documentation to the Tax Office | 1 day (simultaneous with procedure 5) | no charge |