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Setting up a business in a European country is a great idea for a number of reasons. You can benefit from offering your products or services to the country’s wide consumer base. You can also gain access to the country’s highly-skilled workforce and grow your brand using different channels.
If you intend to set up a business in Europe in the near future, you will need to understand how to register it in the country you have chosen. In this guide, we will outline the essential steps to register a business in Europe.
Step 1: Perform Research
The very first step is to research the various rules and regulations your business will be under. Alternatively, you can look up the rules and regulations for various countries and then choose one based on the rules and regulations you find to be most favourable for your venture.
Step 2: Choose a European Country
Choosing a European country based on its ease of registration is just one aspect to consider. You will also need to consider various other factors to determine if the country will be the right fit for your venture.
For this reason, you should conduct a thorough market analysis when you are narrowing down your top pick. This includes researching:
- How long it takes to register a business
- The customer base size in the European country
- The average customer income
- The size of the labour pool
- Corporate tax rates
- Local promotional channels
- The country’s available trade hubs
- The country’s proximity to other European countries and markets
Some of the factors mentioned above may be more important than others depending on your business type. For example, Belgium offers a streamlined business registration process that can be completed in just ten days. However, the country also has a fairly high corporate tax rate.
Similarly, Denmark allows non-EU residents to set up private companies. However, it requires the company’s directors to be EU residents.
Step 3: Select a Company Type
Once you have chosen a European country for your business, you must decide on a company type. This step is crucial because your business type will determine the rules and regulations your business will be subjected to. It will also impact what protections you will enjoy as a business owner in the European country you have chosen.
Most European countries recognize different variations of standard company types. This includes Limited Liability Companies Partnerships, Sole Proprietor Businesses, and Joint Stock Companies.
Let’s look at the requirements for each of these company types in Germany as an example.
Limited Liability Companies
Germany recognizes two distinct types of limited liability companies known as GmbH and UG. Both these company types are great for business owners who would like to protect their private assets and project a strong public image for their business. This company type also allows you to appoint a third-party manager who is not a shareholder.
Some of the main requirements for this company type include:
- A minimum share capital of €25,000 if the business is a GmbH
- A minimum share capital of €1 if the business is UG
- The business must have at least one shareholder
Stock Corporations
Germany refers to stock corporations as Aktiengesellschaft or AG. This is a legal entity whose rights and obligations exist independently from its owners. The company’s shares are typically owned by various shareholders who also count as the company’s co-owners.
Many business owners favour this company type because it gives them the freedom to transfer shares easily and without having to perform formalities such as obtaining a notarial certification. The company’s existence also isn’t impacted when shares switch hands.
Stock corporations in Germany do include a major drawback in that they require a share capital of €50,000. They also tend to have a complex organisational structure, which isn’t ideal for business owners who would like to keep things simple.
Some of the main requirements for this company type include:
- A minimum share capital of €50,000
- The business must have at least one shareholder
- Abiding by heavy regulations as a listed public company
Partnerships
Germany refers to partnerships as Gesellschaft des bürgerlichen Rechts or GbR. This is a civil law partnership for arrangements consisting of two or more individuals or legal entities. This business structure is ideal for commercial traders and liberal professionals.
GbR are advantageous because they follow a straightforward legal structure. They also give you the freedom to delegate specific powers to any partners. Key decisions are often conducted through voting and partners share company profits and losses equally.
The downside of GbR is that each partner will be liable for the company’s debts using their personal assets. So if one partner has damaged the company in any way, everyone will have to bear the impact of the resulting loss.
Some of the requirements for GbR include:
- The partnership must consist of two or more individuals or legal entities
- The management responsibilities must be shared among partners
- No share capital is required.
Sole Proprietor
Sole proprietor businesses in Germany are called Einzelunternehmen. This refers to businesses run by a single person or sole trader.
Einzelunternehmen entities do not require a management team and all decisions are made by the single owner. They can choose to work alone or hire staff. There are three types of Einzelunternehmen businesses recognized in Germany. These are:
- Kleingewerbetreibende: Traders with small businesses
- Freiberufler: Liberal professionals
- Eingetragene Kaufleute or e.K: Registered merchants
Each of the above sole proprietor arrangements have distinct requirements, so it is important to understand each one if you intend to set up a sole proprietor business in Germany.
Step 4: Contact the Head Office in the Country
Every country has a government-run head office that controls business registration. For example, if you want to register a trade business in Germany, you will need to contact the Trade Officer or Gewerbeamt for the municipality you wish to set up your business in.
This office will tell you what documents or materials you will need to gather for the registration process. For example, to register your trade business in Germany, you will need:
- A valid ID document such as a passport
- A permit or approval depending on the activities your business will be engaging in.
- A trade card if your business will be engaging in activities that resemble those in the skilled crafts sector.
- A residence permit which lets you to perform commercial activities as a self-employed individuals
- Anywhere from €10 to €40 to cover your registration fee
- A police clearance certificate or documents from the Central Commercial Register
Step 5: Register the Business
Now you can finally complete the main business registration process. To do this you simply need to fill out business registration forms and submit them online. This process is generally straightforward, but you might need to contact the registration office for clarification on how to fill out certain form fields.
Once the forms are done, you will need to pay the registration fee and submit them online. This online registration process is useful because you won’t need to be physically present in the country to complete it.
Step 6: Set Up and Register the Business’s Bank Account
The previous step doesn’t conclude the registration process as you will still need to set up and register your business’s bank account. To do this, you will need to research the different banks in the country you have chosen and select the one that offers account types and terms that seem the most favourable for your business structure.
In some cases, you will need to be physically present to set up this bank account. However, you may be able to do this remote through a power of attorney.
Step 7: Protect Your Intellectual Property
Depending on the type of business you will be running, you may have certain intellectual property that needs to be protected before starting your operations. This includes trademarks, copyright, and patents.
You will therefore need to apply for these intellectual property protections once you have completed all the other business registration process steps.
How OpenAEuropeanCompany Can Help
As you can see, registering a company in Europe is a multi-step process that requires plenty of research and planning. If you need assistance with this process, please contact the professionals at OpenAEuropeanCompany. Our staff understand the business registration processes for each European country and can guide you through the process for the country you have chosen.
Get in touch with OpenAEuropeanCompany today and get a headstart on your company registration process.