In the case of a joint-stock company (JSC), the share capital is higher than that of a limited liability company (GmbH). So the capital, which represents a guarantee function for the company towards third parties, is higher.
In order to clarify whether this legal form suits your business activity, it’s imperative to make forecasts for sales and to clarify the following: is it important for the company to be in close contact with third parties such as suppliers or other business partners? In this case, it may be more expedient to set up a joint-stock company instead of a limited liability company (LLC). Also, do you plan to quickly develop your business, which requires foreign funds? Then it would be advantageous to choose the legal form of a joint-stock company (LLC). Especially if you’re planning to bring banks, investors or other shareholders on board: this legal form is particularly well suited if third-party intervention is essential for the development of your business.
The advantages of a joint-stock company
When setting up a joint-stock company (LLC) you’re free to choose your company name. If you want to integrate your surname into the company name, you’re only obliged to add “LLC”. Even after you’ve founded the LLC, it’s still possible to change the name of your company. This requires an amendment of the articles of association by the general assembly. This amendment to the articles of association is a notarial act which must be entered in the commercial register.
The joint-stock company has an important advantage: shareholders are subject to a reduced financial responsibility: They are only liable for their share of the share capital. However, it’s still possible for the management to be held liable with their private assets – in the event of certain negligent actions, such as the obligation to keep accounts or in the event of a criminal offence.
The shareholders working within the LLC are regarded as employees. They are therefore entitled to the social benefits associated with this legal form and are compulsorily insured.
With regard to taxes, the legal form of the LLC offers another significant advantage: by dividing the profits, the progressiveness (i.e. the increase in tax rates for the higher profit shares) can be breached to a certain extent.
The advantages of a joint-stock company
When setting up a joint-stock company (LLC) you’re free to choose your company name. If you want to integrate your surname into the company name, you’re only obliged to add “LLC”. Even after you’ve founded the LLC, it’s still possible to change the name of your company. This requires an amendment of the articles of association by the general assembly. This amendment to the articles of association is a notarial act which must be entered in the commercial register.
The joint-stock company has an important advantage: shareholders are subject to a reduced financial responsibility: They are only liable for their share of the share capital. However, it’s still possible for the management to be held liable with their private assets – in the event of certain negligent actions, such as the obligation to keep accounts or in the event of a criminal offence.
The shareholders working within the LLC are regarded as employees. They are therefore entitled to the social benefits associated with this legal form and are compulsorily insured.
With regard to taxes, the legal form of the LLC offers another significant advantage: by dividing the profits, the progressiveness (i.e. the increase in tax rates for the higher profit shares) can be breached to a certain extent.
Checklist for building an LLC
Having weighed the many advantages and disadvantages of creating a joint-stock company, you now want to move forward. The following steps are required:
Conclusion
These few steps are mandatory if you want to set up a joint-stock company. Even if you have a lot of points to consider, the LLC company form can be a real advantage for the development of your company!
