Agentur: How to open your own agency in Germany

Contents

• Choosing the right legal form
• Where do I have to register my agency?
• What are the requirements? 
• Want to know more? 

Choosing the right legal form for your agency

If you want to set up a company in Germany, you’ll have to decide which legal form you want to use. For agencies, the UG (haftungsbeschränkt), GmbH or GbR legal forms are the most frequent choices. When opening an agency, you could also think about establishing a sole proprietorship.

Be aware that each legal form also differs from a tax perspective.

Here’s a brief overview of the common legal forms that are suitable if you’re setting up an agency:

Establishing an agency as UG (haftungsbeschränkt)

The UG (haftungsbeschränkt) – in English, an entrepreneurial company (limited liability) – is a special form of the GmbH. It’s particularly suitable for agency founders who want to set up a limited liability company with little start-up capital.

Advantages: A UG only requires a share capital of at least € 1, which means the total formation costs are lower than those of a GmbH.

Liability: One UG has limited liability. That means that partners are generally liable exclusively with the company assets and not with the private assets.

Establishing an agency as a GmbH

The shareholders of a GmbH – in English, a limited liability company – require a total share capital (Stammkapital) of € 25,000.

Advantages: The GmbH is a very popular and highly respected form of business, in Germany and also abroad

Liability: The partners do not assume any personal liability, but are liable with the company assets.

Establishing an agency as a sole proprietorship

The sole proprietorship is the simplest form of company formation with simple registration and no accounting obligation.

Advantages: No capital contribution is required.

Liability:  As a sole proprietor, be aware that you are personally liable for any debts or legal issues related to your business. This means your personal assets, such as your home or savings account, could be at risk if something goes wrong. It’s crucial to take steps to protect yourself, such as getting adequate insurance coverage. Consulting with a lawyer can also help you understand your options and minimise your risk.

Establishing an agency as a GbR

The GbR, or partnership under civil law, is a variant of the partnership in which all partners are also managing directors.

Advantages: There’s no minimum capital requirement and no notary is necessary.

Liability: Like with a sole proprietorship, GbR partners are also personally liable for damages related to the business.

Establishing an agency as a GmbH & Co. KG

To establish a GmbH & Co KG – in English, a ‘limited liability company & limited joint-stock partnership’ – at least one personally liable partner and one partner are required. First, the shareholders establish a GmbH (limited liability company). If this is entered in the commercial register, the GmbH & Co. KG can be formed. The minimum capital that must be contributed to a GmbH & Co. KG is €25,000. Material assets can also be contributed.

One advantage of the GmbH & Co KG is the fact that the GmbH assumes the role of general partner in the limited joint-stock partnership. The GmbH is liable for the full corporate assets, however not with the private assets of the partners – which differs from the usual KG (limited joint-stock partnership) with natural persons as partners. Liability risks for the persons involved in the company can thus be greatly limited.

Where do I have to register my agency?

Registering an agency as a trade

Regardless of the legal form you have chosen, you must register at the trade office (Gewerbeamt) responsible for your company headquarters. If you open your agency as a sole proprietorship, a simple business registration is enough.

After registering with the trade office, the tax office (Finanzamt) will automatically get in touch with you for tax registration. As soon as your documents have been reviewed and checked by the Finanzamt, you will receive your tax number (Steuernummer) and may issue invoices.

Get educated about business registration in Germany in our articles Registering your GbR: An overview of the Gewerbeanmeldung process and Registering a GmbH or UG: Here’s how!

Commercial register entry

As a public register, the commercial register (Handelsregister) documents the registered merchants in the area of a competent register court. The GmbH and UG legal forms must be entered in the Handelsregister.

Registering your agency with the Chamber of Industry and Commerce

If you set up an agency, membership in the IHK (chamber of commerce and industry) responsible for your area is mandatory. Like the tax office, the IHK will be informed by the trade office of your company incorporation and will then contact you.

Trade association for advertising agencies

Berufsgenossenschaften (Trade associations) are the providers of statutory social accident insurance (gesetzlichen Unfallversicherung) for companies and their employees. Be sure to register with the appropriate trade association. Even as a small business owner without staff, you are obliged to register.

If you have any questions concerning trade associations the German Social Accident Insurance (DGUV) can help you by calling 0800 60 50 40 4.

Professional associations for agencies

As the owner of an agency in Germany, we recommend that you become a member of an association that represents your interests and those of the industry nationwide. Depending on the type of agency you open, you can join one of the many specialised associations that are relevant to your sector. Examples include advertising and marketing agencies such as the German Association of Communications Agencies (GWA) and the German Digital Economy Association (BVDW). If you run a model agency, membership in the Association of Licensed Model Agencies (VELMA) is recommended. For insurance agencies, it’s the Association of German Insurance Brokers (Verband Deutscher Versicherungsmakler e.V. – VDVM). Find out which association is best suited to represent your interests to the public, politics, etc.

What are the requirements for setting up an agency in Germany?

Industry focus: Specialising in one sector

In the start-up phase, as with every business start-up, the first thing that matters is the business idea, i.e. in which specific business area you want to offer your knowledge and expertise to your clients through an agency. The first decisive factor here is whether and to what extent you already have a network of potential clients.

From freelancer to your own agency

As a rule, the creation of an agency is preceded by a successful stint as a freelancer in the respective market field. After a certain degree of success, freelancers should consider setting up an agency, which may offer various advantages:

• Development of further business areas
• Possibility to realise larger projects
• Higher fees

Costs: Establishing an agency with a financial vision

Every startup should have a detailed business plan. After all, careful financial planning is the pillar on which your success in self-employment stands. So take your time to include all the relevant cost points in your business plan before the agency is founded and during. Based on this calculation, you can start the cost forecast for your first fiscal year in a further step.

You can use the following list as a guide:

• Costs of incorporation, authorisations and licences
• Possible consulting costs in the start-up phase
• Acquisition costs for office furniture and equipment
• Costs for a website
• Marketing expenses
• Current operating costs: rental costs for office space, electricity and heating costs, IT, possibly accounting
• Personnel, taxes, various insurances
• Reserves for unforeseen events

The costs you have to cover will also determine your rates. Calculate how much agency service you can provide and sell as soon as your agency starts operations.

Hiring personnel or outsourcing?

Particularly in the start-up phase, it’s important to build up a network of potential partners to be able to fall back on external service providers and outsource areas of responsibility, whenever necessary. The advantage of outsourcing over hiring permanent employees is that it maintains flexibility and keeps running costs low.

If the number of your orders increases after starting your own business and you find that you have recurring needs for certain tasks, then it may be better to hire permanent employees. But be aware that responsibility increases with the hiring of employees. A prerequisite for the employment of permanent staff should always be that there are enough orders available to fill the working hours efficiently.

Already have plans for your agency in the field of marketing and advertising? Read more in our guide on setting up an advertising agency.