Villa, property, new building & Co. – risk and mistakes

Important, this article refers to the sale of:

• Exclusive properties like villas
• Large properties such as new buildings
• Special projects such as land, forest land, agricultural land & Co.

If you “just” want to sell a condo or “just” a house, then read on here: the 15 most common real estate selling mistakes.

Everyone tells you about the typical mistakes, here are the additional real insights for selling real estate!

Preface: Mistakes are human and (!) avoidable

There are the typical mistakes that exist when selling apartments, houses and land. Mistakes that you will also find on all websites!

You may have come across lurid headlines like “Avoid these 7 mistakes” or even “10 mistakes you should avoid” and of course even better “the 11 biggest mistakes when selling real estate” when researching the sale of your property. These “typical” mistakes when selling real estate, you already know from the article “15 mistakes you should avoid”.

Errors are quite normal, because as mentioned in the introduction, only a little over 271,000 properties are sold per year, let’s look at the German real estate market. A significant proportion of these are also purely B2B (i.e. from company to company). So hardly any private sellers know about the risks.

Checklist: 15 mistakes summarized

These really typical mistakes are also quickly enumerated:

1. Too little time planned for sales – Little time? Already comes pressure
2. The wrong time to sell – Situation and economy
3. Inaccurate description of the property – Exposé is written unprofessionally
4. Unfavourable photos in the exposé – Just like exposé, hardly any demand
5. Wrong target audience and strategy – For example, student apartment in newspaper instead of social media.
6. Value of the property is incorrectly assessed – properties do not find buyers
7. Documents and proofs are missing – Documents are not available
8. Property is not prepared for viewings – Does not convince prospective buyers on site
9. Underestimated effort of the sales process – So many get under pressure, e.g. if the new property is already financed
10. Sale and negotiation are considered easy – preparation is then only half-hearted and leads to purchase price losses
11. Selling phase is designed alone – selling privately without estate agent and expertise
12. Prospects stall too long – Valuable time is lost, property is burned by long listing time
13. Proof of financing (buyer) – creditworthiness of buyer not checked
14. Defects in the purchase contract are overlooked – rights but also deadlines
15. Burn property – Large or exclusive properties in mass portals

For small objects that are in private sale, certainly always a nice, first overview. But as soon as it is no longer “only” about 100,000 euros, but perhaps even about 1 million, 3 million or even 10 million, there are completely different factors that are important.

Golden rule for real estate: exclusivity as a sales factor

Rule number one:

The most important thing, exclusivity in the sale, when it comes to objects > 1 million euros.

Why? You can find out here, in this article.

Real estate in comparison

Let’s first look at the different types of buyers and how they review and value properties. The word “ETW” stands for condominium. We look at 4 groups of buyers:

1. Group: ETW / house 80sqm ~ 200.000 rather indifferent; means also the buyer side is mostly inexperienced, it is less examined
2. Group: 150sqm ~ 900.000 / critical buyer
3. Group: 200sqm ~ 1.200.000 / researching buyers
4. Group: 250sqm and over 1.5 M / examining buyer
5. Group: large properties, new construction, agricultural land, etc. – special real estate / very experienced buyers, mostly with their own real estate office

Group 1-3, i.e. properties up to 200sqm, are mostly in the regular property market, in which “only” private individuals are interested. The typical marketing strategy here is: A lot, helps a lot. Often 2, 3 brokers are commissioned and the property is already in 4, 5 portals, newspapers, maybe even on social media networks.

Group 4 buys properties over 200 sqm, but still private. Who buys in this segment, is usually already experienced and knows, with building fabric, appraisers and so on. At the latest here it needs the help of a broker in negotiations.

Group 5 buys properties in the flow. 50 units (i.e. apartments) a quarter or even a month. Some investors buy 1,000 units directly, whether in A-location, B-location or even C-location. Properties in need of renovation, former hotels that are converted into condominiums or even forest land, agricultural land, old prefabricated buildings, etc.

Rule number 2, from group 5:

Time is (usually) more important than money

Group 4 and 5 need exclusive intermediaries, anonymous real estate sales, instead of “broad” mass and marketing, with direct line to investors, real estate funds and family offices.

Family offices (investors) and funds, rather than private individuals

If you want to achieve a high purchase price when selling real estate, you have to consider a few things, especially rule number 1: Exclusivity!

Real estate investors, family offices, any kind of “institution” check real estate offers and they prefer anonymity when buying and selling real estate. It is not only about exclusive villas, but especially about new construction, apartment buildings, neighborhoods, building plots and much more.

So to be separated are individual units like apartment, house, row house, duplex, etc. from:

1. Real estate with several units (terraced house, neighbourhood, street…)
2. Exclusive real estate of wealthy and or well-known persons

Such objects should not appear in public portals, because ideally, only 1 interested party should exist, who quickly and immediately becomes a buyer. For objects over 5 million euros (read our purchase profile here), time is the most valuable factor.

Buyers must have a solid financial background, capital proofs should not be a problem. Knowing these specific real estate investors, private individuals and investment groups is our job. Accordingly, over 99% of our properties never show up anywhere!

Thus, the placement does not take months, but sometimes only 7 to 10 days.

The big advantage of off market real estate and selling to private individuals, family offices and others:

• Anonymity of buyers and sellers
• Good purchase prices, through exclusive offers

Apartment house in A-location with development potential.

Real estate burn – 10 portals, 10 brokers, … Danger

Real estate agent and real estate portal have risks? Yes, exactly.

Too many advertisements – Error 1

The big danger is this, your property is in portal 1, portal 2, portal 3, so solid buyers will be wondering:

Why is this property listed in so many portals?

Why. Real estate buyers compare offers (see group 1-5 above). So as soon as duplicates show up, people start to get skeptical:

• Why does real estate need so much marketing?
• Are there any drawbacks to the property?
• Is the purchase price way too high?

If your offer now stands between thousands of others, the probability to find interested parties decreases, as well as with the typical mistakes when selling real estate.

Too many brokers – mistake 2

Accordingly comes the 2nd fatal mistake that drives many private sales down in price: Because the object was not sold quickly, a second broker is called in, perhaps even a third, fourth and fifth broker.

You wouldn’t believe how often that happens. Even with high-priced properties from 10 million.

Danger: The object is burned.

Factors for the sale: buyer and psychology

Real estate is subject to 2 factors:

• Number-based
• Emotion-based

Emotions are quickly explained: everyone likes to buy nearby, they know their way around here. If it were purely a matter of numbers, there are usually always interesting alternatives (locations) with better returns. This means that emotional factors also play a role.

Of course, a “burnt property” does not mean that you lose 70%, 80% of the purchase price, but it delays the sale of real estate, sometimes even in the years. Especially in the case of houses. Often private sellers then have to accept a lower offered price.

After all, at some point it will have to be sold, especially if a new property has already been financed, whether the move is done or the new love lives in another city.

Anonymity, exclusivity: off market to known buyers

Selling anonymously isn’t just important for construction companies, these two groups usually don’t want to attract attention either:

1. Wealthy individuals and public figures
2. Disposal before inheritance

Wealthy individuals and public figures – In addition to price, there is the notoriety of the owners described earlier. In particular, wealthy individuals and public figures do not want their properties to be open to view. Whether fans or members of the press, anonymity is considered very, very important in millionaire circles.

Then there is another group that prefers to sell anonymously and thus at the same time benefit from the effect of the exclusive sale, a higher purchase price.

Sale before Inheritance – Even on the subject of selling property before death, there are many people who do not want their own children or closer relatives, often even neighbours to know about the property sale. This could lead to disputes before a sale is completed.

Tip. Are you still thinking about whether to sell or bequeath? Learn how to do it here: Bequeath correctly. Also for your children and loved ones: Inherit correctly.

Scarcity effect due to exclusivity: influence purchase price

This shortage (i.e. the targeted approach of individual investors) also has a positive effect on the selling price that can be achieved.

As long as the offer is only available to one person, it is extremely exclusive and accordingly, higher sums are accepted in order to secure this offer.

Another advantage, this ensures an accelerated buying process.

After all, the prospective buyer then knows that he or she is the only person to whom the property has been offered so far.

Conversely: If a property is on five portals and it hasn’t sold yet, why push it? So far, it doesn’t seem to be going well either.

Now imagine using that knowledge as a savvy real estate agent (buyer and seller) when you sell your property, maybe even for the very first time. So good tips are worth a lot, as is experience. Especially when it comes to negotiations.

Negotiation risk: price corrections and renegotiation

Even in the preliminary negotiations, people like to play the supply / demand card. In the real situation, sellers quickly become uncertain. Some buyers negotiate until the last second.

It’s the same with real estate agents when they know that three other agents have the property. Suddenly you can make a lot on the price with skillful negotiations, I could call somewhere else.

In short, the more exclusive the sale of a property, the smaller the asking price, the faster and more profitable land, exclusive and large properties are sold.

Real estate portals clearly offer the wrong target group here. Private buyers have no interest in such costly and also elaborate projects. But for project developers, regardless of whether they are private individuals, property developers or large investment funds, such offers can be very interesting. At least if you have the right network.

How many people in Germany do you think would buy a plot of forest land in, let’s just say, Bavaria? How many people would buy a stake in a mine that extracts metals, for example? That’s exactly what you need very exclusive and financially strong investors for. Water source, ore mine, forest property, it becomes even more interesting with real estate and investment objects, which do not correspond to the typical condominium or the terraced house. Such things are e.g. water sources, mines for copper, iron ore or forest land, as well as agricultural land.

You can already see how diverse the things are that are taught. The A&O is always a sound value.

Valuation and expert opinion – Well-founded… !!!!

How much is your property worth? Believe me, a majority of real estate agents will figure in a great total! You’ll think to yourself:

How much is my property worth?

Why do most real estate agents do this? Of course, private sellers usually get one or two comparative offers. So if agent A says your house is worth €900,000, agent B says €920,000 and agent C says €950,000, it’s clear who you’re going to choose.

The danger: overvaluation by brokers

Caution. This is a false valuation that ultimately leads to the very mistakes mentioned above: 10 portals, 10 brokers. In the end, your condo, house or apartment building is on countless portals and worse, maybe even with countless brokers.

Why? Because the first broker has not achieved a sale, due to the overvaluation.

Another essential source of danger:

Credit check of interests: Proof of capital

Credit checks are extremely important for real estate sellers. After all, you don’t want to be negotiating with one, two or even three people who can’t even afford your property or their land! The higher the value of a property, the more thorough this check and valuation of the property needs to be.

Such properties (20, 30 or more units) are of course no longer bought by private individuals, but usually by companies, institutions or said investment funds. Accordingly, the complexity of checking creditworthiness also increases. It becomes even more complex with foreign investors.

If you work with off market, because here, as with us, a large part of the buyers are already known from the history. Accordingly, capital evidence can be provided quickly, communication is good and accordingly, information, documents and evidence are also available quickly.

No-person GmbH: The GmbH without shareholders

The Kein-Personen-GmbH – or Kein-Mann-GmbH or Keinmann-GmbH – is a curiosity among German forms of corporate law, because it represents a GmbH that has no shareholders. In the Austrian version of the GmbHG, the acquisition as well as the pledge of own shares by the company is expressly prohibited in section 81 and declared ineffective. In Germany, on the other hand, there is no such restriction, which is why a GmbH there is granted the right, as a legal entity, to acquire its own shares without restriction. Thus, the acquisition of 100 percent of the business shares is also possible.

Causes for a no-man GmbH: inheritance, donation, termination & Co.

But how can there be a GmbH without shareholders? There may be different reasons for all GmbH shares to be owned by the GmbH itself: The GmbH can be registered as heir to the business shares and thus actually be left without a single shareholder in the event of inheritance – in the case of a one-person company or two-person GmbH, such a scenario is easy to imagine. Alternatively, the GmbH can also be given business shares by its shareholders or no shareholders remain in the GmbH on the basis of a caducation – i.e. the forced exclusion of shareholders who are not willing or able to pay and who have defaulted on their capital contribution in accordance with the articles of association.

Further reasons are, for example, the sale of shares to the GmbH; the abandonment – i.e. the relinquishment – of shares by the shareholder(s) in favour of a consideration, usually the release or discharge from existing (payment) obligations; or also the withdrawal of shareholders through ordinary termination.

Possible causes of the emergence of a no-person limited liability company:

• Heritage
• Gift
• Caducation
• Purchase/sale of shares
• Abandon
• Cancellation

Establish a GmbH: Legal form and alternatives

1. One-person GmbH: Solo founder
2. Two-person GmbH: Founder Duo
3. Limited liability company (GmbH)
4. Special case: Real estate GmbH
5. Legal forms: List

One-person GmbH: Solo founder

One-person GmbH – The GmbH model for solo founders! By appointing new shareholders or leaving existing shareholders, the GmbH model you choose can easily change. Whether it’s a one-person company, a two-person limited company or even a company that operates without any shareholders at all…. In each case, there are special features that you should be aware of, as they deviate from the norm of the conventional limited liability company.

• One-person limited liability company

Two-person GmbH: Founder Duo

Two-person GmbH – The GmbH model for founding duos! By appointing new shareholders or leaving existing shareholders, the GmbH model you choose can easily change. Whether it is a one-person company, a two-person GmbH or even a company that operates without any shareholders at all… In each case, there are specifics you should be aware of as they deviate from the norm of the traditional limited liability company.

• Two-person limited liability company

Limited liability company (GmbH)

Limited Liability Company (Gesellschaft mit beschränkter Haftung, GmbH) – The limited liability company is a German legal form that is founded by at least one person and managed by at least one shareholder. As the name already indicates, this corporate legal form is characterized by a limitation of liability for its shareholder(s).

• Limited liability company (GmbH)

Special case: Real estate GmbH

Immobilien GmbH / Vermögensverwaltende GmbH / Immobiliengesellschaft – In this article you will learn the basics about real estate companies. Who would think of founding a limited liability company when buying a house or a condominium? Admittedly, this makes no sense for owner-occupation, but it does for renting.

• Real estate company

Here you will find all the legal forms that can be chosen as a founder in Germany and a guide with a checklist:

Legal forms: List

Legal forms – What types of company are there? If you want to start your first company, then choosing the ideal legal form is one of the first steps in the process of setting up a company. Whether it’s a special real estate company or a start-up, I’ve summarized all the types of companies in Germany for you here.

• Legal forms: List

GmbH: foundation, advantages and disadvantages

In the following, you will find out everything you need to know about setting up a GmbH. How do you become a shareholder of a GmbH? What are the differences between incomplete and complete companies? What are the advantages? What are the disadvantages? How do I set up a company? What is a company? You will get an answer to all these questions and more – explained simply and quickly. Plus everything you need to know about taxes in Germany and real estate trading.

Learn everything important about it here! In addition, you will find all German types of companies and legal forms, as well as tips on how to start a company, including the special case of real estate GmbH, family foundation & Co.

If you’re considering setting up a limited company, the first thing you need to know about is the incorporation process: Who can form what exactly, when and to how many… what are the differences and similarities between the various forms of company law? It is equally important to know the advantages and disadvantages of a GmbH: From profit distribution to saving taxes – an overview of the seven most important founding criteria for you.

What are the founding criteria?

1. Number of shareholders
2. Management
3. Foundation
4. Company name
5. Funding
6. Liability
7. Profit distribution

Corporation GmbH: Management according to HGB

In the entrepreneurial world, there are many different forms of business you can choose from. They are roughly divided into two categories, namely sole proprietorship and companies, which in turn are divided into incomplete companies – these include dormant companies and BGB companies – and complete companies – partnerships, corporations and some more.

The limited liability company – in short: GmbH – is one of the so-called complete companies and, in contrast to incomplete companies, is not subject to the German Civil Code (BGB) but to the German Commercial Code (HGB). As a corporation, the GmbH has a more complex structure than other forms of corporate law, as it cannot be formed informally like a general partnership (OHG), but requires notarisation of the shareholders’ agreement.

Other typical corporations:

• Entrepreneurial company / UG (limited liability)
• Stock corporation (AG)
• European Company (Societas Europaea, abbreviated to SE)
• Partnership limited by shares (KGaA)

Legal form variant GmbH & Co KGaA – KGaA with general partner GmbH

Sometimes the GmbH also appears in combination with a partnership limited by shares (KGaA). For example, family businesses occasionally organise themselves as a Gesellschaft mit beschränkter Haftung & Compagnie Kommanditgesellschaft auf Aktien – in short: GmbH & Co KGaA. In this case, they form a stock corporation in the legal sense – however, the general partner as personally liable shareholder is not just any natural person, but specifically a limited liability company (GmbH). If the general partner is instead embodied by an AG, it is referred to as an AG & Co KGaA, and in the case of a Societas Europaea, as an SE & Co KGaA.

More about the individual hybrid forms:

• AG & Co KGaA – see stock corporation (AG)
• SE & Co KGaA – see Societas Europaea (SE)

Companies operating under the legal form variant of the GmbH & Co KGaA have only existed since the end of the 1990s, after open legal questions were clearly explained by a court ruling of the Federal Supreme Court (BGF). The licensing departments of some well-known football clubs have opted to set up a GmbH & Co KGaA, as have many other companies from a wide range of industries: Food, pharmaceuticals, clothing, publishing and digital media, to name but a few.

Examples of GmbH & Co KGaA companies:

• Asklepios Clinics GmbH & Co. KGaA
• Borussia Dortmund GmbH & Co. KGaA
• CoinIX GmbH & Co. KGaA
• Funke Media Group GmbH & Co. KGaA
• H&R GmbH & Co. KGaA
• Jack Wolfskin Ausrüstung für Draußen GmbH & Co. KGaA
• Merz Pharma GmbH & Co. KGaA
• Mineralbrunnen Überkingen-Teinach GmbH & Co. KGaA
• NorCom Information Technology GmbH & Co. KGaA
• Paragon GmbH & Co. KGaA
• Schwartauer Werke GmbH & Co. KGaA
• Wiley-VCH GmbH & Co. KGaA

CEWE Stiftung & Co. KGaA is a special case: In this company, the general partner is embodied by a foundation. In principle, the partnership limited by shares is possible in all conceivable combinations, as GUB Investment Trust KGaA points out as an example.

Continue reading here on the topic of setting up a family foundation:

• Establish a family foundation

Foundation & management: alone, as a partner or in a team

You want to found a GmbH and live your dream of independence in reality? No problem! Because for the foundation of a GmbH one natural – or legal – person is completely sufficient. If you want, you can be the sole founder of the company and thus automatically take over the management alone. Founder duos, on the other hand, usually share the management, whereas in a multi-person GmbH all shareholders can exercise their co-management rights. Optionally, the position of managing director can also be outsourced and filled externally. In this case, one speaks of a commissioned external managing director.

Whoever ultimately holds the power of management… There is an obligation towards the other shareholders to provide information on the affairs of the GmbH and to submit the books and documents to them for inspection upon request.

Tip: A limited liability company is an excellent way to set up a family business. Due to the flexible possibilities to adapt the share capital and the business shares to the financial framework of all family members and to manage the business across generations, parents, children and grandchildren can jointly participate in the corporation.

Entry in the commercial register: The most important applications for GmbH founders

The internal relationship determines the beginning of the company as the date contractually agreed between the partners. In the external relationship, however, the formation of the GmbH is dated on the first action on behalf of the company, i.e. at the latest with the binding entry in the commercial register. Registration costs you on average around 200 to 300 euros and is usually carried out by a notary.

Since you are registered in the commercial register as a GmbH shareholder, you can – just like a OHG shareholder – officially trade under a company name. This means that your company has a company name, i.e. an official name, which you can freely design together with the other shareholders. It doesn’t matter whether it is a personal company, a real company, a fancy company or a mixed company… As long as the name is in the sense of the prohibition of misleading and the name is “Gesellschaft…. mbH” or carries the suffix “GmbH”, almost anything is allowed.

Tax ID, Trade Licensing Office, Articles of Association & Notary Public

You will first receive a tax identification number – tax ID for short – from your local tax office, which serves as a basic requirement for all other formalities and applications. The registration of the GmbH as a company or commercial enterprise is carried out by the Trade Licensing Office for a processing fee of approximately 10 to 65 euros.

Moreover, a so-called obligation to make additional contributions can also be agreed in the shareholders’ agreement. This is an optional limited or unlimited obligation of the partners to make further limited or unlimited additional contributions on top of the existing contributions. Such a requirement is usually linked to certain conditions or the occurrence of certain situations, such as the pending redevelopment of a property. According to the Law on Limited Liability Companies (GmbHG), such agreed additional contributions must be in proportion to the GmbH shares of the individual shareholders. However, by means of an abandonment – i.e. the relinquishment of one’s own shares in the company – it is possible to free oneself from an existing obligation to make additional contributions.

Excerpt from the law – § 26 GmbHG:

(1) The memorandum and articles of association may stipulate that the shareholders may decide to demand additional payments (additional contributions) over and above the nominal amounts of the shares.

(2) The payment of additional contributions shall be made in proportion to the shares held.

(3) The obligation to make additional contributions may be limited in the memorandum and articles of association to a certain amount to be determined in proportion to the shares held.

25,000 Euro share capital, half for cash foundation

A prerequisite for registration in the commercial register is the payment of the required share capital of at least EUR 25,000 into the business account. At least half of the specified amount must be paid into the business account when the GmbH is founded in cash. For the residual value it is irrelevant whether it is a cash contribution or a contribution in kind such as real estate, machinery, real estate liens, etc., the main thing is that the capital contribution is recognisably noted in the shareholders’ agreement according to its type.

Possible contributions in kind:

• Real Estate
• Machines
• Car
• Office & business equipment
• Copyright
• Real estate liens
• Trademark rights
• Patents
• Receivables recoverable

In general, share capital is defined as the sum of all capital contributions and is given the term “subscribed capital” in the balance sheet. The exact value is determined by the shareholders in the shareholders’ agreement and can vary for the individual shareholders. The prescribed minimum amount is set above 100 euros, whereby all higher-value contributions must be a multiple of 50. In addition, a quarter must be paid in as a minimum on each capital contribution until summa sumarum 12,500 euros is reached.

Profits, Losses & Liability

In contrast to partnerships such as the general partnership (OHG) and the limited partnership (KG), a profit made by a limited liability company is not necessarily paid out directly. Rather, the partners decide jointly how to proceed with the profit: In the case of a profit distribution, the calculation of the profit shares is carried out in proportion to the shares of the individual partners. In the case of a reserve formation, on the other hand, the profit is retained and contributes to the increase of the equity capital.

The limitation of liability is a decisive factor for the name of a GmbH and often a criterion for choosing this and no other legal form of a company. As a corporation, the GmbH is a legal entity under private law. This has the consequence that the individual partners are limited in their liability to the corporate assets and do not have to participate in the losses with their private assets in the case of corporate debts. Before registration in the commercial register, however, it is still a pre-GmbH and thus all shareholders involved in the pre-foundation are liable without limitation, directly and jointly and severally.

However, a separate liability applies to the managing director: In case of doubt, he is the only one who must also be liable with his private assets.

GmbH Bodies: Managing Director, Supervisory Board & General Meeting of Shareholders

A limited liability company consists of several organs. These bodies are divided into:

1. The directors,
2. The Supervisory Board and
3. The shareholders’ meeting.

The managing directors deal with the day-to-day business and other matters of the company and represent their company externally in accordance with the GmbHG. The supervisory board is required by law above a certain number of employees and acts as the company’s supervisory body by appointing and advising the management, but also by monitoring and, in case of doubt, dismissing it. Alternatively, its establishment can also be determined within the framework of the articles of association. The shareholders’ meeting acts as the decision-making body of the GmbH.

If you want to know more about the individual bodies of a limited company, read on here:

• Corporate bodies of a limited liability company

Advantages: Reputation, credit rating, security, flexibility & Co.

After presenting the typical characteristics of a limited liability company, you have certainly already recognised the advantages that this legal form offers you: The high start-up capital also makes the GmbH a reputable legal form, which can be an advantage especially in matters of company financing. Financial institutions are therefore often willing to issue good loans and business partners and customers gain more security due to the good credit rating.

Furthermore, contributions in kind are also accepted, so that it is not solely a matter of the cash assets of a shareholder. The financial risk, on the other hand, remains low, since the partners are not held liable with their private assets. Taxation with corporation tax is also more favourable in many cases than having to handle everything – as is the case with partnerships – via income tax.

Flexible GmbH models further allow to establish a GmbH both alone and among partners as well as in a team – the management can be arranged internally and externally for one or more persons. Shares in the GmbH can be bought and sold by both individuals and legal entities. This makes the change of shareholders much easier.

• Respected legal form
• High credit rating
• More security for banks, business partners & customers
• Contributions in kind are permissible
• Low financial risk due to limitation of liability
• More favourable taxation with corporation tax
• High flexibility in structure & management
• Legal entities are accepted as shareholders
• Simple change of shareholders

Disadvantages: Trade tax liability, 25.000 Euro share capital & liability

The disadvantages, which the establishment of a GmbH can bring with itself, are likewise fast localized: On the one hand, the high share capital of at least 25,000 euros is an obvious problem for many start-ups. Also the social adhesion measures itself accordingly to at least 25,000 euro. The foundation may not take place informally, but is subject to extensive formalities and specifications. In case of doubt, the managing director is also liable with his private assets. Banks can easily leverage the exemption from liability if, despite high creditworthiness, they aim for a directly enforceable guarantee from the shareholders. Last but not least, the GmbH is subject to trade tax and, depending on the purpose of the company and how it is handled, has to pay further taxes.

• High share capital required
• Liability based on share capital
• No informal incorporation
• Possible private liability for managing directors
• Banks may require directly enforceable guarantees
• High trade tax levies

Evaluation: Invest, Risk & Hedge

After comparing the advantages and disadvantages, it becomes clear: At first glance, the formation process seems complex and much more extensive than, for example, with a civil law partnership (GbR)… Basically, however, the process is not overly difficult, especially if it is a one-person company. A limited liability company makes particular sense if business projects are planned that are exposed to a high level of risk, or if the managing director and shareholder are one and the same person. Business founders with monetary reserves and real estate investors are given many options for structuring and managing their dreams and entrepreneurial goals through a GmbH.

Especially for families, the GmbH is often a suitable legal form, since each family member can contribute to the company according to his or her qualifications, possibilities and reliability, and changes can easily be made across generations.

GmbH models with and without shareholders

As a sole shareholder, you are your own boss: you are founder, shareholder and managing director at the same time and can set up your GmbH entirely according to your wishes. If the entrepreneurial responsibility is too high for you or if you have plans for whose implementation you are dependent on several people, you can bring in as many co-founders as you wish or add them to the GmbH later. You can also divide the management authority among one or more persons. The multi-person GmbH is therefore the most common GmbH model.

By appointing new shareholders or leaving existing shareholders, the limited company model you choose can easily change. Whether it’s a one-person company, a two-person limited liability company or even a company that operates without any shareholders at all…. In each case, there are specifics you should be aware of as they deviate from the norm of the traditional limited liability company. In the following, you will learn the most important aspects for solo founders, founding duos and team founders in order to be able to make an informed decision regarding the form of company that is best suited to you and your plans before you start your own business.

• Two-person limited liability company
• One-person limited liability company
• No-Person-GmbH

Tip: For GmbH formations with a maximum of three shareholders, a sample protocol is available that can significantly simplify the formation process for you.

Immobilien GmbH: Management, Leasing, Marketing & Co.

You think the idea of a limited liability company is not bad at all and are now wondering how you can combine your capital company with the real estate business? A real estate company is a company that serves the financing, development, realization, leasing or marketing of real estate – starting with a single property up to a real estate portfolio in the three- or multi-digit range. The management of real estate property or third-party real estate on behalf of third parties can also be handled by a real estate company.

Small tip: When acquiring and/or managing real estate, make sure that all details are clearly stated in the partnership agreement.

Vermögensverwaltende GmbH – Variant 1: Advantages of the Immobilien GmbH

This variant of the asset-managing GmbH is often referred to as a leasing company due to the advantages associated with it. It impresses with several advantages, first and foremost impressive tax advantages: Instead of having to pay tax on the rental property privately at high rates (income tax, solidarity surcharge, church tax), a corporation placed in front of the property can save taxes to a considerable extent. The rental income is counted as business income and is therefore taxed at the corporate tax rate, which significantly reduces the overall tax burden.

Furthermore, the renting and leasing of private real estate property is generally not considered a commercial activity, which would have to be regarded as taxable. The pure asset management takes place outside the general economic traffic, which is why the trade tax is completely omitted upon application to the competent tax office. In order not to risk a later taxation with the full trade tax rate, you should outsource all commercial administrative as well as manual tasks as a precaution.

Attention: In the case of a real estate GmbH, the usual distribution of profits is not provided for, as the shareholders must charge the final withholding tax on their earnings in the event of a distribution of profits. Instead, any savings resulting from the tax benefits will be used to repay debts or as an asset investment.

Asset-managing GmbH – Variant 2: Advantages of the holding company

This variant of the asset-managing GmbH is – in contrast to the Immobilien GmbH presented above – a commercial real estate company. Here, direct participations are combined in a hierarchically superior parent company – called a holding company. In addition to holdings in corporations such as the GmbH and the AG, other corporate legal forms can also be incorporated. One of the purposes of a holding company is to save taxes: By combining the various company holdings, no capital gains tax is levied in the event of a profit distribution.

Taxes for GmbH shareholders: KSt, GewSt, USt & Co.

As a GmbH shareholder, you need to know about some types of tax, because with the establishment of your company you receive income from your business and must of course also pay tax on this. In accordance with tax law, sales tax must therefore naturally be paid, insofar as the GmbH does not only carry out tax-free sales. The following applies to all corporations: They are subject to corporate income tax. An exemption from taxation is possible under certain circumstances, for example if the GmbH meets the criteria for non-profit status. The payment of trade tax is also obligatory for a GmbH, even if all founding members were freelancers, because by virtue of its legal form it is always regarded as a commercial enterprise.

• Corporate income tax (KSt)
• Trade tax (GewSt)
• Value added tax (VAT)
• Income tax (ESt)
• Capital gains tax (KapESt)

Other taxes: LSt for employees, GrESt & GrSt

As an employer, the GmbH is of course also responsible for the payment of income tax for all persons in an employment relationship with it. Under tax law, the managing director is considered a dependent employee. When a property is purchased, a one-time land transfer tax is due. It is always demanded if the company not only rents real estate, but acquires it by purchase. For all real estate owned by the GmbH, the real estate tax is then also applied.

• Wage tax (LSt)
• Real estate transfer tax (GrESt)
• Property tax (GrSt)

You can find out what taxes you can expect with a real estate corporation here:

• Save taxes on real estate

Conclusion: Limited liability company – For whom is it worthwhile?

With versatile GmbH models you can start your dream of your own company in any constellation and have the possibility to react flexibly to changes in the number of shareholders. Whether you prefer to work alone or in a team – a GmbH offers solo founders, team founders and entrepreneurial partnerships a suitable legal form to handle even risky transactions skillfully and without private liability. The easy introduction of new shareholders and changeable management allow for a cross-generational management of the corporation and can also organize a secure succession.

In real estate terms, asset-managing real estate companies are particularly worthwhile for start-ups and investors with high private assets who wish to manage, rent out and, if necessary, sell their own and/or third-party real estate portfolios on a non-commercial (Immobilien GmbH) or commercial (Holding) basis. The GmbH is also a good choice for long-term transfers of real estate property to children and grandchildren. Furthermore, the capital contributed to the GmbH is protected even if private financial bottlenecks arise.

Comparison: Sole proprietorship, one-man GmbH, small AG or entrepreneurial company?

If you plan to set up your business on your own, you can choose between different legal forms of business: On the one hand, there is the classic sole proprietorship, in which you act as a freelancer or registered trader, or set up a small business. Alternatively, you can choose between the one-man limited liability company and the entrepreneurial company – often referred to as a “mini-GmbH” – or set up a small public limited company.

Sole proprietorship & one-person GmbH

Basically, there is not much difference between the two legal forms of a sole proprietorship and a single-member company, because in both cases you are the sole shareholder with sole power of management and sole power of representation. However, the decisive difference arises in the form of the liability issue: As a registered businessman (e. Kfm.) or registered businesswoman (e. Kff.) you are liable without limitation, directly and jointly and severally – as the sole shareholder of a one-person GmbH, on the other hand, you are liable exclusively for the business up to the amount of the capital contribution you have made.

Are you a sole proprietor yourself and no longer want to bear the enormous liability risk? Then you should think about converting your sole proprietorship into a one-person limited liability company. The change of form is easily accomplished, but can make a huge difference in case of losses! In order to avoid personal liability, as part of the registered traders (e. K.) you only need a notarial certificate confirming a value of at least 25,000 euros for your business and submit this to the commercial register together with the opening balance sheet. The sole proprietorship is practically brought into the GmbH as a contribution in kind.

Entrepreneurial company & small public limited company

Alternatively, you can consider setting up an entrepreneurial company (UG). Often referred to as a “small GmbH” or “mini-GmbH”, this legal form of company is a sub-form of the conventional limited liability company, but unlike the “normal” GmbH, it only requires a single euro as share capital. It is therefore particularly attractive for solo founders who do not have 25,500 euros in their bank account. Without the share capital of a GmbH, however, your image with the banks could be lower and your chances of getting a good loan could decrease.

The so-called “small AG” is primarily intended for individual shareholders who wish to keep their public limited company within a small group of people. Apart from the individual shareholder, who also equally assumes the role of the management board, only three other persons are required to be appointed as supervisory board members. However, the formation of a public limited company, regardless of its size, is very complex and more cost-intensive than the other common forms of corporate law. Therefore, a one-person limited liability company or an entrepreneurial company may be more suitable if you intend to found your company on your own. Alternatively, you may also consider setting up a sole proprietorship.

You can find out more about the different legal forms for solo founders here:

• Sole proprietorship (EU)
• Entrepreneurial company / UG (limited liability)
• Small public limited company – see AG

Reading tip: Legal forms & real estate GmbH

1. Legal forms: List
2. Real estate GmbH / Asset management GmbH

Legal forms: List

Legal forms – What types of company are there? If you want to start your first company, then choosing the ideal legal form is one of the first steps in the process of setting up a company. Whether it’s a special real estate company or a start-up, I’ve summarized all the types of companies in Germany for you here.

• Legal forms: List

Company types in detail:

• Sole proprietorship
• Registered businessman / registered businesswoman (e. K.)
• Civil law partnership (GbR)
• General partnership (OHG)
• Limited partnership (KG)
• Entrepreneurial company (UG)
• Real estate GmbH / Asset management GmbH
• Stock corporation (AG)
• Real estate stock corporation (REIT-AG)
• Societas Europaea (SE)
• Foundation / Family Foundation

Real estate GmbH / Asset management GmbH

In this article you will learn the basics about real estate companies. Briefly explained: A real estate company is a company that pursues the purpose of renting, developing, financing, realizing and/or marketing. It doesn’t matter if it’s one property or multiple properties. The management of residential and commercial real estate – in its own interest or as a service offered to third parties – is also a popular focus for real estate companies and asset management GmbHs. Find out more about the main advantages and disadvantages of buying real estate and the expected costs.

• Real estate company

• The Model Book – Amazon (Print)
• The Model Book English – Amazon (Print)
  Hardcover edition for € 19,90
• The Model Book – Amazon (Kindle)
• The Model Book English – Amazon (Kindle)
• All Book Recommendations

The Model Book contains many questions, many answers

For all these questions I have written an extensive work, in which young models quickly find a red thread, for the entrance into their model career. You’ve heard you look good before? Or phrases like “You should model!” If so, then maybe this book will be just right for you. In THE MODEL BOOK you learn as a new model everything you need to model. The book does not only show you which mental requirements you have to bring along as a young model in the advertising world, you also learn everything about photographers, test shootings, shows, jobs and castings.

Content of THE MODEL BOOK

Topics Overview:

• Mental strength as model
• Find the perfect model agency
• Agency application
• Construct model folder
• Test shootings with photographers
• Castings and E-Castings
• Photo shootings
• Showroom, fashion show and fair
• Advertising spots
• Beauty Tips for Models
• Healthy life
• Fashion history
• Haute Couture and Pret-a-Porter
• Modeling abroad
  …

Order now cheap & secure on Amazon:

• The Model Book – Amazon (Print)
• The Model Book English – Amazon (Print)
  Hardcover edition for € 19,90
• The Model Book – Amazon (Kindle)
• The Model Book English – Amazon (Kindle)

Recommendations from readers

Thorben (rated with 5 stars)

“Well I am basically enthusiastic about the book. It is not a patent recipe for success or says ‘This is how it has to be’, but it gives a good and clear overview of all important topics. It defines, in its opinion, all important “technical terms” from the industry, as well as procedures. How does a “Go-See” work, what should be in my model folder, Where is the difference between a parent agency and a boutique agency?

For the entry and the price an absolute must-have for models, but also for photographers who want to know more.”

Amazon customer (rated with 5 stars)

“Like the other book “Become a model”, this one convinced me of the same quality. This one is written in a little more detail. Have you always wanted to be a model and have the perfect measurements right from the start? Then this book is just right for you! Here you’ll get a great guide to what you need to know, from the perfect appearance in the agencies, how you behave at casting and much more. Super entry to the ascent :-)”

Amazon customer (rated with 5 stars)

“One day my dream is to be a big model who is allowed to run on the catwalks of this world and is photographed by big magazines. However, like many other girls, I probably did not know how I would achieve these goals and where the clues would lie. The author not only explains how to reach your goal, but also gives a realistic (!) insight into the world of models and agencies. I think this is very good, because many people see the model business as a land of milk and honey and lose themselves in it. In addition to this insight, tips on healthy eating are also adressed. It is always emphasized that you don’t have to starve yourself for the model job or only eat cucumbers etc., but you can also treat yourself to a little something to stay happy. The main thing is to eat a balanced and healthy diet. But I also found the selected beauty tips very helpful. From this book you can not only get an insight into the current fashion world, but also learn something about the general fashion and model history, which I find very interesting (and it increases the educational value of the book even more).

The book has also helped me in matters of self-confidence, charisma and enthusiasm of other people. From the tips and tricks you can cut off a thick slice of any area and integrate it into your everyday life. Although I had hoped for a few more pictures, Stephan Czaja does not only give great inspirations, but motivates and gives strength for the possible future career as a model. Thank you!!”

Amazon customer (rated with 5 stars)

“In the beginning I was skeptical if you could learn something in this book. Since I often work with Newfaces as a photographer, I was looking for a book to help them get started in the world of modeling. Thanks to this book, models are perfectly prepared for what’s to come. The author really goes through all the details of model life here and packages the whole thing in a cool design. Also the single graphics and markings I have never seen before in a book, which gives the book its own design and as far as one would read through the notes of a typical booker.
From casting to Polaroids there’s everything you need to know.”

Amazon customer (rated with 5 stars)

“The book is awesome!
Lots of useful information, tips from an insider of the industry and a great layout! The book opens the whole view on the world of the models to one. From the beginnings, like applications at agencies, poses at shootings and basic knowledge for models up to the professional model life everything is to be found what one must know. The best thing about it – it was written by the agency boss of a big model agency and if he doesn’t know how this world works, who else? I got the book as a birthday present from my mother and I really have to say that it helped me a lot. I read it completely in 2 days and just at the start of the new GNTM season it inspired me to try it out in the model world. I can recommend the book to anyone who is interested in the world of fashion, models and fashion!”

Recommended book values

More books? Here you can find all publications (Stephan M. Czaja): Books.

The Social Book

Social media marketing is more complex than ever. Facebook, Instagram, TikTok and YouTube now have more than two billion users. Any social media manager who knows how to address people and how to reach them is worth a lot in the company. Social media is the new instrument in marketing. No matter if Facebook Advertising, Group Marketing, Community Management, Instagram Stories, YouTube SEO or Influencer Marketing. The possibilities and means of social media expand month by month. The development of social networks is progressing and, of course, the complexity for individual social media managers is also increasing. The Social Book provides all the basics that beginners in the field of social media marketing need to run successful campaigns. From practical agency experience, many conversations with customers and of course also concepts and strategies, for individual social media channels or also more complex, cross-media influencers and advertising campaigns. More about: The Social Book.

The Business Book

Becoming an entrepreneur is not difficult, but being an entrepreneur is very difficult. Already knew 9 of 10 startups failed in the first 5 years. When I am on the road during my lectures, this is often the first step to make it clear to the young entrepreneurs that every person around them has to fail if they want to survive as entrepreneurs themselves. The reality check for entrepreneurs is pretty brutal. Nobody remembers the pyramids that fell. Everything talks about those who are still standing. It’s the same with entrepreneurs. Failure knocks on the door faster than you’d expect. This book is the result of my experience as an entrepreneur, the lectures and the reflection of the audience. More about: The Business Book.