Can I Run an E-commerce Business as a GbR?

If you're considering starting a new e-commerce business, one of your first key decisions will be to select the right legal structure for your venture. In Germany, one option is the GbR, which stands for "Gesellschaft bürgerlichen Rechts" or "Partnership under the German Civil Code." In this article, we'll explore what a GbR is, its advantages and disadvantages, and whether it's a suitable legal form for running an e-commerce business.

What is a GbR?

A GbR is a form of partnership that is similar to a sole proprietorship, with the key difference being that at least two persons are required to establish it, whereas a sole proprietorship can be formed by just one person. The GbR is regulated under the German Civil Code (BGB), unlike other legal forms such as GmbH (Limited Liability Company) or UG (small GmbH), which are governed by the German Commercial Code (HGB). One of the advantages of a GbR is that it does not require articles of association or entry in the commercial register, and only a simple registration with the municipality is necessary. Additionally, there is no prescribed share capital for a GbR, which can make it a cost-effective option for starting a business.

Advantages of a GbR

The main advantage of a GbR is its simplicity and cost-effectiveness. Unlike other legal forms that require notarised articles of association and entry in the commercial register, a GbR can be established with just a simple registration with the municipality. This means that there are no notary and district court costs involved, making it a cheaper option to set up compared to other legal forms. Additionally, there is no minimum share capital requirement for a GbR, which can be advantageous for e-commerce businesses that may not require a significant amount of capital to start, especially if products are sold via marketplaces or with the help of dropshipping.

Disadvantages of a GbR

Despite its simplicity and cost-effectiveness, a GbR also has some important disadvantages that entrepreneurs and businesspeople should be aware of.

Lack of Notarised Articles

One significant disadvantage is the lack of notarised articles of association. This may save in the range of 600 EUR in legal fees, but it greatly increases the risk of disputes between partners. Unlike other legal forms that have predefined rules and regulations, a GbR does not have ex officio regulations, and conflicts between partners may need to be settled in court. This can be time-consuming and costly, and it can potentially disrupt the operations of your e-commerce business.

Unlimited Personal Liability

Another disadvantage of a GbR is the issue of unlimited personal liability. In a GbR, all partners have the power of representation with no restrictions, which means that each partner can take actions, such as borrowing money or making decisions, without the knowledge or consent of the other partners. Additionally, all partners are jointly and severally liable for any debts of the GbR with their full personal assets. The implication of this is that every partner assumes personal liability for any financial obligations that the business may incur. In fact, each partner can be held fully responsible alone or with the other partner(s). As you can imagine, this can have serious implications when the business gets into trouble or if there are conflicts among the partners.

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Summary and Our Opinion

While it's relatively easy to start an e-commerce business and a GbR may seem like an attractive option due to its simplicity and cost-effectiveness, it may not be the best choice for running an e-commerce business.

The lack of notarised articles of association and the personal liability of the partners in a GbR can pose significant risks and potential conflicts. In our opinion, a UG (Unternehmergesellschaft), which is a form of a limited liability company, may be a better option for running an e-commerce business in Germany. With a UG, important issues can be legally regulated between the partners in advance and the personal liability of the partners is limited to the share capital. Once the share capital has been paid in, the partners no longer have any private liability for business debts. The share capital of a UG can officially be as low as 1 EUR, but we recommend a minimum of 300-500 EUR to ensure financial stability and credibility. Put simply, we’d suggest that you don’t take the risk – use a business structure like the UG, with limited liability and notarised articles of association.

We strongly recommend consulting with a legal professional or tax advisor to ensure compliance with German laws and regulations when starting and operating an e-commerce business as a GbR or any other business structure. If you have concerns and want professional assistance with your business incorporation, get in touch with our team at GmbH-UG.com for support from A to Z as you set up your new e-commerce business in Germany.