A partnership is created if at least two persons set up a business jointly. The partnerships include the following forms:

Company constituted under Civil Law (Gesellschaft bürgerlichen Rechts (GbR/BGB Company))

If you set up and run a business together with partners without additional contracts or agreements, your business is automatically a company constituted under Civil Law (GbR or BGB Company). They can be set up both by business enterprises and freelancers.

The provisions concerning companies constituted under Civil Law set out in the German Commercial Code apply. For the most part, they can be replaced by different contractual provisions. This means that you can draw up articles of association which take into account the requirements of the parties involved.

You must register the GbR or BGB Company at the business registration office (Gewerbeanmeldestelle) of the local authorities. It can be set up informally and becomes legally valid as soon as the partners begin their joint business undertakings. The business does not have to be registered in the Commercial Register. Otherwise the provisions for sole proprietorships apply.

Note: Many GbR or BGB companies quickly change to another legal form. A limited liability company (GmbH) or public limited company (AG) which has not yet been registered in the Commercial Register is still a GbR in legal terms. If freelancers choose this legal form then one speaks of partnerships, joint practice or similar.

General Partnerships (OHG)

The general partnership (OHG) is a company whose purpose is to jointly run a commercial enterprise. Your partners are all liable without limitation with their business and private assets. You must register an OHG in the Commercial Register.

Whereas it used to be the case that the name of the OHG and other partnerships always had to contain the name of at least one of the partners, nowadays you can choose any imaginary name.

Partnership Companies (PartG)

The equivalent of the OHG for freelancers is the partnership company (PartG). This form can also combine various liberal professions under a single corporate roof.

The partners are liable with their personal assets in the same way as for the OHG. In contrast to the OHG, the individual partners are held solely liable for their own professional mistakes alongside the partnership company.

The PartG must be registered in the Register of Partnerships at the local district court (Amtsgericht) using the services of a notary.

Limited Commercial Partnership (KG)

The limited commercial partnership (KG) may be the right choice if one or more investors make a financial investment in a partnership. It has two groups of partners:

• The entrepreneurs, as the general partners, have full control over the business since they are entitled to manage the company. However they are liable with their entire personal assets.
• The limited partners however are only liable with their investment. They are not involved in the running of the company, but have the right to inspect the books. They receive a part of the company profits.

You must register a KG in the Commercial Register. No minimum capital is stipulated. The articles of association need not follow a particular form.

Limited Partnership with a limited Liability Company as General Partner (GmbH & Co. KG)

A special kind of limited partnership is the GmbH & Co. KG, where the limited liability company (GMBH) is the general partner which also assumes the liability risk. The general partners are normally also the managing directors of the GmbH and are only liable up to the value of their investment in the GmbH & Co. KG. This legal form is beneficial if you want to limit the personal and business risk or to integrate external investors.

You must register a GmbH & Co. KG in the Commercial Register.