The choice of the legal form in Austria, starting a company in Austria

The choice of the legal form in Austria depends on your individual requirements and plans as an Austrian entrepreneur. Depending on the specific situation (size of the company, persons involved, financing, liability, etc.), the advantages and disadvantages of legal forms must be considered from the following aspects: civil law, social insurance, legal, and fiscal.

The so-called sole proprietorship has a single person in the foreground, and the owner raises the capital, leads the company and bears the risk all alone. He/she is also fully liable with private assets. A sole proprietorship is generally created with the commencement of activities. A sole proprietor with a business license must be insured with the Social Security Institution of Commerce and Industry.

Individuals can also set up a limited liability company in Austria. After the sole proprietorship, the limited liability company (GmbH) is the most common legal form here. The main advantage of the GmbH is, among other things, the fact that the liability is limited to the company, just like the name of the company already suggests. This legal form is particularly suitable for mergers of several people who want to have a joint business in Austria without risking their capital contribution too much. The establishment of a GmbH in Austria requires a partnership agreement that should take into consideration the overall situation of the company and that of the shareholders. The agreement must be made in the form of a notarial act. The company is established upon the entry into the Commercial Register. The business registration takes place only after the entry in the Commercial Register and the submission of an extract from it by the trade authority.

In Austria, there are also the so-called partnerships. These include the general partnership (OG) and the limited partnership (KG). The shareholders are fully and personally liable with their personal assets. The establishment of a partnership requires a partnership agreement between two or more shareholders. Each shareholder is subject to the health and pension insurance under the Commercial Social Insurance Act (Gewerblichen Sozialversicherungsgesetz, GSVG).

And finally, there is the civil law partnership (GesBR). This partnership is established when at least 2 persons with common resources have a common business purpose. Thus, a civil law partnership consists of at least two partners, of which both are fully and personally liable with their personal assets. The GesBR cannot be entered in the Commercial Register due to lack of legal identity.

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