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Advantages and Disadvantages

Lots of Advantages for Entrepreneurs

Both types of companies - the LLC and the Corporation - combine a number of properties that are advantageous for entrepreneurs. These include:

  • the possibility of an anonymous incorporation

  • the possible establishment without any initial capital

  • limited liability and, thus, the protection of the personal assets of the founder

All of these benefits also apply when a founding company’s business also acts primarily, or exclusively, in Germany. When asked which of the two types of companies to select, an aspiring entrepreneur now has the most concrete differences. Anyone who already knows at the time of their company’s creation that they will eventually increase their company’s growth and, correspondingly, its debt is often better served by the Corporation.

With the issuance of shares, a Corporation can easily acquire debt. However, as with the German stock corporation there is a certain danger of an unfriendly foreign takeover of the company; and, therefore, removal of its founder from power.

Formally a little more work but it is not impossible for the LLC to acquire outside capital.  For example, by bringing a silent partner into the company.

The LLC gives the founders more freedom as, in this example, the distribution of profits.

Overall for the entrepreneur a LLC usually means a little less formality so that legal form is often recommended and especially for small businesses. As previously described, a specific decision can be made only on the basis of the individual start-up project. To help with this decision, ALTON happily assists its clients with skilled technical advice.

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