Starting a Startup—What Nobody Tells You: Should You Go with a GmbH Right Away, or Is an UG or a Sole Proprietorship Enough?

“Clothes make the man”—I first came across this saying in my German class when we were reading Gottfried Keller’s novella. Back then, I thought: Sure, appearances shouldn’t matter. But in the business world, unfortunately, things often look different. When we launched our startup, piparo, we decided to form a UG. After all, we wanted to “start small” at first. But we quickly realized how much this decision limited us in the eyes of others. Comments like: “Can you even afford the consulting services?” “Why aren’t you a GmbH?” “You’re still just a small operation.” Although we’re technically fully confident in our capabilities, the stigma always remained: UG = small business. And that influenced how we were perceived—whether we wanted it to or not. A name change? Sure, it’s possible. But: bureaucratic, time-consuming, and expensive. And as a bonus, the bank reassesses your creditworthiness afterward. It felt like we’d put a lot of time and energy into something that ultimately ended up holding us back. Why did we go down this path back then?

1. Commitment: We were still freelancers and wanted to keep the risks low. So the UG was a compromise. Lesson: Half-measures don’t work. Full commitment pays off.
2. Lack of Knowledge: We thought we could handle it without much professional advice. We were wrong. Lesson: Bring in professionals if you’re not the expert yourself. Looking back, I’d say: If you’re serious about starting a business from the get-go, you should reflect that in your choice of legal structure. And yet I hope that someday we’ll stop judging so heavily by “appearances”—whether it’s people or companies. What are your experiences? Do you have any tips on how a small business can still be taken seriously? Further links: https://www.linkedin.com/posts/pirmin-bahr-9a7098150_startup-graesnder-founder-activity-7251574461022248961-SSV5?utm_source=share&utm_medium=member_desktop