In short: Legal forms fall into three families. Sole trader (simple, no minimum capital, but full personal liability for everything the business owes), partnerships (a general partnership means the partners are personally liable; a limited liability partnership, or LLP, shields the members) and limited companies (liability capped in exchange for capital and more paperwork). In the UK a private limited company (Ltd) needs no minimum capital at all, while a public limited company (PLC) requires £50,000 of nominal share capital; Ireland mirrors this with the LTD, the DAC and the PLC. The striking thing is how universal this is: almost every country has a limited-company form — Germany's GmbH (€25,000) and UG (from €1), France's SARL and SAS, the Dutch BV, Spain's SL, Italy's SRL, Poland's sp. z o.o. and Portugal's Lda — just under a different name and with different capital. As a rule of thumb: start small and solo, move to a limited company once liability risk or growth demands it, and always confirm the setup with a solicitor, an accountant and your local companies registry.
Business structures compared: which legal form fits?
"Should I just register as self-employed, or set up a limited company straight away?" — almost everyone building something of their own runs into this question. The good news: behind all the abbreviations sits a simple system of three families, and the choice comes down to one thing — how much personal liability are you willing to carry, and how much capital and paperwork will you take on to avoid it? This overview sorts the legal forms in the UK and Ireland first, then places them alongside the rest of Europe so you can see the common pattern.
Think in three families. Sole trader, partnership and limited company — behind all of them sits the same bargain: liability traded against capital and paperwork.
Sole trader: simplest and cheapest, but full liability. No minimum capital and few formalities — but you are personally and without limit liable with all of your private assets. In Ireland it works the same way, as a sole trader registered for tax.
Partnership: founding together. In a general partnership the partners are personally, jointly and severally liable; a limited liability partnership (LLP) shields the members' private assets while keeping the flexible partnership structure.
Limited company: liability protection for capital. A UK private limited company (Ltd) needs no minimum capital, a public limited company (PLC) needs £50,000 of nominal share capital; Ireland offers the LTD, the DAC and the PLC. Liability is limited to the company, but running costs rise.
Almost every country has its own "limited company". Germany's GmbH and UG, France's SARL and SAS, the Dutch BV, Spain's SL, Italy's SRL, Poland's sp. z o.o. and Portugal's Lda — same principle, different name and capital.
Always involve a solicitor, an accountant and the registry. Company formation and the register filing follow country-specific rules, so get professional formation advice before you sign — a UK or Irish company, for instance, is set up without a notary, whereas many European limited companies require a notarial deed.
Limited liability comes only at the price of more capital and admin – the basic rule of every legal form.
Keep your formation capital, reserves and the running costs of your legal form in view: set up a dedicated budget in Kontoo — private, on your own device. (General education, not legal or tax advice.)
In depth
The three families — and the one trade-off
In almost every country legal forms sort into three families, and behind them sits the same bargain: liability traded against capital and paperwork. The sole trader is the fastest and cheapest route — no minimum capital, few formalities. The price is that you are personally and without limit liable with all of your private assets; in Ireland the sole trader works the same way. A partnership pools several founders. A general partnership needs no minimum capital, but the partners are personally, jointly and severally liable; a limited liability partnership (LLP) keeps the flexible partnership structure while shielding the members. The limited company flips the trade-off: in exchange for share capital and more paperwork you get liability limited to the company itself. A UK private limited company (Ltd) can be formed with no minimum capital at all, while a public limited company (PLC) requires £50,000 of nominal share capital; Ireland offers the private LTD, the designated activity company (DAC) and the PLC. More protection almost always means more capital, more bookkeeping and higher running costs.
Market comparison — every country has its limited company
What stands out is how similar the countries are: almost everywhere there is a limited-liability company built on the same template, just under a different name and with different capital. In Germany the GmbH needs €25,000 of share capital (at least €12,500 paid in), while the UG starts from €1 and the AG requires €50,000; Austria cut its GmbH minimum to €10,000 (at least €5,000 in cash) on 1 January 2024 and added the new FlexCo, which shares that €10,000 minimum but lets each shareholder's stake be as small as €1. In Switzerland the GmbH needs CHF 20,000 and the AG CHF 100,000. France (SARL, SAS/SASU), the Netherlands (BV, minimum capital effectively abolished, from €0.01), Spain (SL, from €1 since 2022 instead of €3,000), Italy (SRL at €10,000 or the simplified SRLS from €1), Poland (sp. z o.o. at 5,000 PLN, or the newer PSA from 1 PLN) and Portugal (Lda, €1 per shareholder) all follow the same principle. The trend of recent years is clear: minimum capital keeps falling to make starting up easier.
How to choose — start small, switch later
A sound rule of thumb: if you are starting solo and small, the sole trader route is simplest — no capital, little bureaucracy, full control. Once real liability risk appears, or you want to bring in investors or scale up, the case for a limited company grows strong. Switching is expressly possible: many people begin as a sole trader and incorporate later once the business proves itself. What matters is keeping the numbers in view — not only the formation capital, but also the ongoing costs of bookkeeping, accountancy and annual accounts, which rise with the legal form. And because every country has its own rules, and details like paid-in requirements, reserves and registration duties differ, the decision should not rest on gut feeling alone: for the formation — especially for limited companies — bring in a solicitor, an accountant and, where available, a business-support or enterprise adviser before you commit.
Education, not advice. How we work and check figures: Editorial. Figures as of 2026, last reviewed 07/14/2026.
Frequently asked questions
What is the most important difference between the legal forms?
Liability. As a sole trader and in a general partnership you are personally and without limit liable with your private assets; in a limited company (or an LLP) liability is limited to the business. You buy that protection with share capital and more paperwork.
How much capital does a limited company need?
In the UK a private limited company (Ltd) needs no minimum capital — companies are commonly formed with shares of just £1. A public limited company (PLC) requires £50,000 of nominal share capital. Ireland's private LTD likewise has no minimum. By contrast Germany's GmbH needs €25,000 (at least €12,500 paid in) and Switzerland's GmbH CHF 20,000.
Can I really start with almost no capital?
Yes, in several limited-liability forms. The UK Ltd and the Irish LTD need no minimum capital, Germany's UG starts from €1, Spain's SL from €1 (since 2022), and the Dutch BV has effectively no minimum (from €0.01). Some forms then require you to build reserves until a higher figure is reached.
What is an LLP, and how does it differ from an ordinary partnership?
A limited liability partnership (LLP) keeps the flexible structure of a partnership but limits the members' personal liability, much like a company. In an ordinary general partnership, by contrast, the partners are personally, jointly and severally liable with their private assets.
Does the 'limited company' exist abroad too?
Almost everywhere — just under a different name. It is the GmbH in Germany, the SARL or SAS in France, the BV in the Netherlands, the SL in Spain, the SRL in Italy, the sp. z o.o. in Poland and the Lda in Portugal. The principle of limited liability is the same everywhere; only the capital and formalities differ.
Do I need a solicitor or notary to set up?
In the UK and Ireland a company is formed directly through the companies registry without a notary, and a sole trader simply registers for tax. Many European limited companies, however, require a notarial deed. For the right choice and the tax consequences, an accountant, a solicitor and your local business-support service are the people to ask.
All lessons · Glossary · Editorial · Kontoo does the math and explains – this is general education, not tax, legal or financial advice.
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