Test Your Knowledge of Legal Structures for Start-up Busines...

Start-up businesses need a legal structure that adapts to their current life stage. In the early stage, the company is favored - especially if other income sources are available (a "half-day job"). This recommendation changes in the later financing/capital raising phase, as more capital is preferred from risk-taking investors who often operate as a corporation. Additionally,

Participation in the company's success for (qualified) employees in the world of start-up companies is much harder than with capital companies. This could be overcome by granting virtual shares (phantom stocks) to all involved. The sale of shares in a start-up company with a capital company offers the greatest tax benefit due to the 95% tax exemption combined with the stock dividend effect. To combine the advantages of immediate loss utilization through start-up businesses in the early stage with the advantages of a holding model with capital companies, it might be best to initially set up a holding company with capital companies in which the founder is additionally unusually involved in the operational and initially loss-making start-up company (GmbH & atypically still).