The usual legal forms used for the incorporation of a typical German startup are the limited liability company (Gesellschaft mit beschränkter Haftung – GmbH) and the entrepreneurial company with limited liability (Unternehmergesellschaft (haftungsbeschränkt) – UG (haftungsbeschränkt)), the UG being a subtype of the GmbH. This is because of the relatively "simple" incorporation process, flexibility in respect of the governance system, and the liability shield provided for the shareholders.
When incorporating a German startup, it should be checked if anyone of the founders had already pursued their business idea before the incorporation of the startup together with someone else (generally, one or more of the other founders). In this case, by operation of law, a civil law partnership (Gesellschaft bürgerlichen Rechts - GbR) will usually exist between the founders, which should be contributed to the startup as a contribution in kind in addition to the share capital in cash (in case of a structure involving holding companies, with the intermediate step of contributing the respective civil law partnership interests to the respective holding company, which then in turn contributes them to the startup). Such contribution needs also be assessed from a tax perspective.
A GbR is a civil law partnership where the partners have unlimited personal liability for the debts and obligations of the business and, thus, should not be used as a legal form for startup companies.
Other possible legal forms existing under German law for the incorporation of a company (e.g., stock corporation (Aktiengesellschaft - AG), general partnerships (Offene Handelsgesellschaften - OHG) and limited partnerships (Kommanditgesellschaften - KG)) are only used very occasionally in German startup land.