If you take the plunge and start a limited liability company (ApS), capital is often the first item on the list. How much money needs to be committed, how is it contributed, and what can it be used for? At Accountview, we guide you every step of the way so you understand the capital requirements for an ApS, choose the right form of contribution, and get your company off to a good start.
What is the requirement for startup capital?
The initial capital requirement for an ApS is 20,000 kroner. The amount must be paid in before the company can be registered with the Danish Business Authority, and it must be deposited into the company’s business account as soon as it is opened. The contribution can be made either in cash or in the form of assets, which is known as a non-cash contribution.
If you choose the cash option, you transfer 20,000 kroner from the owner to the company’s new bank account. The money remains the company’s property and can be used immediately for operations, purchases, or investments. If you choose a non-cash contribution, you’ll instead contribute assets, such as equipment, inventory, or shares from a previous company. These assets must be appraised by an auditor so that the tax authorities and creditors can verify that the contribution meets the capital requirement.
What can the startup capital be used for?
The company’s paid-in capital is not held in a restricted account. The funds can be used for anything the company needs, from purchasing office equipment to paying the first salaries. The important thing is that the funds are used for business purposes and are properly recorded in the books.
However, it is not permitted to lend money to the owner or a related party. An illegal shareholder loan can have both financial and criminal consequences for you, and it is one of the mistakes we most often help correct when new company owners contact us. We set up the accounting software to monitor outstanding balances with the owner, and we alert you before an amount exceeds the limit.
Making a Capital Contribution to a Limited Liability Company with Ease
At Accountview, we offer a fixed-price package for company formation, where we handle the entire process. The package includes advice on the form of capital contribution, drafting of the articles of incorporation and bylaws, registration with the Danish Business Authority, and setup of your accounting software. We also partner with Lunar, which allows you to open a business account with no fees and save several thousand kroner during the startup phase.
We always recommend a quick discussion before the capital is deposited, so that you don’t spend the money during a period when the bank hasn’t yet released the account, or incorporate the company before your accountant has reviewed the valuation report.
When is a capital contribution the right choice?
A contribution-in-kind makes sense if you already have a sole proprietorship or other companies with assets that can be transferred to the new ApS. It may also be relevant in the case of a tax-free business conversion, where the sole proprietorship is converted into an ApS without personal taxation on the gain. We always perform a specific calculation so you can see whether a contribution in kind saves you taxes or simply requires additional documentation.
For brand-new self-employed individuals without an existing business, a cash contribution is the simplest option. It’s quick, inexpensive to set up, and doesn’t require an auditor’s report. In practice, we can have the company registered within three to five business days, so you can get your business up and running without long wait times at the Danish Business Authority or the bank.
Frequently Asked Questions
Can I be held personally liable for the company, even though I have contributed the capital?
As a general rule, you are only liable up to the amount of your capital contribution. However, if you provide a personal guarantee to the bank or suppliers, or if you violate the Companies Act—for example, by making illegal loans to the owner—your liability becomes personal after all. We’ll review your agreements so you know where you stand.
Can the initial capital be increased or reduced at a later date?
Yes, capital can be both increased and reduced in accordance with the rules of the Danish Companies Act. A capital increase can be carried out through cash contributions, contributions in kind, or a stock split. A reduction typically requires a four-week notice period during which creditors may file objections. We handle both the documentation and the reporting.
What if the capital is depleted during operations and the company falls below half of the required amount?
If equity falls below half of the paid-in capital, management is required to convene a general meeting and report on the company’s financial position. This must be done within six months. We will prepare the report and propose measures so that you can rectify the situation in a timely manner.
Would you like some help getting your ApS off to a good start? Let’s have a quick, no-obligation chat about your plans.
