Second, the money is not gone. It is right there in the company's account. You use it to pay company bills.
The only thing annoying about German GmbH is that it can take 6-8 weeks until you get your tax id and registration numbers. You can, of course, already do business with the name postfix "i.G.", ie. instead of "Foobar GmbH" you write "Foobar GmbH i.G." and done.
EDIT: typo
That's fine if you start a restaurant or small workshop and need money for salaries, materials etc, of course.
It's a barrier to entry when you can start something digital only with just a person or three putting in sweat equity and zero to very little actual cash.
Once your idea gets traction and money comes in you hopefully will be able to spare the 1 EUR you need for an UG. Anyway, I recommend investing into founding a GmbH as soon as possible, not for liability's sake but marketing's. You will not make inroads into corporate procurement without a "proper" incorporation.
The downside, of course, is that you probably won’t get any direct(-ish) subsidies from Germany — although any pan-EU options should be on the table.
Annual admin costs very much depend on how complex the business is, no? The primary recurring obligation for a UG is the mandatory retention of 25% of annual net profits until the share capital reaches €25k, enabling tax-neutral conversion to a GmbH.
What I could think of for UG with idea on converting to GmbH, you could have:
- UG setup cost (fairly low compared to GmbH)
- UG/GmbH accounting & tax compliance
- Commercial register updates
- Notary fees for structural changes, and eventually the conversion process
