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The foremost reason to set up a GmbH is that the liability is limited. In case anything goes wrong, your company would be the one responsible and there would be no legal liability on you as a person. For example, you are running a market consultancy and are serving a client as a sole proprietor. In the worst-case scenario, suppose your advice has led to a huge loss of your client and he has sued you for this. In such case, you will be personally responsible to that client. Now, if you have money to pay him off, you are lucky. But if not, you might have to mortgage or sell your property. On the other hand, if you own a GmbH, only your corporation would be liable and your personal life won’t be at risk.
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