When my wife started her current business as a consultant, she was living off her savings from teaching high school. If you think every entrepreneur has €25k of capital, you need to reevaluate what your country thinks of entrepreneurship.
You can get the simple company type (disregarded entity) and all the advantages of limited liability with an LLC.
What would you need to mess up to be liable for huge sums as a single consultant company?
Imagine if you’re a consultant and for whatever reason, you get sued or worse. That’s what the LLC is for.
Suppose you find out your cvs editor infringes on a patent and you’re liable. Suppose some business suffers data loss and sues. These things do happen in Europe too.
Also, it’s just a matter of professionalism. A sole proprietor isn’t very professional and many medium-size businesses won’t do business with sole proprietorships.
Germany insolvency can take a decade, make getting a flat or even keeping your bank account a challenge and rarely results in debt relief to boot [1].
[1] http://www.privatinsolvenz-hilfe.org/en/german-bankruptcy-la...
If you are selling Hot Dogs, nobody will bat an eye if it’s a UG, but if you apply for a big software contract, people might be wary.
It seems to me that a sole proprietorship would do more to protect against counterparty risk, i.e. more of the person's assets would be available to satisfy the debt.
My guess is that counterparties prefer a limited liability partner to arguably insulate themselves from employment liabilities.