Germany company formation is mostly done in form of Gesellschaft mit beschränkter Haftung (GmbH). This type of company is closest to the English limited company or US LLC.
In the recent time it has become possible to register the "virtual" seat of the company. Approximate price is 100-200 € per month. To lease a small office (20-25 m2) costs 600-1000 € per month.
German court and tax authorities usually demand the company to have employees in the case that company management lives abroad. However, in the case that business is done properly and no terms are neglected one can count on minimal contacts from state authorities and therefore no necessity for employment of the workforce.
Initial capital of German GmbH is 25,000 €. It must be provided either in cash, in real estate, goods, etc. This capital must be on the disposal of the company in any time.
Trade license office (Gewerbeamt) is specialized office of the state authorities. Every business entity must apply for the trade license of the activity which it wishes to perform. Registration is normally done in few weeks. It is necessary to precise the activity as "püntklich" as possible.
Except the Trade license office, there is also Financial office, Companies house, etc. If one respects the terms given there is no need to be afraid of excessive interest of these authorities.