Starting up your business

Are you about to start up your new business? Here, you will find out about the formalities you need to take care of before you can start your operations. Also, we will give you a concise overview on your rights and obligations as an entrepreneur.

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Registration and bureaucracy

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Before you can set up a business in Germany, you need to deal with the paperwork. First of all, it is important to know whether you are going to work on a self-employed (gewerblich) or freelance (freiberuflich) basis. Freelancers need to register with the tax office (Finanzamt). If you want to register as a self-employed entrepreneur, you will need to contact your local trade office (Gewerbeamt). The Authority Finder will guide you towards the authorities you’ll need to deal with and will tell you where they are. 

Please note: You may find it challenging to deal with the various authorities. However, you should try and utilize their support. Make sure to prepare your meetings with the authorities well – that way, you’re likely to get the support you need. It’s important to get the paperwork done on time. Don’t be scared off by the bureaucracy, and find out beforehand which registrations and approvals you need.

Tax

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If you are setting up a business in Germany, you will normally have to pay tax to the tax office, which is the local authority of Germany’s financial administration. Amongst other factors, the type of tax you need to pay depends on your company’s size and legal structure as well as on your earnings.

On the Startup Portal, you’ll find an overview of the various tax types. Please note that in Germany, you may have pay certain types of tax in advance on the basis of estimates, and that there are certain payment terms.

In addition, you will need to submit an annual tax statement for your business, which contains the details of all of your earnings and revenues.  As you get started, it may make sense to consult a tax accountant to avoid making mistakes and incurring tax debt. The tax office will also advise you on tax-related questions.

Personal coverage

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Being self-employed means that you need to take care of many things yourself. This includes safeguarding yourself – for example in case of illness or unemployment. Here, you’ll find a concise overview on important insurances and old-age provisions.

  • Health and nursing care insurance. As a self-employed person in Germany, you are obliged to take out health insurance and nursing care insurance. There are two types of insurance: statutory health insurance and private health insurance. Make sure to find out about the type of healthcare that is suitable for you and how to obtain the right insurance cover. The Federal Ministry of Health has set up a telephone hotline for questions about the German healthcare system.
  • Accident insurance. Accident insurance will cover expenses incurred for treating accidents at work or on the way to or from work. It is also relevant for occupational illnesses. Most individual entrepreneurs and freelancers are free to decide whether they want to take out accident insurance. However, it does become mandatory as soon as you employ your own staff.

Additional information is available on the website of the German Social Accidence Insurance.

  • Old-age provisions. In some “liberal professions”, self-employed people are obliged to contribute to public pension funds, just like ordinary salaried employees. This is true for handicraft trades, for example. Other self-employed individuals can choose whether to contribute to a pension fund or not. No matter what your individual position is, you’re well advised to consider an (additional) private pension plan.  On the Startup Portal, you will find additional information on old-age provisions.
  • Unemployment insurance. If you are working on a self-employed basis, you may choose to take out unemployment insurance. To do that, you will need to file an application with the Federal Employment Agency. Tips and further information on this topic are available on the Startup Portal.  

Information for women: The E-training offered by the Startup Portal contains six lessons for aspiring female entrepreneurs on the most important steps in setting up a business. In addition, the E-training contains information personal coverage for female entrepreneurs (E-training is available in German only).

Company coverage

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Theft, burst water pipes, fire damage: these kinds of events are rare, but they may jeopardise the existence of new companies. That’s why you should think carefully about the types of risk that are particularly dangerous for your business. The good news is that you can take out insurance for most of these risks.

Business liability insurance, for example, is relevant for businesses of all industries. It applies if your company or staff cause damage for third parties. If you have a company car, you will need to take out vehicle insurance, too.

Depending on your industry, location and product range, you may need to take out additional insurance, such as electronics insurance or buildings and contents insurance. An overview is available on the website of the Federal Ministry for Economic Affairs and Energy.

Laws and contracts

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From renting out office space to product liability – as an entrepreneur in Germany, you’re bound to have to deal with numerous contracts, laws and legal regulations. In the beginning, you may feel like you’re surrounded with red tape, which can be very frustrating. However, think of the benefits: if there is a contract for every business transaction, you’re guaranteed high legal certainty.

An overview of relevant laws and contracts you will need to deal with as you set up your own business is available on the Startup Portal. Additional information will be provided by the Chambers of Industry and Commerce. If you need additional support, please consult a lawyer.

Your obligations as an employer

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If you would like to employ your own staff, you will need to observe a number of rights and obligations. In order to hire staff in the first place, you will need a company number. To find out how to get a company number and what else to bear in mind, please refer to the Startup Portal. Remember that as an employer, you will need to pay tax and social insurance contributions.

You will need to observe a number of legal regulations as you deal with your employees, too. For example, you will need to continue paying salaries and wages even if your staff is ill, and your employees have a right to annual leave. It’s important to note that you can’t fire employees without a valid reason, either. You should make sure to find out your rights and obligations vis-à-vis your staff. The information provided by the Business Portal will point you in the right direction.

Information on this portal

Find out about all types of insurances

Assess your opportunities in the German labour market

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Information on the World Wide Web

The BMWi Business Portal

Find the right funding programme (German)

 

Startup Portal for Female Entrepreneurs

Here, you will find information about the services available for women entrepreneurs (German, English, Turkish, French, Russian, Italian)

BMWi GründerZeiten no. 5: Versicherungen (insurance)

Comprehensive information on personal and company insurance (German)

BMWi Checklist no. 11: What should I insure?

Checklist for companies (German, English)

BMWi Overview no. 38: Tips on social welfare insurance

A compilation of helpful advice for finding appropriate insurance (English )

BMWi GründerZeiten no. 9: Steuern (tax)

Find out about the types of tax entrepreneurs need to deal with (German)

BMWi Overview no. 29: Taxes

Who pays when? (German, English)

BMWi Overview no. 28: Tax errors

The six most frequent tax errors made by new entrepreneurs (German, English)

BMWi GründerZeiten no. 15: Personal (staff)

Things to bear in mind if you want to hire your own staff (German)

BMWi GründerZeiten no. 23: Controlling

Select the right controlling system for your business (PDF) (German)

BMWi GründerZeiten no. 24: Recht und Verträge (laws and contracts)

Rental contracts, purchase contracts, employment contracts – you’ll find all of the important information here (PDF) (German)

BMWi GründerZeiten no. 26: Erlaubnisse und Anmeldungen (permits and registrations)

In order to start up your business, you need to register it – find out here what you need to pay attention to (PDF) (German)

BMWi Overview no. 32: Special permits

Which businesses need what kind of special permit? (German, English)