Starting a business in Germany can become extremely complex. It involves determining the suitable legal form, ensuring taxes are done correctly, and registering with the appropriate authorities. To give you more information about how this works, here is a guide for founding your own company in Germany.
Everything you need to do to start a business in Germany
The sections below outline the process it takes to start your own company in German. However, please note that some items apply only for non-German citizens and differ depending on whether you want to be a solo freelancer or a corporation.
Determine whether you’re a Freiberufler or Gewerbetreibender
The first item to consider is whether you are a Freiberufler (freelancer) or a Gewerbetreibender (tradesman). There are certain professions such as in the health care, legal, scientific, and linguistic areas that are considered as Freiberufler. For other trades-based activities such as a craftsman you would be a Gewerbetreibender. The difference is important, because for some trade professions, you’ll need additional permits or licenses to operate. In any case, the easier route is to become a Freiberufler, because there is less paperwork involved. Most Freiberufler professions don’t require a Gewerbeschein (trade license).
For further information, view this article to help you determine the difference.
Select a legal form for your business
If you would like to build a corporation, you also need to consider the legal form your business will take. The majority of businesses in Germany use the GmbH legal form. Here is an overview of the different types:
|Gesellschaft bürgerlichen Rechts (GbR)||
|Gesellschaft mit beschränkter Haftung (GmbH)||
|Offene Handelsgesellschaft (OHG)||
|GmbH & Co. KG||
Get your visa (if you’re not a German citizen or from the EU)
If you’re not a German citizen or from the EU, you’ll also need to apply for your visa in order to start a business in Germany. If you’re a freelancer, you’ll need a freelance visa. If your business takes another legal form, you’ll likely need a business visa. Visa applications and their requirements in Germany are on a case by case basis, so it’s best to make an appointment with the responsible Ausländerbehörde (foreigner’s office) to discuss what steps you need to take. At minimum you will need:
- A German bank account
- Your passport
- Proof of German health insurance
- Further documentation about your business or freelance services
One tip here for those who are entirely new to Germany: most foreigner’s offices in Germany don’t speak English so you will need to learn some German in order to process your visa and communicate with the visa officer during your appointments.
Register your business address
Once you’ve outlined what your business will be, you then need to get your Anmeldebestätigung (business registration), similar to the address registration for your private residence. In order to get your business registration, you make an appointment at your local Bürgeramt (citizen’s office).
Official business registration
Depending on your type of business you may need to register with the Handelsregister (Commercial Register). Furthermore, all businesses (including Freiberfuler) need to register at the Finanzamt (tax office) in order to receive a tax ID (and potentially a VAT ID if your business charges VAT). These numbers must be included on all your invoices.
Get a tax advisor
As a freelancer, my biggest advice for anyone who wants to start their own business in Germany is to get a tax advisor. This will be your go-to person for all the business-related documentation you need for your visa, invoices, Finanzamt registration, and tax documentation preparation (which is extremely complex in Germany), and much more. Mistakes on these topics are a big deal and it’s much better to have someone who can help you and provide advice so you avoid any related legal issues.
Update your insurances
When you start your own business, you also need to update or set up your health insurance for this status. If you’re required to prove health insurance for your visa, this needs to be done as soon as possible so you have legitimate health coverage in Germany (it’s illegal not to). For people who are self-employed, you typically choose a form of private insurance, in which the premiums and related services are entirely up to your insurance provider. Alternatively, you can opt for public insurance, in which the premiums are based on a fixed percentage of your average monthly income. This also heavily varies and depends on your insurance provider as to which percentage this is.
For further information on any of the above processes, take a look at the “Starting your own business” guidelines from the German Federal Ministry for Economic Affairs and Energy.