I think that the bureaucracy is what is really killing entrepreneurship in Germany. Right now I'm wrapping my head about opening an UG (small GmbH) company, but when I think about all the regulations and associated costs, I'm not sure it's worth it. That's probably the reason many people do contracting as "selbständige" instead through their own companies. I wish there would be a real equivalent of LLC or Ltd company in Germany.
Go to your local citizen center (Bürgeramt), register for a "Gewerbeschein" as "Einzelunternehmer". It costs 35€ and then you're good to go and do business. Takes 10 minutes.
You can still go for a UG or GmbH later. It's really not necessary in the beginning, especially if you have hardly any revenue.
Getting a GbR (Gesellschaft bürgerlichen Rechts ) setup is also possible at the Bürgeramt and similarly easy.
Also: as mentioned in the interview getting a "Steuerberater" once you have some income is a good thing to do. They can advice you in many financial and basic legal things and do most of the paperwork for you so one can concentrate on actual work ;-)
There's no need to go to the Bürgeramt to form a GbR. A GbR is formed by multiple people joining together to pursue a common goal. A GbR is implicitly formed when 2 people agree to participate in a lottery - a written contract is possible and advisable, but not required. A registration is not required at all.
I would actually recommend seeing a Steuerberater before you form your company or register anything anywhere. There's a lot of money you can save on that front.
No, you don't, at least not for the bank account. You need the tax number from the Finanzamt and the confirmation that you're freelance but that's a different thing.
In any case the registration at the Gewerbeamt (Gewerbeschein) is a different beast than the contract and paperwork needed to form a company. In some cases freelancers are required to register and in some cases companies can be exempt. It's basically a license to do business. If you register you need to pay Gewerbesteuer which can be costly (you can deduct that from you income taxes but often not in full).
So if you can freelance instead of registering a Gewerbe for a single person, do so, by all means. Talk to a tax accountant to know if you really need to register.
that's the one I got and the process was really simple, the tax part was more complicated (getting the tax number for the company) but not impossible.
still you have to know enough german or have a german friend who can help you.
in my case we are bootstraped and the cost of a Steuerberater (tax advisor) is kind of high so we are delaying it as much as possible. Still I will need one next month :)
> Go to your local citizen center (Bürgeramt), register for a "Gewerbeschein" as "Einzelunternehmer". It costs 35€ and then you're good to go and do business. Takes 10 minutes.
Thanks for the tip. I'll try to look it up. As a quick question, do these two forms provide you the same liability protection as LLC?
What about bookkeeping regulations? Is it any simpler than UG/GmbH? Simple that I can do it myself, with only a minimal help of Steuerberater?
is not actually a legal form. It only means that you are a single entrepreneur/founder.
> Gewerbeschein
is not required in all cases, especially not for IT people. The final decision is with the tax administration. Your tax accountant can help you there. The general consensus is that if you can avoid it and be a regular freelancer, do so. In pretty much any case you need it if you form a UG or GmbH.
Bookkeeping regulations depend partially on how much income you have. If you have less than 17 500 Euros income a year you can actually be VAT exempt which removes the need for a Umsatzsteuervoranmeldung, but on the other end of the spectrum, you can have the full bookkeeping requirement similar the one that a GmbH has for a GbR if the GbR earns too much.
> This is NOT correct. As a GmbH, you have to do double accounting (doppelte Buchführung), whereas as Einzelunternehmer, you can go with a simple Einnahmen-Ausgaben-Rechnung, which is easier and also cheaper if you let a Steuerberater do it.
This is not correct. The default case is Einnahmen-Überschuss-Rechnung, but if you surpass either 400k/year (or in some cases 600k per year) for two years, you're subject to double accounting even as Einzelunternehmer or GbR. The tax administration can even compel you to double accounting in other cases (like high earnings in a couple of month). I know, since our GbR was subject to double accounting. Sadly.
If you want to freelance then in a lot of cases you don't need any Gewerbeschein, especially in IT. You need to register as freelance with the tax administration though. Having a UG/GmbH is appealing for other reasons though: Limited Liability is what you're aiming at. There's a lot of other obligations that tag along with that, such as the bookkeeping requirements.
If you want to freelance then in a lot of cases you don't need any Gewerbeschein, especially in IT
Right, but a Gewerbeschein helps if you have any other income that's not from freelancing. For example Google AdSense or Amazon Affiliate links etc.
Limited Liability is what you're aiming at.
That is correct, but in most cases highly overrated for people just starting out, especially in IT. An IT-Betriebshaftpflicht (insurance) could be considered though, depending on the type of work you do.
> Right, but a Gewerbeschein helps if you have any other income that's not from freelancing. For example Google AdSense or Amazon Affiliate links etc.
sure, depending on the income. However, having one subjects you to gewerbesteuer which you can otherwise avoid. So you might want to balance the benefits against the costs.
> That is correct, but in most cases highly overrated for people just starting out, especially in IT
It's highly overrated especially if you're a single person enterprise since then, the owner/ceo can be personally liable in a couple of situations. It's a pretty definite must though if you consider having employees.
Depending on what you want from the company you need a GmbH/UG or similar construction. For example it's very hard to find investors for a GbR since a GbR is not a legal persona and cannot own assets. So all the money invested would be basically given to the founders. For various legal reasons it's very hard to invest money into a startup as a GbR, the chief reason is that the GbR is not required to register who is the CEO and can legally speak for the company.
Still, the chief reason people form a UG/GmbH is limited liability :)
Insurance is a good idea. Also, there are GmbH cooperatives, that have the sole purpose of limiting liability. Its members are basically freelancers, but are employed by this proxy company.
I wonder what regulations you're talking about when opening a UG. There's a form contract that you fill in, got to a Notar, pay a fixed fee (50 Euros IIRC), wait for the electronic registration and done. Even forming a GmbH is not really a major hassle - we have formed ours in half a day. The main hurdle for the GmbH is actually the base capital that you need to accumulate - 25.000 euros. But that's not "cost" since you get to spend the money.
The larger issue associated with both legal forms are actually the bookkeeping requirements since unlike a GbR or freelance, the company is actual a legal entity and does own all its money, so you need to pay yourself a wage instead of just taking money from the company. However, you can get a tax accountant to do all the bookkeeping for you for a reasonable amount.
You should add, that Ltd. in germany is in some cases a bad sign for german businesses. There are a lot of service companies that don't do business with Ltd's because of their responsibility situation etc.
If you want to start a company in germany, it's a good idea to start as a one-man-show ("Einzelunternehmer") or if your more than one founder as a GbR ("Gesellschaft bürgerlichen Rechts"). The "more professional" GmbH ("Gesellschaft mit beschränkter Haftung") is more expensive and has a lot of costs and paperwork involved.
Oh, and if you can effort an Steuerberater, do it! It saves a lot of time and stress!
Einzelunternehmer is if you have eggs like Anton Schlecker who had 36000 employees as an e.K. (Eingetragener Kaufmann) without any legal umbrella.
I would say for IT: Either go Freiberuflich, or GmbH. Freiberuflich has the benefit of easier book keeping, lower tax (no Gewerbersteuer), and the drawback of liability and that you must not sell things (e.g. computers, or of the shelf software), but only own code or design. GmbH has the drawback that you need to do real book keeping, and likely need a Steuerberater.
The GbR is the default to avoid. One can do it as single founder, as long as there is no risk. But once you have more founders go for a different form.
Also: UGs are not enjoying that good of a reputation, since they require only a minimum of starting capital. my tax accountant likes to tell the story of the one time they did business with an UG: ordered file folders, never arrived.
Are you something like a freelancer/coder? Nobody gives a shit about your type of business. The task is to get the job done.
Do you have a B2C business? Customers absolutely don't care.
Do you have a B2B business selling a product or a service? Well, then it might make a difference, but not to every client.
People in Germany are waaaay to self-conscious about the type of company (Rechtsform). It is understandable somehow. I went to a couple seminars (Existenzgründungsseminare) and 2 out of 4 presentations were by lawyers about picking the Rechtsform. Who gives a shit? The attendees didn't earn a single Euro yet and still, they were discussing the Rechtsform as it was the most important thing on earth.
