Set up a sole proprietorship and register a business

Registering a business quickly and easily – step-by-step instructions

Anyone who intends to earn money with their own projects and services and thus make a profit is obliged to register a trade. Those who act independently and alone must register their activities as a sole proprietorship. How this works you will learn in this article.

Be it through the sale of self-made decorative items, through financial consulting or through the creation of websites for companies and associations: Anyone who is self-employed and thus earn money would like (also nebenberuflich), must officially a trade for its Register sole proprietorship. Contrary to many claims, this is now easier than you might think – often you don’t even have to go to the public authorities to do this, but can also set up your business quite easily from your from home.

When must a trade be registered?

Every person who is not a freelancer and wants to be commercially active in order to make a Profit motive is required by § 14 GeWO (Gewerbeordnung) to register a business register their business. The registration should take place at the latest 14 days after the beginning of the activity and is thereby on personal way, in writing and in many places meanwhile also on-line possible.

Freelancer are doctors, lawyers and artists. These only have to register their activities with the tax office. Freelance activities are regulated according to § 18 EStG (Income Tax Act).

Who is allowed to start a sole proprietorship?

A sole proprietorship is often a possibility, especially for aspiring pupils and students, to earn a little money on the side To earn money in addition. After all, you have to finance your studies and especially at a young age money is often scarce. Also the readiness to found a company and the desire to get started with your own ideas is quite high at a young age. No wonder, then, that most sole proprietorships are run by individuals in a comparatively young age be established.

Nevertheless it is however permitted to each German citizen – whether student, pensioner or family man – to make itself independent – and that also on a part-time basis. This means that even if you are in the middle of your full-time job or studies, you are entitled to possible at any time, register a business at the same time.

Sideline business vs. Main job: Does this get in the way?

Your boss or superior cannot forbid you to become sideline active. According to the Freedom of trade act (type. 12 in the Basic Law and §1 of the Trade, Commerce and Industry Regulation Act) you are free to choose your profession and also to run your own business at any time. Note, however, that you are also obliged to, to inform your employer about your further activity – no matter whether self-employed or not.

Likewise your independent work may not in direct competition stand with the activities of your employer. Should you be so busy in your sideline business that this is negative impact on your main job If you have a business with a bad reputation or even damage it, this can also lead to big problems with your full-time job.

Founding a sole proprietorship – These are the requirements

The good news beforehand: The hurdles as a founder to set up a sole proprietorship are very low. It requires No start-up capital, but only ca. 20 Euro registration fee (varies from city to city), your identity card and a few minutes of time.

In addition you should Minimum age of 18 have reached the age of "full legal capacity" in Germany. Otherwise the authorization of a legal guardian is required.

In summary: Registering a business is neither expensive, complicated, nor bureaucratic.

Registering a sole proprietorship: This is how it works!

In order to make the process as simple as possible for you, we will go over the registration of an activity at the using a concrete example by: In the following we assume that you want to create websites for companies and associations from your city and that you want to do this based on your Profit intention now you want to register officially.

Registering a sole proprietorship at the Trade Licensing Office

For the registration of your activity the Form GewA1 required. At least complicated would be here the walk on the city hall or. to your trade office. This form is available there and you can go through it step by step with the person responsible for it without making any mistakes. Another advantage would also be that the person on the Trade Licensing Office can answer you immediately further bureaucratic questions.

This is how the GewA1 form looks like. This can be filled out at the local authorities or online.

Register sole proprietorship and small business online

In the meantime the Business registration in many places but also via the Internet possible. There are two different options here:

Service portals of the federal states offer corresponding services. Here, the individual points of the GewA1 form are queried and then transmitted online to the person responsible for this at the respective trade office. The identity card can be uploaded here as a picture and the fee for the registration is in writing by invoice.
The GewA1 form can be downloaded from the website of the city/municipality downloaded and filled out are. Afterwards this is printed out and sent to the trade office or. sent to the competent authority.

To start your sole proprietorship, you ideally don’t even have to leave your house.

The following are the Portals for online registration for all 16 federal states listed:

GewA1: Fill out trade registration form

No matter if in the town hall or online: The individual points of the GewA1 form must always be gone through and filled out. As explained above, we will now go through these points using our concrete example, the creation of websites. We assume that you are over 18 years old, that you want to work as a sideline, that you want to work from home and that you want to start your own business newly founded.

We have provided the GewA1 form for you to fill out directly, print and download:

On the GewA1 form, the points 1 to 33. In the case of a start-up, from point 3 be started. Complete the fields under "Personal details" with your first and last name, your gender, your address, your date of birth, your place of birth, your nationality and ideally your telephone number. E-mail address information is optional.
At Point 12 at "Addresses" you have to fill in your work address – if you work from home, so the same address you already filled in at point 9. Items 13 and 14 can be omitted.
At Point 15 it is necessary to describe the nature of your activity. Here it is important that you describe your activity roughly, but do not get too detailed. That leaves you in the later course of your activity still some at scope of action. Using our example, where websites are created, for example, "web design and online services" can be entered here.
Since the activity is to be part-time and not full-time, "Yes" is checked at item 16.
At point 17, the Start date of the declared activity, it is always advisable due to bureaucratic matters, the first day of a month to be indicated. The activity can also be registered several weeks in advance or subsequently. If the business registration should take place, for example, on a 20. June, at point 17 either the 01 should be used.06. or the 01.07. of the respective year must be indicated.
At point 18 – the type of business – "Other" is ticked.
Since you work alone and have no employees under you, item 19 is omitted. At point 20 the first point "Main office" ticked, because you want to work from home and your business will certainly not have any branches in its first hours.
Item 21 and 22 are omitted. At point 23/24 "start-up" ticked.
Points 26 to 31 can be omitted.
Finally, point 32 requires the date and point 33 requires your signature ready!

What happens after registration?

If you have registered locally at the trade office, there is still nothing more to consider. As long as the registration fee has been paid, your identity card has been presented and the form has been duly filled in, your registration is completed.

If you want to make registered online you have to wait for the feedback from the competent authority. You will normally receive an invoice by mail, as well as your business application signed back – you now hold your so-called trade license in the hands. After you have paid the bill, everything is also here by.

In any case, you will receive an invoice 2-3 weeks after registration mail from the tax office. This is responsible for the tax registration of your business. You will receive a Questionnaire for tax registration and a tax number. latter, by the way, must also be indicated on future invoices. In the questionnaire itself you have to estimate your future profits and turnover. The following video explains how to fill in this questionnaire for tax purposes:

What are the differences between a side business and a main business??

This actually depends on the respective authority an: The tax office and the trade office don’t care about the time spent, but according to a health insurance company, a sideline business is always designated as such if you are maximum 18 hours in the week for the same. The Federal Employment Agency even speaks of a maximum of 15 hours.

Should you regularly over 18 hours If you work as a sideline during the week, your health insurance company will ask you to fill in a form additional health insurance.

If the number of hours, but also the profit of your activity regularly exceeds that of your previous main activity, your sideline activity must be registered as a main business.

When do I have to pay trade tax as a sole proprietor??

As a sole proprietor, business tax is only due when you have about 24.500€ profit per year be exceeded. The tax-free allowance of 24.500€ is intended to lower the hurdles for young entrepreneurs, so that a certain financial leeway can be created here.

The allowance applies per trade. If a person has registered two different trades, the tax allowances are also valid for both companies separately.

When do I have to charge sales tax?

If in the year less than 17.500€ turnover are made you are self-employed Exempt from sales tax. This makes it much easier, especially for budding self-employed people with comparatively low turnovers.

Important to note here is the Small business regulation according to § 19 UStG, through which the disclosure and payment of sales tax may be waived.

What about the contributions for health insurance?

The respective Health insurance must be reported, That you are now self-employed on the side. The latter then checks from time to time whether the declared sideline activity can actually be classified as a sideline business.

But if you still earn more from your permanent job than you do from your side business, you don’t have to pay more money into your insurance than you did before.