This guide shows you how to register a business in Germany, step by step.

This guide is not for you if:

  • you do not live in Germany, and you do not plan to live in Germany
  • or you want to start a corporation (UG or GmbH)

How hard is it?

It's not so bad. When you start your business, there is a lot of paperwork to fill, but there is information online to help you. The difficulty is gradual. You solve problems one by one, not all at once.

Accounting and bookkeeping is the hardest part. You usually do it every month. If you make a mistake, it can be expensive.

If you are moving to Germany to become a freelancer, it's harder. You must find an apartment, register your address and apply for a residence permit, all at the same time. During that time, you can't work (because you don't have a residence permit), so you must have a lot of savings.

If you don't speak German, everything is much harder. All the documents are in German. The long tax registration form is in German. The Finanzamt only writes in German. Most accounting tools are only in German. You will need help from someone who speaks German.

There are tools that make it easier:

English-speaking tax advisors in Berlin ➞

The cost of running a business

This is what it costs to be self-employed.

This is for sole proprietors and partnerships. Corporations and limited liability companies are taxed differently.

Trade tax

Cost: 0% to 3% of all profit above 24500€ per year

If your business is registered as a Gewerbe, you must pay the trade tax (Gewerbesteuer). This is a tax on all profit above 24500€. You can credit most of it from your income tax. In Berlin, you pay 1.05% more taxes on your profit with the trade tax. In other German cities, you pay 0% to 3% of your profit.

What is the trade tax? ➞

Health insurance

Cost: 90€ to 925€ per month

If you live in Germany, you must have health insurance. If you are self-employed, your employer does not pay half of your health insurance, so it feels twice as expensive. The cost depends on the type of insurance you have.

When you are self-employed, you have more health insurance options. You can choose public, private or expat health insurance. Talk to a health insurance broker to pick the best option for your situation. Don't just pick the cheapest one.

How to choose German health insurance ➞

If you are a freelance artist, publicist or art teacher, join the Künstlersozialkasse. It's a social fund that pays half of your health insurance, and half of your public pension insurance. It's a really good deal.

How to join the Künstlersozialkasse ➞

Value Added Tax (VAT)

Cost: 0

VAT (Umsatzsteuer) costs you nothing. You charge VAT on your invoices, and give that money to the Finanzamt. It's not included in your income. If you charge VAT, you also get a VAT refund for your business expenses.

Small businesses (Kleinunternehmer) can choose not to charge VAT. If they don't charge VAT, they can't get VAT refunds on their business expenses.

How VAT works in Germany ➞

Income tax

Cost: 0% to 45% of your income.

As a German resident, you must pay income tax (Einkommensteuer) on all your income, including the income from your business.

Tax advisor and bookkeeping

Cost: 0€ to 2,000€ per year

A tax advisor can help you register your business and file your taxes. They are expensive, but they are worth it. My tax advisor prevented many mistakes, and solved many problems with the Finanzamt.

English-speaking tax advisors ➞

If you want to pay less, use tax software instead. Sorted and LexOffice can help with invoicing and VAT reporting. I use LexOffice for all of my bookkeeping.

German tax software in English ➞

Some banks like Kontist, Holvi and Qonto can also make your accounting easier. I use Kontist as my business bank.

Tax advisors and tax software are tax-deductible expenses.

Other business expenses

Cost: varies

If you run a business, you can get insurance against disability, lawsuits, mistakes, and other problems. This is optional. You could also need tools, equipment and office space.

Types of insurance in Germany ➞

You can deduct all of your business expenses. This allows you to pay less income tax.

Cost of living

If you move to Germany to start your business, understand the cost of living. Your business must make enough money to pay for your cost of living.

Cost of living in Germany ➞

Step 1: Register your address

In Germany, you must register your address every time you move. It's called the Anmeldung.

When you register your address for the first time, you get a tax ID (Steueridentifikationsnummer). You need a registered address and a tax ID to create an ELSTER account and register your business at the Finanzamt.

How to find an apartment in Berlin ➞

How to register your address in Berlin ➞

How to get a tax ID ➞

Step 2: Open a bank account

You need a bank account to register your business at the Finanzamt, and to pay your taxes. You don't need a German bank account; any bank European bank account that supports SEPA transfers is okay1.

If you are a Freiberufler or a Gewerbe, you don't need a business bank account1. You can use your personal bank account. Check your bank's terms and conditions; some banks don't let you use your personal account for your business1.

If you form a corporation (GmbH, UG, AG or KGaA), you need a separate business account (Geschäftskonto)1. It's required.

If you don't have a bank account, look at my comparison of German banks. Business banks like Kontist, Holvi and Qonto can also make your bookkeeping easier. I use Kontist since January 2022.

How to choose a German bank ➞

Banks that don't need a registered address ➞

Two bank accounts is better

You should have two bank accounts: one for you, and one for your business. If you keep business transactions in a separate account, bookkeeping is easier.

The Finanzamt can freeze your account

If you don't pay your taxes, the Finanzamt can freeze your bank accounts. They will freeze all of your accounts, not just your business account. They can also freeze your accounts in other EU countries1. When the Finanzamt freezes your bank account, you can't withdraw money or make bank transfers1.

Sometimes, the Finanzamt can freeze your accounts by mistake. It happened to me, and to other people I know. Even if it's not your fault, it can take a few days to fix. During that time, you can't withdraw money.

If you get a Pfändungsschutzkonto (P-Konto), you can access some of your money, even if your bank account is frozen1, 2. It gives you enough money to buy food and pay your bills1. You can switch to a P-Konto for free1, 2, but it can affect your Schufa score1.

Step 3: Find a tax advisor

Tax advisors are very expensive in Germany, but they will save you a lot of money. They can register your business at the Finanzamt and at the Gewerbeamt for you, and take care of your tax declarations. They make accounting easier, and they prevent expensive mistakes.

English-speaking tax advisors in Berlin ➞

Step 4: Freiberufler or a Gewerbe?

Later, you will need to register your business with the tax office (Finanzamt). The tax office decides if you are a freelancer (Freiberufler) or a tradesperson (Gewerbe).

The difference is very important. Tradespeople must get a trade licence (Gewerbeschein) and pay the trade tax (Gewerbesteuer). They must usually be listed in the trade register (Handelsregister). They must sometimes follow different accounting rules.

Not every freelancer is a Freiberufler! This title is only for specific professions. Engineers, doctors, architects and teachers can be Freiberufler. Food delivery drivers and tour guides are not Freiberufler; they are a Gewerbe1, 2. Most commercial websites are registered as a Gewerbe.

Freiberufler or Gewerbe, what's the difference? ➞

Step 5: Get a trade licence

If you register as a Gewerbe, you must get a trade licence (Gewerbeschein) before you register your business with the Finanzamt.

In Berlin, you can apply for a Gewerbeschein online. You need a valid residence permit before you do this. In the rest of Germany, you can use the paper form. Your tax advisor can also do it for you.

What is the trade tax? ➞

How to get a trade licence in Berlin ➞

Step 6: Register with the Finanzamt

The next step is to declare your business to the Finanzamt. You must fill the Fragebogen zur steuerlichen Erfassung online. It takes 5 to 7 weeks1, including 1 week to create an ELSTER account.

Your tax advisor can register your business for you. If you don't speak German, use Sorted's free tool to register your business. I tried it; it's really good.

How to register a business in Germany ➞

Step 7: Get a residence permit

You might need a residence permit to be self-employed in Germany. It depends on your nationality. It takes around 3 months to get a residence permit, sometimes longer.

Who needs a residence permit? ➞

How to apply for the German freelance visa ➞

Step 8: Tell your health insurer

If you already have health insurance, tell your insurance company that you will be self-employed.

When you are an employee, health insurance payments are taken from your paychecks. If you are self-employed, you pay every month by bank transfer.

Health insurance for freelancers is more expensive, because your employer does not pay half of it.

If you have public health insurance, the cost of your insurance depends on your income. Since you don't know your future income, they use your estimated income. If you pay too much for insurance, you will get a refund later. If you don't pay enough, you will get an invoice later.

If you are self-employed, private health insurance could be a lot cheaper. Since I switched to private, I save over 400€ per month, and I have better coverage. Talk to a health insurance broker about it. It's not a simple decision.

How to choose health insurance ➞

Step 9: Get financial help

The state can help you start a business. There are many options:

You can apply for a training voucher, initial funding and an investment grant at the Jobcenter. If you just moved to Germany, you can't get help from the state1.

Step 10: Update your website

If you have a website, it must follow German and European laws. If you make a mistake, you can get an Abmahnung and waste a lot of money.

How to run a website in Germany ➞

Need help?

Where to find help ➞ Business questions