Business registration in Germany is the first step to starting self-employment in this country. After completing the registration process at the relevant trade office, you should know which organizations in Germany are automatically informed of your business registration and which one you need to contact. In this article from Wise Business Group, we will explain this.
According to the definition, commercial activity in Germany is an activity that is carried out permanently, independently, and to make a profit.
In principle, all citizens in Germany can have a commercial activity. However, it is necessary to register their commercial activity in the trade license office, unless it is a freelance activity.
In addition to the business license, some businesses in Germany require a special license. In this regard, the businessman must prove his competence above all else.
Also, some regulations must be accurately followed for businesses with strict hygiene requirements. In this context, we can mention various businesses in the hospitality sector in Germany.
We recommend that you register your business before you start your actual commercial activity in Germany. In this case, you can guarantee legal certainty and commitment to customers. However, starting work without official approval is not allowed for businesses that require a license.
Many citizens in Germany are not aware of their business obligations. For example, we can mention cases where people sell goods through the Internet. If the tax or trade office registers a business in Germany, the business person must take steps anyway.
For someone engaged in a business activity in Germany but has not registered it with the city or municipality, there is a risk of paying an administrative fine of up to 3600 euros.
Also, if the income from a business in Germany is not subject to tax or its tax is not calculated correctly, it may also face additional payments or heavy fines from the tax administration. However, lack of awareness is not protective at all.
Therefore, we recommend to use your utmost care and register your business in Germany correctly. For this purpose, you can read our numerous articles on business registration in Germany. Many practical points about registering and setting up a company in Germany have mentioned in these articles.
You ought to register your business before starting your commercial activity in Germany. However, in many trade offices in Germany it is also possible to register a business retroactively. In such a case, it is necessary to clearly mention that your business was created spontaneously and without prior planning.
Also, registration of a subsidiary or secondary business with low income is required in Germany. Especifically since the tax exemptions (both for trade tax and income tax) for this type of business in Germany usually do not entail a significant additional burden.
In Germany, any person who sends the business registration form with all the required documents to the relevant trade office, usually receives the license for his business after a short period of time. Basically, this is the license application form that is stamped and signed and serves as an official license to do business in Germany.
After the business license is issued, other organizations and associations in Germany will automatically be notified of your business registration, because other obligations are created by conducting business activities.
The most important organizations that are automatically notified of a business registration in Germany are:
These registrations are often carried out automatically by the responsible trade office in Germany.
Then, the tax office contacts the businessman to clarify the tax aspects. Based on the sales forecast, it is also possible for self-employed people in Germany to use the small business regulations to be exempt from sales tax during the start-up phase. In any case, traders will receive a new tax number as part of the self-employment process.
Registering a business in Germany creates a fee-based mandatory membership of the Chamber of Commerce and Industry that you can use in a profitable way: Think of the advice and training offered there. Also, handicrafts, technical, and construction businesses must be represented in the Chamber of Crafts.
The Trade Inspection Organization will also be notified of your business registration in Germany. For example, the intervention of this organization can be in order to check the appropriateness of the business location.
Anyone who sets up a business in Germany must also register with the Employers’ Liability Insurance Association to be covered in the event of occupational and professional accidents.
In case of hiring employees, the Federal Employment Agency must assign a company number to your business.
The State Statistics Office only records your activity so that it can use it to create statistics and statistical reports in the future. Therefore, the official business information cannot be used for other business activities.
In recent years, it has been observed more than in the past that after completing the business registration in Germany, competent authorities visit the place of business to check the accuracy of the information provided.
By taking such measures, cities and municipalities want to prevent the establishment of companies created only on paper and comply with the basic registration requirements in Germany, but their actual business activity is in another country. In recent years, number of such so-called letterbox companies has increased in Germany.
As already mentioned, for businesses that require supervision and are specified in paragraph 38 of the German Trade Act, a certificate of good conduct and an extract from the central trade register are required.
In addition, it may be necessary for the tax office to issue a declaration of no objection to establish that the financial status of the trader is adequate. You can see the other requirements, obligations and documents required to register a profession in Germany here.
You have to make your business legally binding in Germany from the beginning. Record the business activity before it actually starts.
Business registration is possible after start of business activity in Germany by many trade offices, if a convincing explanation is provided.
Failure to timely register a business activity in Germany can result in an administrative fine of up to 3,600 euros. There is also a possibility that you will be required to pay additional amounts. Accordingly, registration of subsidiary businesses is also required.
By submitting the business registration form, other authorities in Germany will be notified of your business registration.
In this regard, we can refer to the tax office (recording the tax aspects), the Chamber of Commerce and Industry (automatic and mandatory membership due to business registration), the Chamber of Crafts for technical and construction businesses, the Trade Supervision office and the State Statistics Department.
A self-employed person in Germany must contact the trade association to obtain accident insurance coverage.
In case of hiring employees in Germany, the employer must contact the Federal Employment Agency and receive the company number to pay the employees’ social insurance premiums correctly.
Wise Business Group provides comprehensive services regarding business registration in Germany and obtaining German residence permit through self-employment. Our consultant having specialized knowledge and several years of experience in registering and setting up a company in Germany, will answer all your questions in this regard. For more information, do not hesitate to contact us.
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