Before taking any administrative steps, we guide the founder to identify their exact activity type, as this determines registration procedures, taxes, and authority oversight.
Step 1: Determine the activity classification
- Commercial trade (Gewerbe)
- Scope: e-commerce, physical retail, manufacturing, gastronomy, agencies, and general commercial services.
- Registration: must register with the local trade office (Gewerbeamt) using form GewA 1.
- Taxes and fees: subject to trade tax (Gewerbesteuer) if annual profit exceeds €24,500. Mandatory membership in the Chamber of Industry and Commerce (IHK) or Chamber of Crafts (HWK).
- Liberal profession (Freiberufler, § 18 EStG)
- Scope: specialized professions including doctors, lawyers, engineers, architects, certified translators, journalists, artists, and IT consultants.
- Registration: bypasses the Gewerbeamt and registers directly with the tax office (Finanzamt).
- Taxes and fees: exempt from trade tax and IHK/HWK membership fees.
Step 2: Choose the business structure (Rechtsform)
- Sole proprietorship (Einzelunternehmen)
- Best for: freelancers, small traders, and side businesses (Nebengewerbe).
- Capital: €0 minimum capital required. Unlimited personal liability.
- Civil law partnership (GbR)
- Best for: two or more founders starting a simple business together.
- Capital: no minimum capital; simple partner contract; shared unlimited personal liability.
- Mini-GmbH (Unternehmergesellschaft, UG haftungsbeschränkt)
- Best for: bootstrapped startups wanting limited liability.
- Capital: minimum €1 share capital (recommended: €1,000 or more). Requires notarization and entry into the commercial register (Handelsregister).
- Limited liability company (GmbH)
- Best for: established commercial ventures, foreign investors, and growth startups.
- Capital: minimum €25,000 share capital (at least €12,500 deposited upon filing). Full limited liability.
Step 3: Evaluate tax schemes (Kleinunternehmerregelung, § 19 UStG)
Early-stage founders should decide whether to opt into the small business regulation:
- Eligibility
- Prior year net revenue of €25,000 or less and current year net revenue of €100,000 or less.
- Benefits
- Exempt from charging 19% (or 7%) VAT on invoices, drastically reducing monthly tax filings.
- Drawback
- Cannot reclaim input VAT (Vorsteuer) paid on startup expenses or equipment purchases.
Step-by-step setup workflow
1. Secure residence and permit approvals (§ 21 AufenthG)
- For non-EU citizens
- Ensure the residence title permits self-employment (“Selbstständige Tätigkeit gestattet”). If applying for a self-employment visa, prepare a 3-year business plan and financial projections for IHK review.
2. Complete trade registration (Gewerbeanmeldung)
- Process
- Submit form GewA 1 to the municipal Gewerbeamt (online via the local portal or in person).
- Cost
- €15 to €65, depending on the city.
- Result
- Issuance of the Gewerbeschein. Skip this step if registering as a Freiberufler.
3. Submit the tax questionnaire (Fragebogen zur steuerlichen Erfassung)
- Deadline
- Must be submitted electronically via ELSTER within 1 month of launching.
- Details needed
- Revenue estimates, profit forecasts, bank details, and the VAT election (§ 19 UStG).
- Result
- Issuance of your tax number (Steuernummer) and optional VAT ID (USt-IdNr.). Required before issuing legal invoices.
4. Set up mandatory accounts and insurance
- Business bank account (Geschäftskonto)
- Separate personal and business finances (legally mandatory for UG and GmbH).
- Commercial health insurance
- Inform your health insurance provider of self-employment status to adjust contribution rates.
- Accident insurance (Berufsgenossenschaft)
- Automatic notification occurs after trade setup; registration is mandatory for occupational safety.
5. Ensure ongoing compliance
- IHK / HWK membership
- Automatic registration following the trade filing. Base fees are typically waived for small founders with profits under €25,000.
- Invoice compliance (§ 14 UStG)
- All invoices must state the tax ID or VAT ID, supplier and client addresses, a sequential invoice number, and a tax rate breakdown.
Preparation questions
Questions we work through together before anything is submitted. Bring what you have — none of this is a test.
What exactly will the business do?
Why this helps: A concrete description of the planned activity is the starting point for the classification in step 1. Trading, consulting and manufacturing lead to different routes.
Which country do you currently live in, and what is your residence status in Germany?
Why this helps: Whether you already hold a residence title, and what it permits, changes the sequence of the steps considerably.
Do you already have a preferred legal form in mind?
Why this helps: If you have a preference, bring it and the reasoning behind it. If not, the overview in step 2 is a good basis for the conversation.
How many founders will be involved?
Why this helps: Sole and multi-founder setups differ in contract, liability and registration requirements.
What starting capital do you expect to have available?
Why this helps: An approximate figure is enough. It helps relate your plan to the capital requirements listed in step 2.
Do you have an intended business address in Germany?
Why this helps: The municipality determines which Gewerbeamt and which chamber are responsible, and registration fees vary by city.
Might your activity require a permit or special authorization?
Why this helps: Some trades and crafts are subject to additional authorisation. Please mention anything you have already been told about this so it can be checked with the competent body.
When do you want to start trading?
Why this helps: The intended start date matters because the tax questionnaire in step 3 is tied to a one-month deadline.
Do you expect to employ anyone in the first year?
Why this helps: Employing staff adds registrations and insurance obligations that are worth planning for from the start.
Do you already work with a tax adviser or accountant?
Why this helps: Formal tax advice in Germany is reserved for licensed professionals. Knowing whether you already have one helps us see where our support fits.
Information status: September 2026. Requirements, amounts and authority procedures can change. Confirm the current rules with the responsible German authority before applying.
This guide is general information. It is not legal or tax advice, it does not decide your eligibility and it does not guarantee any outcome. Authorities decide individual cases and their decisions can differ.