Starting a Business: The 8 Most Important Questions

What Is a Business Start-Up?

A business start-up (Existenzgründung) is the building of a self-employed livelihood: as a trade business, a freelance profession, or a company. It covers the entire path from the business idea through registration and financing to the first revenue.

A distinction is made between full-time and side-business start-ups, as well as new start-ups, takeovers, and franchises. Depending on your project, you start as a sole proprietorship, a partnership (e.g., GbR, a German civil-law partnership), or a corporation (UG, GmbH).

Which Legal Form Suits Me?

The right legal form depends on liability, capital, taxes, and the number of founders. A sole proprietorship and a GbR are quick and inexpensive, but come with full personal liability; a UG and a GmbH limit liability but require more effort and share capital.

Sole proprietorship/GbR: no minimum contribution, simple bookkeeping, full liability. UG: from €1 share capital, but an obligation to build reserves. GmbH: €25,000 share capital, limited liability, notary and commercial register required.

Which form is best in terms of taxes and liability is ideally clarified with a tax advisor and start-up consulting.

When Do I Have to Register a Business?

You must register a business under § 14 GewO (Gewerbeordnung, German Trade Regulation Code) as soon as you take up an independent activity that is intended to be ongoing and profitable. Exception: freelancers under § 18 EStG (Income Tax Act) register directly with the tax office (Finanzamt), not with the trade office (Gewerbeamt).

Business registration takes place at the trade office of your city and usually costs around €20–60. Afterwards, the tax office sends you the questionnaire for tax registration (Fragebogen zur steuerlichen Erfassung), which you fill out through ELSTER (notification obligation under § 138 AO).

In doing so, you choose, among other things, the small business regulation (Kleinunternehmerregelung) under § 19 UStG. It is possible if your revenue in the previous year did not exceed €25,000 and does not exceed €100,000 in the current year.

Can I Be Self-Employed on the Side?

Yes. Self-employment on the side, alongside employment or while receiving benefits, is possible. Employees should inform their employer; with basic income support (Grundsicherungsgeld, formerly Bürgergeld) or unemployment benefit I (ALG I), income is offset against the benefit.

Note: the start-up grant (Gründungszuschuss) and the entry allowance (Einstiegsgeld) require a start-up as your main occupation (at least 15 hours per week). You are liable for tax from the first euro you earn.

What Is a Viability Certificate?

A viability certificate is the opinion of a qualified body (fachkundige Stelle) that your start-up is economically viable. It is mandatory proof for the start-up grant under § 93 para. 2 no. 2 SGB III.

Your business plan and your financial plan are assessed. The more reliable your figures, the easier the confirmation. We prepare your documents so that the qualified body can certify viability.

What Is a Qualified Body?

A qualified body is an institution that is permitted to assess the viability of a start-up. Under § 93 para. 2 SGB III, these include in particular chambers of commerce and industry, chambers of crafts, professional chambers, trade associations, and credit institutions.

In practice, tax advisors and qualified start-up consultants are also recognized. However, the wording of the law explicitly names only chambers, trade associations, and credit institutions.

What Does Starting a Business Cost?

That depends heavily on the industry and legal form. A service start-up as a sole proprietorship often starts with a few hundred euros, whereas a GmbH requires €25,000 share capital (of which at least half is due at registration). Formal costs such as business registration are usually €20–60.

Besides the start-up costs, always plan a liquidity buffer for the start-up phase. To meet your capital requirements, you can consider development loans (e.g., KfW), state development banks, and guarantees.

Which Insurance Policies Do I Need as a Founder?

Health insurance is mandatory (statutory or private). Depending on your profession, mandatory statutory pension insurance may apply (§ 2 SGB VI, e.g., for certain craftspeople, teachers, and caregivers). On the business side, business liability or professional liability insurance is important, depending on your activity.

Also sensible are occupational disability insurance (Berufsunfähigkeitsversicherung) and, if you previously received unemployment benefit, voluntary continued coverage in unemployment insurance.

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