Do you have a buzzworthy product or service that would appeal to foreign markets?
Starting a business overseas is a wise move for ambitious entrepreneurs looking to expand beyond their borders. There are many great countries to start a business in, but German companies are the ones that thrive. Germany is known for its robust economy and its impressive start-up scene.
This guide will help you navigate everything from creating a plan to opening your doors. You’ll feel informed and eager to get the gears turning.
Ready to learn more? Let’s get started.
Starting a Business in Germany
Thanks to the rise of the internet and online business, there is a new type of entrepreneur. They are young, highly skilled, and are looking to make their mark in the world. Germany is full of this new class of aspiring moguls, and it is easier to start a German business than ever before.
Employment laws have shifted for the better, great subsidies have been treated for start-up owners, and foundations are looking to fund research for innovative projects. All in all, German business culture is looking good.
Starting a small business in Germany requires that you open a German bank account, obtain the proper visa, and gain a residency permit. You’ll need to visit the tax office and register as a tradesman or freelancer. Most people will require a trade license before submitting any business documentation to the tax office.
What might create a bit of a headache for you is all of the regulations. German law can be very strict regarding worker safety, hygiene, accountancy, and working hours.
You’ll also need to make sure you create a thorough German business plan which should include a budget of how much everything will cost and a course of action for every step. The good news is that the administrative burden isn’t much.
Can Foreigners Open a German Company?
International entrepreneurs are welcome to create a business in Germany. With that said, there are certain special considerations you’ll need to bear in mind.
In addition to logistical requirements, there are also a significant amount of lifestyle changes that you’ll need to prepare for. After all, you’ll be moving to a new country, and you should immerse yourself in the culture.
Be sure to visit as often as you can before starting your business. You’ll also need to learn German and meet locals who can be part of your community.
Requirements
There are a variety of businesses you can create in Germany, so the exact steps will vary depending on what you’re looking to start. However, there are a few key requirements that tend to be similar across all cases.
For starters, you’ll need to obtain a business visa. This will help you stay for six months as you plan your business and complete paperwork. You’ll need to provide proof of short-term health insurance, information about where you’re staying, and proof of finances.
You’ll also need to secure a trade license. This involves going to a tax administration office in the city of your choice. You’ll register as a tradesman and receive your trade license.
The tax administration office in Germany, also known as Finanzamt, will also help you register your business. You’ll need several documents for this, including a valid visa, a functioning bank account, a residence permit, a German tax ID number, and a passport.
If you need some assistance with things like PEO services, Bradford Jacobs is here to help. Check it out today!
Taxes and Premiums
One of the factors that every entrepreneur has to consider when starting a business is taxes and premiums. The taxes of significant concern include the value-added tax, municipal trade tax, plus the solidarity surcharge, income tax, and church tax of your employees. There is also a corporate tax if your business is incorporated.
The value-added tax assesses a levy on every step of the production and delivery process. Essentially, you can expect to add it to whatever you charge for every service and item you sell to customers. Banks, medical centers, and insurance services tend to be exempt.
The municipal trade tax is levied on business profits by local German authorities, and it varies depending on the community. Generally, you can expect to pay around 18 percent.
5.5% of your income tax covers the costs of integrating the states of former East Germany; this is a solidarity surcharge.
It’s important that you learn the different types of taxes you’ll pay and the German vocabulary for all of them.
Self-Employment
You may not be thinking about starting a business in the traditional sense; maybe you’re curious about being self-employed. If you want to move to Germany and work for yourself, you’ll need to meet specific criteria.
The criteria depend on your qualifications, the type of business you’re starting, and if you’re doing something that can be done by another qualified resident or German national.
You’ll likely be asked for certain documentation, and your business will be analyzed to determine if it is economically viable and specialized enough. If it is, you’ll be issued a residency permit.
Creating Successful German Companies
Germany is not only a wonderful place to live, but it has recently developed a thriving start-up scene. Berlin, in particular, has become a hotspot for web designers, marketers, and innovative software companies. Other cities like Frankfurt and Munich attract entrepreneurs from all over the world.
If you’re hoping to start a business, why not join one of the many successful German companies? You simply need to learn the basics, and then you can start planning.
Looking for more articles like this? Be sure to check out the Business section of our blog!
