Now your business plan is ready, it is time to begin the registration process.
But where exactly do you need to register your freelance status or your company? Which authorities and organizations do you need to contact? In today’s article, you’ll find answers to these and other questions.
Registering your company
If you found a business as a sole trader or a civil law partnership (GbR), you have to register this with the Trade Licensing Office (Gewerbeamt). Once you’ve registered, your local tax office will automatically send you the documentation which you need to apply for your tax number.
If you employ staff in your company, you are also required to apply for a company number from the employment office (Arbeitsamt) and to register this with the health insurance provider (Krankenkasse). It is also important to register for membership of your local chamber of industry and commerce (IHK).
Larger business types (such as Kaufmann, GmbH, UG, AG, OHG and eG) are required to take additional steps; these include a mandatory entry in the commercial register (Handelsregister). You can find out more about different company types in Germany on the IHK Berlin or BMWi website.
If you form a cooperative (Genossenschaft), you have to register this in a cooperative register (Genossenschaftsregister) and apply for membership of a cooperative auditing association (Genossenschaftliche Prüfungsverband). In addition, your company must be listed with a trade association (Berufsgenossenschaft). As an independent tradesperson or craftsperson, you also need to register with the German Chamber of Trade (Handwerkskammer).
Self-employment as a freelancer
If you don’t want to set up a company straight away, you can also start working independently as a freelancer. The advantage of this is that you will have to deal with a lot less paperwork and as a result the process is less complicated.
As a freelancer, you just need to register with the tax office and apply for a tax number. You have to register within four weeks of starting work. You can find out online which is your local tax office: this will depend on the city and district you live in.
Your tax number will be sent to you by post within a few days of submitting your tax registration form at your local tax office. You can only work as a freelancer once you have a tax number as you need to include this number on your invoices and your annual tax return.
Insurance for freelancers
As a freelancer, you should make sure you are properly insured. You are obliged to declare your freelance status to your health insurance provider as you will no longer be regarded as an employee but as a self-employed person. Once you have registered this, the insurance provider will determine a new contribution rate based on your income. It is a good idea to compare health insurance providers and find out which coverage best corresponds with your type of work.
Joining a trade association is not compulsory for independent freelancers, however, if you employ staff, you must register them with a trade association for your industry. Sole proprietorships, corporations, and partnerships, on the other hand, are obliged to register with a trade association. However, as an independent player, voluntary membership may be beneficial for you: it can provide you with insurance cover for work-related injuries, occupational illnesses, and accidents while working or commuting. So it makes sense to look into whether statutory accident insurance would be a worthwhile option for you and offer good value for money.
As a self-employed person, you should also consider commercial liability insurance against damage caused by you, business content insurance that covers you in the event of damage to your own company, and perhaps also legal insurance to cover you in the event of a legal dispute.
When you start work on a self-employed basis, you’ll need to contact different authorities and organizations. Registering yourself as a freelancer involves the least paperwork. Other types of business entail more bureaucracy, but this varies according to the company form. Once you’ve set up your business, it’s important to make sure you are adequately insured.
Working as a freelancer: the pros and cons of self-employment
Are you still unsure whether to take the plunge and opt for self-employment? It’s always a good idea to weigh up the pros and cons before making a major decision. In our next article in the ‘Working as a freelancer’ series on Friday, August 9th 2019, we’ll look at the advantages and disadvantages of being self employed.
If you’re unsure whether self-employment is the right choice for you, take a look at our article ‘Working as a freelancer: being your own boss’: you’ll find helpful tips on how to figure out whether you have what it takes to succeed as a freelancer.