Company Registration: How to Register Your Business in Germany

Tom
Tom January 2022 8 min

Table of contents

When you start a company in Germany, the first thing you need to do is register it as a business. If you’re completed your business plan, outlined your idea, opportunities, risks and financing options, step one is to go to the Gewerbeamt. That’s the Trade Licensing Office and it’s where you can apply for a business license – the so-called Gewerbeschein in Germany.

Below find a rundown of the steps required to register your company in Germany and which documents you’ll need to make it happen. 

Who Has to Register Their Business?

Anyone who is commercially active is considered a trader in Germany, and so must register themselves as a business. An exception to this rule is a Freiberufler (freelancer), plus a few other exemptions which will be explained below. 

Obligation for Businesses

To be considered a trade in Germany, the entrepreneurial activity being performed must have the objective of making a profit on a permanent basis, as the sole responsibility of the trader.

Founders must also register their businesses with the Gewerbeamt before they do any trading. The same applies to any side income: tax law is indifferent to whether the business is carried out full or part-time. This is stated in the Gewerbeordnung (Trade Regulation Act).

Put simply: register your business before you start doing any trading. The Gewerbeamt will be accommodating however if you’ve registered your business recently after beginning business activity. Just make sure you approach them in a timely manner and late business registration isn’t likely to affect you.

If you register too late or fail to notify the correct authorities at all, you violate the Trade Regulation Act and risk a fine of €1,000 in accordance with Section 146 of the Gewerbeordnung.

The Freiberufler Exception

Exempt from this obligation are freelancers, scientists and the self-employed working in agriculture and forestry. Section 18 EStG lists which activities are considered freelance. These include:

  • Doctors, dentists, alternative practitioners, dentists, physiotherapists, veterinarians
  • Lawyers, notaries, patent attorneys
  • Architects
  • Auditors, tax consultants, consulting economists and business economists, sworn accountants, tax agents
  • Journalists, photojournalists (photographers), interpreters, translators

Ultimately, it is the Finanzamt (tax office) who decides whether a profession meets the requirements for freelancing. Consult with your local Finanzamt if you’re unsure about your own activities. It’s important to have the correct classification because it determines whether you need to pay the Gewerbesteuer (trade tax).

Where Should You Register Your Business?

Register your company at the Gewerbeamt in your district. This is usually possible both in person and online.

Online registration is on the rise in many cities, sparing startups the trip to the Gewerbeamt.

Your options for registering online or by mail depends on the municipality. Get thoroughly informed about which documents you have to submit and how.

Which Documents Are Necessary for a Company Registration?

Registering your business requires filling out the company questionnaire.

In the case of partnerships such as a Gesellschaft bürgerlichen Rechts (GbR), partnership company, Offene Handelsgesellschaft (OHG), Kommanditgesellschaft (KG), each managing partner fills out a separate form.

Where corporations (Kapitalgesellschaften) are concerned, the managing director is the legal representative who completes the registration. Any other legal representatives are added onto corresponding supplementary sheets.

The Gewerbeamt requires the following documents:

  • Identity card or passport
  • In the case of power of attorney, a written power of attorney and the identity card or passport of the person granting the power of attorney
  • Excerpt from the register of companies entered in the commercial, association or cooperative registers

It depends on the nature of your business, but the Gewerbeamt may also require a police clearance certificate, health certificate, master craftsperson’s certificate or craftsperson’s card. Visit the responsible Industrie- und Handelskammer (Chamber of Industry and Commerce) or or Handwerkskammer (Chamber of Crafts) for more information.

Founders without German citizenship will also need a valid residence permit and confirmation of permission to carry out a commercial activity.

Small business license

The small business license exempts entrepreneurs from the Umsatzsteuer (sales tax), but it does not exempt from the Gewerbsteuer. Small business owners benefit fully from the Gewerbesteuer allowance, but they are not exempt from the obligation to register a trade. When a small business owner registers for a trade license, it is called a small trade license.

Preparing for Your Business Registration

Save time on the registration with adequate preparation. If you’re prepared, you’ll likely be taking your business license with you straight from the registration office, or having it mailed to you within a few days.

Check off these to-dos to ensure you’re prepared:

  • Choose the right legal form
  • Open a business account
  • Create articles of association

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Register Your Business in 6 Steps

With preparation out of the way, you’re ready to register your business. This process can usually be completed in six steps.

  1. Collect information and documents
  2. Fill In the Business Registration Questionnaire
  3. Apply for a Tax Number for Your Business
  4. Register with the Statutory Accident Insurance
  5. Register with IHK and HWK
  6. Register Your Company with the Employment Agency

Step 1: Collect Information and Documents

Avoid any missteps at the registration stage by finding out all you can about the registration process of the Gewerbeamt in your municipality. Then, gather all your documents.

Next, find out if you can do the registration online. If this is the case, you won’t have to leave your house. Make sure also whether document submission can be done digitally, by mail or in person.

Step 2: Fill In the Business Registration Questionnaire

With all your documents ready and all the information you need, now it’s time for the questionnaire. Download it from your local Gewerbeamt and fill it out. If anything is unclear to you on the form, your local Gewerbeamt are available to call and ask.

Step 3: Apply for a Tax Number for Your Business

Upon completing the Fragebogen zur steuerlichen Erfassung (questionnaire), the relevant authorities will check it and you will receive a tax number for your business. You will use this tax number in all tax matters and on every invoice.

If your business involves cross-border trade, you will also need an Umsatzsteuer-Identifikationsnummer (VAT number) in addition to your tax number.

Step 4: Register with the Statutory Accident Insurance

Registration with the Berufsgenossenschaft (employers’ liability insurance association), the statutory accident insurance in Germany, is mandatory. Make sure you register with the Berufsgenossenschaft that is responsible for your profession. If your profession cannot be assigned, the Verwaltungs-Berufsgenossenschaft (VBG) is responsible for you.

Step 5: Register with IHK and HWK

As a Tradesperson, you are required to belong to the Chamber of Industry and Commerce (IHK). Once the Gewerbeamt forwards the foundation info to the IHK responsible, your company automatically becomes a member. If you’re classified as a craftsperson, you register with the Chamber of Crafts (HWK) responsible for your craft.

Step 6: Register Your Company with the Employment Agency

If you employ your own stuff, you’ll need a Betriebsnummer (company number), which you can get from the Agentur für Arbeit (Employment Agency). This number identifies companies in Germany and transmits them social insurance notifications for employees subject to social insurance.

What Does a Business Registration Cost?

The price depends on the municipality and will fall somewhere between €10 and €65. Once paid, you will receive the authorisation to operate your business in the next few days and can get to work.

Gewerbesteuer – What You Should Know

If you have registered a business, you are considered a trader and therefore are obliged to pay the Gewerbesteuer.

A municipal tax, the Gewerbesteuer, is considered one of the most important sources of income for municipalities in Germany. You are paying it directly to the local district, instead of the tax office. The responsible authority is the Gewerbeamt (trade office) or Ordnungsamt (regulatory office) where your company is based.

Some good news: If yours is a younger and smaller company, you can take advantage of a uniform tax allowance for Gewerbesteuer. Einzelunternehmen (sole proprietorships) and Personengesellschaften (partnerships) are entitled to a Gewerbesteuer allowance of €24,500 per year. What that means is, if your annual profit is below this amount, you’ll be covered by the allowance.

If your profit is above this number, the allowance is deducted from the total profit and you pay only the amount which exceeds the allowance.

Corporations are not entitled to the allowance regardless of the amount of their profit.

Registering or Deregistering a Trade

Once your business is registered, you are required then to report to the Gewerbeamt any changes to the nature of your company. These changes include: 

  • Relocation of the company’s registered office within a municipality
  • Opening of additional branches
  • Change in ownership
  • Change in the scope of activity
  • Expansion of the offer

If any of these cases arises, re-register your business with the appropriate form.

Should you alter the legal status of your company or move the HQ to another municipality, deregister your business first and then re-register your business with the new municipality. If you shut down your operation entirely, you need to deregister the business.

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