General information about operating a business in Germany

5 reasons

Deciding to do business in Germany is a great decision. The country has one of the strongest economies in Europe and globally. The industries in Germany are thriving and the economy of the country keeps getting better.

One of the reasons why it has a huge economy can be linked to numerous businesses across the country. The country is much open to investors and to great ideas that will help in boosting its economy. Lots of burgeoning startups are taking advantage of this.

When you want to start a business in Germany, you should read about Qlick and other financial services on to know the best to get an instant business loan from. If you want to do business in Germany, these are things that you may need to know before proceeding.

Payment of Taxes

Doing business in Germany means you’ll have to pay some taxes. Taxes help in making the country conducive for business. Taxes you’d be paying include the following:

1. Gewerbesteuer.

2. Mehrwertsteuer.

3. Körperschaftsteuer.

4. Solidarity surcharge.

5. Church taxes of employees.

Gewerbesteuer is also known as municipal tax is levied by the local authorities on the profits made from your business. The amount payable is relative to your community.

Mehrwertsteuer is levied on each stage of production or delivery of services. You’re expected to add this VAT to the price of your product or services and send the amount to the relevant authorities.

Solidarity surcharge is 5.5% of your income and the church tax should be collected from any of your employees that are affiliated with any of the registered German churches.

If you chose to run a Limited Liability Company or a Joint Stock Company, you’ll be subject to Körperschaftsteuer, which is about 15% of your earnings.

The Type of Company Is Important

The type of company your business identifies as is very important. It determines the capital requirements, taxes payable, and many others. You must seek professional advice before identifying your company as one. Some of these recognized company types in Germany are:

1. Offene Handelsgesellschaft (OHG) – General partnership.

2. Gesellschaft mit beschränkter Haftung (GmbH) – Limited liability company.

3. Aktiengesellschaft (AG) – Joint stock company, corporation.

4. Kommanditgesellschaft (KG) – Limited partnership.

5. GmbH & Co. KG.

6. Zweigniederlassung.

7. Töchtergesellschaft.

Deciding which is right for you depends on some factors, but not a difficult decision to make. Make a research on each group and decide which is best for you. For example, Körperschaftsteuer tax is only applicable to Aktiengesellschaft and Gesellschaft mit beschränkter Haftung businesses.

Registering Your Business:

Like many parts of the world, your business must be recognized by the relevant authorities. Once you’ve decided on which type of business to run, you must register your company in the German commercial register known as Handelsregister.

If you’re running a small business, one that has a revenue of less than €22,000 in the first year of operation and less than €55,000 in the following years; you’re exempted from registering your business in Handelsregister.

You’re also required to register your business at your local trade office (Gewerbeamt) in the area when you’ve chosen to run your business. Thereafter, you should proceed to your local office and fill in Fragenbogen Zur Steuerlichen Erfassung (Taxation Questionnaire). In addition, you must also get a trade license called Gewerbeschein to be able to operate in Germany. Make sure you register your business with all relevant authorities.

The next step would be to start hiring employees. There are two types of employees in Germany, the Free Agents (Freie Mitarbeiter) and the permanent ones (Angestellter). The former takes care of their taxes and insurance and work only when called upon to work, while the latter gives you or the company some responsibilities to take care of.

Publicity to your business is important in Germany. You can advertise in the local newspaper or make use of social media advertisements to reach out to potential customers within your locality.

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