How do entrepreneurs typically set up business in Germany? In this article, we are going to answer this question for you in great detail. We are going to go through each and every step that we consider important when it comes to establishing a company.
1. Name Your German Company
There are certain rules you need to abide by when starting a company in Germany. If you are about to start a small business, you need to include a trade name and the first and last name of the assigned owner.
Businesses in this category are not registered commercially. As a registered merchant, you need to pick a name that describes your company, without your name included in it. Every other type of business can be creative with its name, yet it has to contain the abbreviation of the legal form of it.
Either way, the nature of the business has to be clear when someone looks at it and it can’t be too general. Then, you can continue by checking for name availability in the commercial register. An available name will be approved by the local court if it meets the requirements.
2. Time to Find a Notary
The next key step is to visit the notary and acquire the articles of association, called Gesellschaftsvertrag in German. This means that the form of your company, starting capital, distribution of profits, the shareholders will be laid down on paper.
A notary is there to go over all these details and make sure everything is alright with the financials. Then, he is going to proceed by registering your business in the commercial registry or Handelsregister. For commercial businesses, this step is mandatory.
3. Visit the Trade Office
The trade office or Gewerbeamt is the place where you can get your trade license. There, you give them a thorough presentation of your company and hand all the necessary permits over. Sole proprietors such as freelancers are the only exception to this step.
Now the permits you need really depend on the company you want to run. Liberal professionals need to seek out their respective chamber for such permit. For example, architects need to visit the Architektenkammer.
For businesses that deal with craftmanship, there is the master craftsman certificate or Meisterbrief that you need to obtain. There is a chamber for that as well called the Handwerkskammer. Many companies require proper hygiene measures, which means you should get a health certificate as well.
For advice on permits, seek out the IHK in Germany.
All legal forms require the papers mentioned in the list below:
- Passport, ID card and VISA from the owners
- A paper confirming the German address of each owner
- Paper confirming the municipality of your business
- A €10 to €40 for registration costs
- Permits and certifications recommended by the IHK
- Police certification
- The articles of association from the notary (Step 2.)
4. Registration at the Local Finance Office
The local finance office in Germany is called Finanzamt and that is where you need to register your company. One of the papers you need there is the tax questionnaire that you need to fill out beforehand. But its good to know, that the TAX Nr. registration takes a lot of time in Germany, it can be 2-4 months, so may be a better solution is to buy a ready made german company.
If you are about to start a partnership or corporation, you need to bring an articles of association copy. Besides that, bring the trade license and show that your business is already in the commercial registry. The Finanzamt will go through these documents.
If everything goes right, you will leave with a VAT ID (optional) and a business tax-ID. After that, you only need to wait for the VAT ID to arrive via mail. This is when you can start invoicing with a piece of mind.
