Because more and more trust7 members have the chance of becoming self dependent, I am going to explain the most important steps on the road to your own firm.

Note: this is no legal or tax advice

The above note is in itself a good example for the complicated and murky situation for self-dependents in Germany. Although my advice hardly differs from that of a tax adviser, nonetheless I have to make it explicit that I am not a tax adviser. If I failed to do this, I would be faced with an ‘Abmahnung’ (caution), because I had contravened the competition laws in force.

There are hundreds of lawyers who specialise in going through the offers and websites of companies with a fine-tooth comb to see whether these are in line with the regulations. If these ‘lawyers’ find any triviality, they send an ‘Aufforderung’ (summons) to the website operator or the company’s proprietor demanding the removal of the incorrect formulation, allegedly in accordance with competition laws, but actually so they can pocket a few hundred euros in lawyers’ fees.

If this happens, it is very annoying and costs money which could better be spent elsewhere. So the advice to show any offers and service provisions to an experienced adviser or tax advisor before publication is right at the top of my tips.

In this context I would like to point out that local IHK establishments (Chambers of trade and industry) offer excellent and free advice for business start-ups. The IHK is also useful when it comes to checking the availability of your firm’s name.

Now then to the basic steps. Assuming you want to become self-dependent, and you are a German citizen or a citizen of a country within the European Union, or you have a residence permit with the note: “Erwerbstätigkeit gestattet, selbständige Tätigkeit erlaubt” (self-dependent activity allowed) or you already have a settlement permit.

Then everything is quite simple!

You go to the relevant ‘Gewerbeamt’ (trade licensing office) or ‘Ordnungsamt’ (administrative office) and hand your completed ‘Gewerbeanmeldung’ (registration of business). You pay 20€, send a copy of your Gewerbeanmeldung to your ‘Finanzamt’ (tax office) and you can already start your firm. There are a few sectors which are subject to permission, for example, estate agency, but basically in Germany there is freedom of trade, that is, you are allowed to go into business with any business idea, as long as you practice according to the rules and with the intent of making profit. You can obtain further details from the IHK or simply google the term “Gewerbeanmeldung” or “Existenzgründung”.

A very important decision that you need to make before starting up your own business is what type of company you are going to opt for. The easiest option is to become sole proprietor of your firm with you accepting liability. Then you can found a so-called ‘Einzelunternehmen’ (individual enterprise).

The advantage here, as I’ve already mentioned, is that it is quick, uncomplicated and, up to a certain income level, costs relatively little in taxes than, for example, a limited liability company. The disadvantage is quite clearly that you are responsible with your personal fortune for any mistakes, demands for redress and similar, and that in the worst case you could be indebted for the rest of your life.

For this reason many people choose the legal form of a GmbH (limited liability company) because here, as the name suggests, any demands made on the firm are limited to the joint capital of the company and your personal fortune remains untouched.

Before going into greater detail about this legal form, I would like to mention another company form and warn strongly against it. I’m talking here about the “GbR” (company under civil law), which is just as quick and easy to start up as an individual enterprise , only that two or more people found a company together. The partners enter into a contract with one another that doesn’t have to be in written form - i.e. a word-of-mouth contract is sufficient. The registration of business is then to be undertaken by all the partners.

The great risk here lies in the fact that every partner is responsible for the mistakes of the other partners, independent of whether he was informed about their activities or not. This liability also persists for years after the dissolution of the company. I think we can all come up with scenarios where somebody’s life could be ruined through the stupidity or negligence of his business partners.

As soon as a group of people come together to start up a company, they should choose a company form with limited liability.

In Germany the English “limited” company form has been gaining in popularity in the past few years. Because of European legislation the limited form is equivalent to the German GmbH, however it is much simpler and cheaper to start up. Recently, a number of firms in Germany have specialised in founding English limited companies. They vary greatly in price and not every offer that seems a sensational bargain at first glance turns out to be one in reality, because there are many factors to consider.

To begin with we can also recommend the founding of a UK limited for people who only want to be active in Germany. The level of taxation is admittedly as high as with a GmbH, however it is not necessary to stump up 25 000 euros nominal capital and it also proceeds a lot faster. Admittedly, the services of a german notary are required for registration in the German trade registry, and the fees are similar to the registration of a GmbH, but, as mentioned earlier, just one English pound is enough for capital and trust7 can organise the entry into the English company registry (Companies House) within a working day. Then the limitation of liability comes into force immediately. In the case of a GmbH this only happens after the entry in the registry of companies, which can take up to a few weeks!

There are many providers for the founding of a UK limited and trust7 also offers this service. We are not afraid of any comparison and I would ask you to take a look at the websites and prices of our competitors. You will find that not only are our prices very reasonable, but we also offer a comprehensive service and minimal costs for the following years.

Founding of a UK Limited inclusive of a 1 year Registered Office in London, Memorandum of Association and Secretary Service. Translation of all documents by a qualified sworn translator, which is required for registration in Germany.
You receive the whole package for:
500.00 € net plus MwSt (VAT), currently 19% 95.00 € = 595.00 € gross.

We would be glad to give more information on other prices and services. Please note our virtual office service at www.t7-germany.com