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Setting Up a Sole Trader in Germany

Setting Up a Sole Trader in Germany

Updated on Monday 14th September 2015

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Setting-Up-a-Sole-Trader-in-GermanySelf-employment in Germany

EU citizens moving to Germany are allowed to work in the country as self-employed individuals. The only requirement for them is to inform the Registry Office (Einwohnermeldamt). Non-EU citizens may also start a business as self-employed individuals provided that they have previously applied for a residence visa in Germany. After three years non-EU self-employed individuals may also apply for permanent residence visas if the work they rendered had a positive impact on the German economy. In this case, the positive impact is represented by an investment and a number of jobs the individual creates.

The sole trader in Germany

The German sole trader is a form of business indicating the owner is fully responsible for the company’s liabilities. The sole trader must register with the German Trade Register before staring operating. The sole trader must also use the suffix “registered trader”. Certain sole traders may also be required to apply for certain special licenses with the relevant German authorities before starting their business.

The German sole trader must also register for taxation purposes, with the adequate professional association and the insurance company if they hire personnel. However, it is advisable to ask for the legal advice of a law firm in Germany about establishing a sole trader because of specific requirements regarding certain professions.

What are the advantages and disadvantages of sole traders in Germany?

One of the greatest advantages of establishing a sole trader in Germany is the simple registration procedure. Also, the capital that must be invested in a sole trader is significantly lower that the start-up costs setting up a German company involves. All profits will go to the owner and a sole trader is easier to manage and control. The owner of a German sole trader may also change the legal status of the business if the company expands.

However, there are also few disadvantages when setting up a German sole trader. One inconvenient is the fact that the owner has unlimited liability that includes his or her personal assets when it comes to the business’ debts. 

Our lawyers in Germany will offer you details about all types of companies and their advantages. You can also contact us if you need legal assistance in setting up a company in Germany.

 

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