How to start a business in Germany: a step-by-step orientation.

By Michael Wild · About 6 minutes to read

When I led the market entries of international companies into Germany, the hardest part was rarely the business itself. It was knowing which step comes first, which office is responsible, and which decision is difficult to undo later. Individual founders face exactly the same questions, usually without a legal department. Here is the route most of them take.

1. Check whether you may be self-employed

Citizens of the European Union, the European Economic Area and Switzerland can generally start a business in Germany on the same terms as Germans. If you hold another citizenship, your residence permit decides whether, and in which form, you may work self-employed. Some permits allow it, others need to be changed first. Clarify this with the immigration office (Ausländerbehörde) or an immigration lawyer before you register anything. The official portal Make it in Germany (opens in a new tab) explains the main routes for entrepreneurs.

2. Freelancer or trade business?

German law distinguishes between liberal professions (Freiberufler) and trade businesses (Gewerbe). The answer decides where you register, whether trade tax applies and whether you become a member of the chamber of commerce. Read our article Freelancer or trade business in Germany? for the details.

3. Choose a legal form

Most founders start as a sole proprietor (Einzelunternehmen): quick, cheap, but with unlimited personal liability. Partners often form a GbR. If you want limited liability, the UG (haftungsbeschränkt) and the GmbH are the usual choices; both require a notary and an entry in the commercial register, and the GmbH requires a minimum share capital of €25,000. Discuss the choice with a tax adviser, because it affects taxes as much as liability.

4. Write a business plan and a financial plan

German banks, funding bodies and the employment agency expect a structured business plan with a three-year financial plan. Even if you finance everything yourself, writing it is the cheapest way to test your idea. Our business plan support is available in English.

5. Register

Trade businesses register with the local trade office (Gewerbeamt), usually online or in person, for a small fee. Freelancers do not register a trade. In both cases you register with the tax office by submitting the tax registration questionnaire (Fragebogen zur steuerlichen Erfassung) through the online portal ELSTER (opens in a new tab), generally within a month of starting. A UG or GmbH is first founded at a notary and entered in the commercial register.

6. Set up the basics

• Bank account: a separate business account keeps your bookkeeping clean; for a UG or GmbH it is needed to pay in the share capital.
• Health insurance: mandatory in Germany. As a self-employed person you arrange and pay it yourself.
• Liability insurance: strongly recommended for most activities.
• Bookkeeping and VAT: decide early how you keep your books and whether you charge VAT or use the small-business rule; your tax adviser helps you choose.

7. Find your first customers

German customers often value reliability, clear offers, transparent prices and a German-language presence. Plan how they will find you and why they should trust a new provider. This is where most of the real work starts, and where mentoring pays off.

The order matters

Two mistakes we see often: registering a business before checking whether this affects a funding option you could have used, and registering before the residence question is settled. Map the steps first, then act.