Is it mandatory to register a company

Business registration for sole proprietorships. Pay attention to this

Many self-employed people decide to set up a sole proprietorship. As with every start-up, the advantages and disadvantages are very close to one another. The price for unrestricted freedom is the risk. A sole proprietorship also bears that alone. This guide contains all kinds of interesting information about advantages and disadvantages, legal issues and the registration of a sole proprietorship.

Sole proprietorship = sole trader or small business owner or freelancer

Anyone who is the boss in a sole proprietorship either falls

1.) in the category Small business owner or

2.) in the category Merchant or

3.) in the category freelancer.

As simple as it might sound, the German legal system does not recognize a “sole trader”. That is why the boss in a sole proprietorship is the businessman, the small business owner or the freelancer - and that sometimes depends on further details from.

Ad 1) Sole proprietorship = small business owner

Below a certain turnover limit, the company remains a small business - with the establishment of a business, but without an entry in the commercial register. If this were explicitly desired, the owner becomes an e.K. - that is, to become a registered businessman - and will have to forego the advantages of a small business owner in the future.

The following applies to small businesses: There is a business registration, but neither an entry in the commercial register nor a company name. Membership in the IHK or HWK is compulsory. The small business owner is liable with his private assets, but does not have to bring a minimum start-up capital. Trade tax only applies above 24,500 euros. In terms of bookkeeping, the income-surplus account is sufficient.

Ad 2) Sole proprietor = sole trader

Anyone who registers a trade becomes a merchant. If the sole proprietorship involves a commercial activity (according to HGB), the owner has to contact the Regulations of a legal businessman. A merchant has the duty to keep records, balance sheets and publish. He is liable with his private assets, but does not have to put in a minimum starting capital. Whether the entry as a merchant or non-merchant follows after the business registration, depends on turnover, profit, capital, employees, business relationships and the size of the company.

Ad 3) sole proprietorship = freelancer

Members of a freelance professional group can never become a businessman. Freelancers need to no business and do not need an entry in the commercial register or a company name. Membership in IHK or HWK is not compulsory for them. The contribution of a minimum starting capital also does not. There is no trade tax. The freelancer is liable with his private assets. In terms of bookkeeping, the income-surplus account is sufficient.

Start a sole proprietorship? That speaks for it - and that against it

It is easy to explain why many self-employed people flirt with the legal form of sole proprietorship: It takes no minimum capitalto start a sole proprietorship. In addition, the establishment, i.e. the registration as a sole proprietorship, is quite quick, unbureaucratic and above all is cheap. In addition, there are the advantages of being the sole ruler. The sole trader has complete freedom of choice when it comes to his sole proprietorship and can consequently manage and manage the company's assets as he wishes.

The other side of the coin is that mentioned at the beginning risk: The owner of the sole proprietorship is liable - with his private assets. Since there is usually less capital available, discussions about financing models are often more difficult. An alternative would be to found a corporation. For individual people, the small AG, the one-person GmbH or the entrepreneurial company (UG) come into question.

Business registration in just a few steps

If small businesses or merchants take action, register the business in this way:

1.) Registration of the trade at the trade / regulatory office. In some industries, licenses or permits are mandatory. These must be available before the business registration. With the business registration of the sole proprietorship, further institutions are informed directly, which may contact the owner of the sole proprietorship directly.

2.) The tax office is usually the first authority that reacts to the business registration of the sole proprietorship. A form is presented in which, among other things, profit determination procedures, advance payments, special regulations, taxation and tax numbers are to be shown.