Good news: It’s finally here. The application process for Überbrückungshilfe III started in mid-February, and the coveted Neustarthilfe für Soloselbstständige followed last Tuesday.
Category Archive: Doing Business in Berlin
Lots of freelancers find themselves in a tough financial situation. Ever since the pandemic started, many of us have been left entirely without work. There are financial instruments like Kurzarbeitergeld for employees, but freelancers have often been left with no choice but to get their basic needs covered by the Jobcenter.
Lockdown ruining your revenue? Homeschooling your kids instead of earning? Enter a confusing array of government grants designed to compensate you. There are so many of them, it’s hard to keep track. Here’s what we know so far.
In the UK, you can form a company that limits your personal liability with just 1 Pound sterling of share capital. The German UG (also known as a mini-GmbH) is based on this concept.
If you don’t have a cool 25,000 EUR lying about to start a GmbH, you can still start a limited liability company in Germany with one Euro or more of share capital. It’s known as an Unternehmensgesellschaft (haftungsbeschränkt) – an entrepreneurial company (limited liability). People also call it a 1-Euro-GmbH because of the minimum share capital requirement.
You can use a template for the articles of association if you’re looking to set up a simple UG, and this will reduce your setup costs. If you plan on a regular calendar year as your fiscal year and you don’t need more than 3 shareholders and one CEO, there is a standard template you can use. Here’s a link to the template for a one-person UG.
You must put aside 25% of the profit each year as a reserve so that the company can eventually become a GmbH. You don’t have to form a GmbH eventually, but you do have to put aside 25% of the profits as a reserve until you reach 25,000 EUR.
Limited liability is attractive but running a UG does have a few disadvantages: double bookkeeping is mandatory, you’ll need a few things notarized, you have to pay trade tax, and the managing director can still be subject to criminal or civil liability if they breach their duties.
How to form a UG
To form a UG, you’ll need to decide:
- What to call your company: check here to see if the name has already been taken
- Whom to appoint as managing director/s and shareholder/s
- How much to nominate as share capital
- The objective of your company – write a good description that encompasses all possible business activities
Then, you’ll need to do the following:
- Write your aticles of association. You can use a template, hire a company to create them, get a lawyer to customise them for you, or customise them yourself.
- Apply for registration in the commercial register
For this, you’ll need an appointment with a notary. Bring your ID (European Ausweis or passport and address registration) and the articles of association with you. You’ll also need to bring an interpreter if you don’t speak English.
- Open a bank account in your company’s name and pay in the share capital
- Register with the trade department (Gewerbeamt) – you can usually do this online
- Register with the tax authority – you’ll get a questionnaire automatically once commercial registration has happened
- Register with the IHK (Chamber of Commerce) or HWK (Chamber of Crafts) in your city – they will contact you automatically
- Register with the appropriate trade association (Berufsgenossenschaft)
- Optional: Register with the Agentur für Arbeit and get a Betriebsnummer if you wish to hire staff
There are a few companies out there who will take care of all these things for you for a few hundred Euros.
What to expect at the notary’s office
The notary will read through and notarise your articles of association and your application for commercial registration (Handelsregisteranmeldung). If you don’t speak German, an interpreter will interpret these documents into English consecutively. Everyone signs, then the notary gives you some important paperwork to take to the bank. Once you prove that you’ve deposited the share capital, the notary takes care of the registration in the commercial register on your behalf. This might take a few weeks. If you choose to do business before your company has been officially registered, you will still be personally liable during this time.
Tips on founding a UG from notaries
I’ve been to quite a few of these appointments as an interpreter and the notaries tend to offer the same pearls of wisdom:
- Make sure the company name is visible on the mailbox at the address at which you’ve registered the company, as soon as you get back from the notary appointment
- Watch out for a whole bunch of fake invoices from people who like to prey on newly-registered companies. The bill you definitely DO have to pay comes from the Registergericht (registration court), and that’s the fee you have to pay for registering your company. If you are not sure whether the bill is genuine, paying the money in cash in person at the Registergericht is a safe bet, as is calling the Registergericht in your district and verifying the details on the invoice.
- Since you can’t open a bank account in your UG’s name until your UG’s commercial registration application and articles of association have been notarised by the notary, you can’t sign anything at the notary’s office saying that you’ve already paid the share capital. Instead, the notary gives you a confirmation that the deeds have been notarized, and you use this to open a bank account. Then, you e-mail the notary proof that you’ve paid in the funds, and the notary then completes your registration.
- Even though you CAN use just one Euro of share capital, that doesn’t mean you should. Take into consideration the costs associated with starting the company in the first place. If your chosen share capital is too low, it doesn’t take much to become insolvent quickly.
- Become a GmbH as soon as you can to be taken more seriously (do what you wish with this last piece of advice!)
I need an interpreter to help me form a UG
Once you’ve got an appointment with the notary, they will send the two deeds that will be read out on the day. These are:
1. Your articles of association
2. Commercial registry application
Send these two documents to me with a few business days’ notice (3 days before the appointment, if possible!) and I’ll get you a quote. It’ll be somewhere between 250-400 EUR including VAT.
We can also book an appointment at a notary’s office of your choice on your behalf or choose a notary’s office with availability that suits you. Click here to Book a Translator and leave us special instructions to book you an appointment at a notary’s office to found a UG.
The on-site services we’re accustomed to offering at public offices around Germany have changed for the foreseeable future. Read on to find out what it looks like to take a translator to an appointment with you during the Corona pandemic.
There are some buzz words whirling around in Germany’s capital city. Mietendeckel (rental ceiling). Mietspiegel (rental index). Mietpreisebremse (rent freeze). These are three different concepts, but I’d like to go through the most recent development, the Mietendeckel. You might be paying too much rent and you might be entitled to a reduction. So let’s get started.
The German Ministry of Finance sat down with the German Ministry of Economics and put their heads together to figure out how to save the thousands of businesses affected by the Corona virus, quickly and with minimum red tape (should we be offended?). This is what they came up: find out if your business is eligible and how to apply for these programs.
There are plenty of grants, loans and aid programmes proposed for residents of Germany during this difficult time, but there’s a distinct group of people who might not be eligible for any of them, and also aren’t quite ready to dive into the world of welfare at the speed of light: solo freelancers and small businesses. Recognising this, Bavaria took the lead and introduced “immediate aid” for small businesses and freelancers. NRW, Hamburg, Baden-Württemberg and Thüringen followed suit. Berlin and Niedersachsen are the latest states to offer the grant. … Read More
We trawled the net looking for up-to-date information on English-speaking lawyers in Germany’s capital city. We found a few lists, but most of them were dreadfully out of date or not organised in a useful way. So we decided to make our own directory, sorted by field of law. We spoke to all the lawyers personally to make sure they were happy to be listed. You can therefore be assured that these lawyers are responsive to contact requests and open to working with English-speaking clients. As we continue to receive positive responses from Berlin’s English-speaking legal experts, we will update the list. Here it is! Special thanks to Fiona Gillespie for her stellar work in compiling this directory.
Today we’ll explore yet another area of infamously complicated German bureaucracy: business registration (Gewerbeanmeldung). A trade licence, known as a ‘Gewerbeschein’, is required for any newly-established commercial enterprise with a fixed premises. This also applies if you are self-employed (unless you’re truly “freelance” – what’s the difference?), moving your existing business to Berlin from another federal state or country. The Gewerbeschein allows you to run your business in the city in which you have registered it.
If you are a sole trader running your own business (self-employed), one of the managing partners of a business partnership, or a representative of a legal entity, it’s your job to take care of the business registration. Here’s everything you need to know.
Which documents do you need to register your business?
- Proof of identity – either an ID card (Personalausweis) or your passport together with your certificate of registration (Meldebescheinigung) – in some cases, you can declare your identity online.
- The business registration form (Gewerbeanmeldung), filled out – either get it from the local district office, download it electronically to print and fill out or fill it out and submit it online in certain states – see below.
- Residence permit – if you’re a non-EU foreign national, you’ll need to present your residence permit. Make sure it allows self-employment – it should say Selbstständigkeit erstattet or Erwerbstätigkeit gestattet.
- Excerpt from the Trade Register – if the business is listed in the Trade Register, you’ll need to provide the excerpt proving this. For businesses listed in foreign trade registers, you’ll need to provide both the excerpt and a certified German translation.
- To register a legal entity that is still in the process of being established, you’ll need to present a statement of approval from the partners.
- To register a legal entity with multiple representatives, you will need to fill out a supplementary sheet for registering representatives.
NB: To register a foreign business in Germany, you’ll need to have a domestic representative present your paperwork, along with a power of attorney and details of a German address for the business.
Can it be done online?
In 14 out of the 16 German Federal states, you can submit this application online. Each state varies – some allow you to sign it digitally, others need your original signature. If you’re applying in Berlin, there’s a brand new online process, available in English. We’ve tested it out, it takes around 15-20 minutes and is very comprehensive! There’s also no need to print and sign anything as there is a declaration of identity (Identitätserklärung) at the very end. After you’ve paid, you should receive an email confirming your business registration within a few days.
Where can you register your business in person?
If you need to talk to a human, you can still book an appointment at your district office (Bezirksamt). However, unlike registering your address (Anmeldung einer Wohnung), which can be done at any Bezirksamt, you will have to go to your local district office. This means the district office of your business’ premises, not your home address. If you live in Pankow but you want your business registered at your co-working space in Neukölln, go to Neukölln!
How much will it cost you?
The cost of registering your business varies slightly depending on the Federal state, type of business, number of legal representatives and chosen registration process.
The prices in Berlin are as follows:
- Sole traders – EUR 26.00
- Business partnerships – EUR 26.00 per partner
- Legal entities with one legal representative – EUR 31.00 (plus an additional EUR 13.00 for each additional representative)
- Online business registration – EUR 15.00
Book a Skype coaching if you’d like some help getting through the online business registration process. Submitting the form usually takes about 15-20 minutes and once completed, we’ll help you get a self-employed tax number and take you through the basics of staying compliant as a business owner in Germany.
A minimum wage (Mindestlohn) has already existed in many European countries for quite a while. Despite this, its introduction in Germany only happened very recently. In 2015, negotiations between the CDU, CSU and SPD saw a minimum wage of €8.50 introduced to Germany in accordance with the Act Regulating a General Minimum Wage. Over the following years, it increased gradually. Right now, it is 9.19 EUR per hour. As of 1 January 2020, it will increase to €9.35 per hour. Some industries have been given a transition period before becoming compliant.