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How to start a business in Germany

For investors and new business owners alike, Germany is a desirable market. It is Europe's largest economy and ranks as the fourth-largest global economy.

By Lena LinettiPublished 3 years ago 3 min read
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How to start a business in Germany
Photo by Scott Graham on Unsplash

For investors and new business owners alike, Germany is a desirable market. It is Europe's largest economy and ranks as the fourth-largest global economy.

Despite some slowing of foreign investment following the global recession and subsequent Eurozone crisis, Germany remains a good magnet for doing business. A well-developed, robust infrastructure, a highly-skilled workforce, a supportive social atmosphere, a secure legal environment, and a long record of world-class research and development support its broad, diversified economy.

However, doing business successfully in Germany allows one to be familiar with its complicated bureaucratic systems, tax structures, and legal climate. If you're pondering commencing a new business venture of your own in Germany, you need to know a few crucial factors to get started. You'll find a helpful guide here.

Let's start with a few basic questions.

How much does starting a company in Germany cost?

The sum varies depending on how much cash needs to be spent, but the actual administrative burden is not too high. In general, there is a registration fee in Germany, and investors would have to contribute to seed capital to set up a GmbH.

In Germany, can foreigners start a Business?

International entrepreneurs are often welcome to set up projects in Germany. When planning how to set up a company as a foreigner in Germany, integrating into German culture is important. So, learn German, get to know German literature and music, spend some time incorporating yourself into the culture that will serve as the home of your business, and set aside time for travel if you can.

Requirements

When forming a business in Germany, the exact steps can vary depending on what type of business you are starting, but in all cases, the process is generally identical. The sequence of primary milestones will be something like this.

Get your address registered in Germany

In Germany, each time you travel, you must register your address. The registration process for the address is called Anmeldung. You get a tax ID and a registration certificate when you file. Later, you'll need these.

For opening a bank account, you need a registration certificate, and you need a bank account to register your company with the Finanzamt (tax office). You will need to file your business with a tax ID.

Obtain a business visa

Obtaining a business visa entitles you to a 6-month stay while preparing your company and completing the necessary paperwork. Evidence of financial support, short-term health insurance, details about where you will be living, and an invitation letter from a prospective business partner, if necessary, are needed.

Open a bank account

When you report your business to the Finanzamt, you will need a German bank account to begin paying taxes. You don't require a business account; a regular bank account is perfect.

Obtain a trade license

First, entrepreneurs would have to attend the Finanzamt in the city of their choice, where they can register and obtain their business license as a dealer. This determines the area of work that your business is going to deal with.

Complete business registration

Next, your company needs to be registered (also with the tax office). A current passport, a German tax ID number, a valid visa, an active bank account, and a residency permit will be required. You should then obtain your VAT number and tax number-the critical identifiers for your new German business.

Inform health insurance

In the next step, business owners may need to notify their German health insurance company that they are going solo because this will influence their payment structure.

Update your website (if one)

You have to update your website if you have one and make sure it complies with the various German and European regulations.

How can a PEO (Professional Employer Organization) help you with expanding in Germany?

Without setting up a legal agency, a Germany PEO in this case, helps businesses recruit workers in this country. The PEO oversees all of the staff's human resources, insurance, payroll, and tax needs.

Setting up a subsidiary or branch office is not often the best route when recruiting workers in

Germany, as it is always a lengthy and costly operation. Hiring through a Skilled Employer Organization (PEO), particularly when starting up in a new country, is a faster and often more productive choice.

Conclusion

Germany offers a first-rate manufacturing, energy, and communications infrastructure and state-of-the-art transportation networks that provide quick access to domestic and international markets. Germany's stable and transparent legal environment provides investors with a secure legal framework and the ability to quickly enforce their rights.

International investors interested in opening a business in Germany should contact the local consultants who can successfully assist them with its registration process.

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Lena Linetti

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