Registering as a freelancer in Germany is easier than you might expect. Usually, you don’t need supporting documents or go to a Somethingamt in person. You also don’t need to wait for permission if your profession is not a licensed activity (like doctors or forestry). Please ensure that your visa or residency status permits self-employment.

📌 A partner of a Blue Card resident is usually allowed to work as self-employed. In any case, check your residence permit. It should state “Erwerbstätigkeit erlaubt”.

Process overview:

1. Check if you have up-to-date Anmeldung

2. File Fragebogen zur steuerlichen Erfassung

   1. Register with the local Gewerbeamt (NOT relevant for Freiberufler)

3. Start business activities 

4. Get the letter from Finanzamt with business Steuernummer

5. Issue an invoice with the Steuernummer

6. You are officially self-employed!

Understanding the Basics of Self-Employment in Germany

Before diving into the process, it's crucial to understand some key concepts:

Types of Self-Employment

There are two types of self-employed (Selbstständige) in Germany: 

1. Freelancer (Freiberufler): Typically applies to liberal professions like artists, writers, consultants, and certain medical professionals. Consulting (software development advisory, process automation, performance marketing setup, etc.) is usually classified as Freiberuflerkeit.

2. Sole Trader (Gewerbetreibender): Applies to most other types of businesses. Sales of finished products (software packages, clay kitchenware, stock photos, etc.) are usually classified as Gewerbe.

Sole traders must register with the local Gewerbeamt. This can be done in parallel with the registration process outlined below. 

Kleinunternehmer (Small Business Regulation)

The Kleinunternehmerregelung is an optional simplified tax scheme for small businesses:

• Income limit: €22,000 in the first year, €50,000 in subsequent years

• Exempts you from charging VAT (Umsatzsteuer) on invoices

• Simplifies annual tax reporting

• Both freelancers and sole traders can be Kleinunternehmer

Language Considerations

Be prepared for language challenges:

• Most official documents are in German

• The Finanzamt (tax office) communicates in German

• Unlike Norman, most accounting tools are only available in German

Step-by-Step Guide to Starting Self-Employment in Germany

Step 1: Register Your Address (Anmeldung) or update it if you moved recently

• Essential for obtaining a tax ID (SteuerID)

• Required before proceeding with business registration

• Will tie you to a Finanzamt you will deal with in the course of doing business

Step 2: Register The Business

You only need to file a tax registration form online, which is entirely free. The official name of the form is Fragebogen zur steuerlichen Erfassung. The form is a notification letting Finanzamt know that they should expect taxes from your self-employment. Finanzamt will send you a Steuernummer specifically for freelancing. Don’t confuse it with Steuer-ID and your personal Steuernummer. This Steuernummer will go into invoices you send customers and tax forms about self-employment.

• File the 'Fragebogen zur steuerlichen Erfassung' with the Finanzamt

• Use the official ELSTER portal or a free tool like Norman with tips, guides, and support

• Average processing time: 3-6 weeks (can be longer in Berlin or other dense areas)

Before submitting the 'Fragebogen zur steuerlichen Erfassung' or around that time, Sole traders (Gewerbetreibender) should register with the local Gewerbeamt. Not all Gewerbeamts have an online form, so it may be necessary to visit the Gewerbeamt in person to register.

Optional: Open a Bank Account:

• From the legal standpoint - you can use a personal bank account for self-employment income/expenses

  • Check the user agreement of the bank. Sometimes, it can prohibit that.

• Still, a separate business account will simplify financial management and can offer additional business features, like better currency exchange rates or multi-currency accounts.

• Not required to be a German bank or German IBAN, but must allow SEPA transfers.

After receiving your Fragebogen zur steuerlichen Erfassung, Finanzamt will send you a letter with a Steuernummer and some instructions. The instructions can include a request to register as a Gewerbe. Gewerbe registration happens in a different institution, IHK, so Finanzamt can’t help you directly.

The letter can also include the amount of mandatory quarterly advance payments to Finanzamt. To “help” you with cash flow planning and decrease the likelihood of a surprise tax bill at the end of the year, Finanzamt can ask you to pre-pay your income tax in equal parts throughout the year. They will assign the amount based on the profit estimate you provide in the tax registration form. If the forecast is low, there can be no advance payments.

Step 3: Handle Taxes and Accounting

There is no need to wait for the letter from Finanzamt, which usually takes 3-6 weeks to arrive. You can start business activities right away. Moreover, you can deduct business expenses you had before filing the registration form, like purchasing work equipment or qualification courses. Finanzamt usually allows the deduction of expenses made a few months before the registration.

1. Income Tax (Einkommensteuer):

   1. Rates: 0% to 45% of your profit

   2. Paid on all income, including salary, self-employment earnings, investment activity, and real-estate leasing

   3. Filed once a year

2. Value Added Tax (VAT/Umsatzsteuer):

   1. Standard rate: 19% (some items at 7% or 0%)

   2. Kleinunternehmer can opt out of charging VAT

   3. Filed monthly or quarterly AND once a year

3. Trade Tax (Gewerbesteuer):

   1. Applies only to Gewerbe

   2. Only on profits above €24,500

   3. Rates vary by municipality

4. EÜR

   1. Simplified profit and loss statement for self-employed

   2. Defines the profit based on which you will be taxed

   3. Because of concepts like VAT and amortization, is a little more complex than revenue minus expenses

5. Zusammenfassende Meldung (ZM):

   1. Only applies to self-employed who have EU clients

   2. Is not a tax, just a mandatory report

6. Accounting:

   1. Use e-invoicing-ready software to issue invoices to your clients

   2. Keep your books clean for simple tax reporting

   3. Keep supporting documents (like customer agreements, invoices, and receipts) for 10 years.

✅ You can combine full-time employment with freelancing. It’s always better to get approval from your employer if your freelance services will be related to your day job.

Step 4: Arrange Insurance and Health Coverage

1. Health Insurance:

   1. Mandatory in Germany

   2. Options: public, private, or expat health insurance

   3. Cost: €90 to €925 per month, depending on income

2. Künstlersozialkasse (KSK):

   1. Only for artists and publicists

   2. Offers subsidized health and pension insurance

Step 5: Find Work and Manage Finances

1. Client Acquisition:

   1. Utilize your network

   2. Explore online freelancing platforms

   3. Join relevant communities

2. Financial Management:

   1. Budget for fluctuating income

   2. Save for taxes

   3. Plan for retirement

3. Invoicing:

   1. Learn German invoicing regulations and e-invoicing demands

   2. Include your business Steuernummer on invoices

🛟   Norman can help you with the whole process, from registration to invoicing and tax filing. Start your journey for free.

Common Challenges and How to Avoid Them

1. Underestimating tax obligations

2. Mismanaging invoices and receipts

3. Overlooking deductible expenses

4. Forgetting about necessary insurance coverage

Final Thoughts

Starting self-employment in Germany requires careful planning and understanding of administrative, financial, and legal aspects. By following this guide and being aware of common pitfalls, you'll be well-prepared for your entrepreneurial journey in Germany.

Remember, while self-employment comes with responsibilities, it also offers tremendous personal and professional growth opportunities. With the right preparation and mindset, you can successfully navigate the German business landscape and thrive as a self-employed professional.