Starting up your own business in Germany

There are many who dream to strive for their own business than for others, and thus plan to start up a business sooner or later. For those living outside their homelands, here is a glimpse on how to start a business in Germany as a foreigner (non-EU citizen).

Clear your motive

In the case of a self-employed activity, there must be an economic interest or a particular local need. The self-employed activity must expect to have positive effects on the economy and the funding to implement must be secured by equity or a loan commitment.

Are you allowed?

If you are already have a permit to reside in Germany, the conditions attached to the permit can be altered to permit self-employed activity. If your legal place of residence is not in Germany, you need to submit an application for a "residence permit for the purpose of self-employed commercial activity" (Aufenthaltstitel zum Zweck der selbständigen Gewerbeausübung).

Type of Businesses

Trade

If you wish to engage in what may be classified as a "trade", you should check with the local Trades Office (Gewerbeamt). You will be likely required to register your business and get a certificate of registration (Gewerbeschein). To get this certificate you will have to demonstrate that you are of reliable character and qualified to run your business. Having a Gewerbeschein obligates you to pay local trade tax (Gewerbesteuer) and requires that you become a member of the local Chamber of Commerce (Industrie- und Handelskammer - IHK) and to pay a yearly membership fee to them.

Crafts & Freelancers

To engage in "Crafts" you may need the approval of a trade association and establish the fact that you meet German standards relating to specific qualifications for your chosen craft. "Freelancers" fall into a category all their own and have yet a somewhat different set of regulations, laws and procedures that must be followed.

Another piece of pie

The most common form of company is the limited liability company, generally known by the acronym GmbH, which corresponds to a British Limited Company (Ltd.). Share capital must be at least EUR 25,000. However, since 2008, entrepreneurs have been able to start a so called Mini-GmbH (unternehmergesellschaft haftungsbeschränkt). This form of company was developed especially for start-ups, as the bureaucratic efforts are simplified and the minimum share capital is reduced to EUR 1.00.

Finally a checklist to prepare while planning your start-up...

Prepare for your hurdles

• Language skills
• Professional qualifications
• Professional experience
• Commercial expertise
• Business Plan
• Consult financial or Tax advisor

Source of information: http://www.existenzgruender.de/EN/Weg-in-die-Selbstaendigkeit/Start/Unternehmen-gruenden/Setting-up-a-business.html

Image source: http://imgkid.com/light-bulb-icon-png.shtml, http://thefutureofink.com/publishing-business-plan-7-elements/