How to Start Your Business in Germany (as an Expat)
Starting a business in Germany might sound hard, but it’s actually easier than you think. Let’s break it down! 🚀
Key Takeaways
- Selecting the right business type impacts taxes, liability, and costs—choose wisely based on your goals.
- Keeping business and personal finances separate is crucial for tax clarity and legal protection in Germany.
- Registering with the notary or city council solidifies your business’s legitimacy and establishes important legal details.
- Self-employed individuals must navigate health insurance and pension options for long-term financial protection and security.
- Registering your trademark secures your brand, preventing unauthorized use or copying by competitors.
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More InformationStep 1: Choose the Right Business Type and Check Your Legal Status
Before launching any business in Germany, it’s crucial to choose the right type of business structure. This first step influences your taxes, liability, and registration requirements. But don’t rush into anything—first, confirm whether you’re even allowed to start a business. If you’re not a German or EU citizen, your visa must specifically allow self-employment. And if you already have a job, your employment contract might require employer approval for any side business.
Once your legal status is clear, you can choose your business form. Solo entrepreneurs (Einzelunternehmen) have two primary routes: Freiberufler and Gewerbetreibender. Freiberufler (freelancers like designers, developers, teachers) have fewer registration steps and are tax-efficient. Gewerbetreibende (those running commercial operations) must register with the Gewerbeamt and pay trade tax. The downside for solo entrepreneurs? Unlimited personal liability and higher tax rates.
If you want more protection and credibility, consider forming a limited company—either a UG (Unternehmergesellschaft) or GmbH (Gesellschaft mit beschränkter Haftung). The UG requires minimal initial capital but comes with limitations. The GmbH needs €25,000 in share capital (only half upfront), but earns more trust from banks and clients. If you can afford it, go straight for a GmbH.
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More InformationStep 2: Open a Business Bank Account
Once you’ve selected your business type, the next step is opening a business bank account. And no, your private bank account won’t cut it—even if you’re just freelancing. Mixing personal and business funds is a recipe for tax and accounting headaches.
For limited companies like a UG or GmbH, a business bank account is mandatory. You can’t even register your company officially until the account is set up and the share capital is deposited. Even for freelancers and Gewerbetreibende, separating finances from the beginning is just smart planning.
The good news? There are many business-friendly banks in Germany, each with different perks. Some even offer welcome bonuses. At PerFinEx, we built a comparison tool that matches business bank accounts to your exact needs. Just apply filters based on your business type, and you’ll find your best fit in minutes.
Whether you’re aiming for credibility, bonus offers, or lower fees, taking the time to set up the right business account is one of the smartest early moves you can make.
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More InformationStep 3: Officially Register Your Business
Now comes the moment where your business becomes real: registration. Depending on your business type, you’ll need to register with the local Gewerbeamt (trade office), the Finanzamt (tax office), and possibly industry-specific institutions like the IHK (Chamber of Commerce).
To register, you’ll need several key details:
Business Address – Be cautious here. Using your private home can create privacy risks and may need landlord approval. A virtual office or co-working space is often a safer, more professional option.
Business Name – Choose something unique and accurate. Misleading names are not allowed, and duplication will get you rejected.
Geschäftszweck – This is your stated business purpose. Keep it specific but broad enough to allow for future services.
Ownership Details – Clearly define who owns and manages what. If you’re working with partners, structure this carefully.
After gathering all the details, submit them to the appropriate authorities. For PerFinEx, for example, we had to register with the IHK to receive our financial advisory license before we could start operations. Expect to receive your tax number, VAT ID, and other crucial documentation during this process.
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More InformationStep 4: Handle Social Security and Insurance
Step four might be the most overlooked—but it’s vital: getting your social security and insurance situation sorted. In Germany, self-employed individuals are generally excluded from the public social security system, which means you have to arrange coverage on your own.
Let’s start with health insurance. Unlike employees, you don’t have an employer paying half the premiums. Many self-employed people opt for private health insurance because it’s often cheaper and provides better services. That’s why we at PerFinEx also went the private route.
Then there’s the pension system. Most expats are shocked to find that self-employed people can opt out of Germany’s public pension. And many do, choosing private retirement plans that allow for higher returns—especially when invested in ETFs. This flexibility can be a major advantage if you plan and save smartly.
You should also consider optional insurances like legal protection, data security, or professional liability—especially if you’re handling sensitive information or working with clients. They aren’t legally required, but they can protect your business from serious financial risks. Choose wisely based on your industry and exposure.
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More InformationStep 5: Protect Your Brand with a Trademark
You’ve made it to step five: trademark protection. It may sound optional, but if you’re building a serious business and want long-term success, it’s essential.
A trademark legally secures your brand name, logo, and identity. Without one, anyone can copy your name, your design—even your whole business image. Trust us: it happens. We at PerFinEx have seen copycats try to hijack our name and brand. Luckily, our registered trademark stopped them cold.
Good news? Registering a trademark in Germany is simple and affordable. You can do it online through the DPMA (German Patent and Trademark Office). It costs just €290 and gives you 10 years of protection—less than €30 per year for peace of mind.
If you’re just freelancing and don’t plan to scale, you might skip this for now. But if you’re building a real brand, growing a team, or going after funding—a trademark is a smart investment.
And speaking of smart investments: health insurance is one of the biggest decisions you’ll make as a founder. We’ve created a full comparison article of public vs. private plans—check it out to decide what’s best for you.
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More InformationFinal Thoughts: You Can Do This
Starting a business in Germany as an expat might seem overwhelming, but it doesn’t have to be. With the right steps, smart planning, and expert guidance, you can build a successful venture that supports your goals and your future.
And if you’re not sure where to start, or want to explore vetted investment properties and tax-saving strategies, we’re here to help. Book a free meeting with us anytime. Let’s build something great—together.