Thinking of starting a business in Germany as a foreigner?
Buckle up. You’re about to enter the bureaucratic Olympics, where the hurdles are made of paper, the finish line is “registration pending,” and the referees are on lunch break until further notice.
Whether you’re launching a startup, expanding your company in Germany, or just trying to open a business without needing a PhD in German tax law, here’s the hard truth: setting up a business in Germany is not for the faint of heart (or the impatient).
That’s where Empleyo comes in. We’re not just your friendly Employer of Record, we’re the people you call when you’d rather skip the 27-step registration dance and get straight to growing your business.
But if you’re curious about how it normally works, here’s how to start a business in Germany… the long way.
Start With a Business Idea
We love a good business idea as much as the next entrepreneur. But Germany? It wants the full story. Your idea needs to fit into an existing legal structure, meet self-employment criteria, and possibly even pass a sniff test from the chamber of industry and commerce.
So before you dream of IPOs, start with the basics:
- What problem are you solving?
- Who are your customers?
- Can this be a sole proprietorship, or are you eyeing a GmbH (that’s a limited liability company, German-style)?
- Will it require special permits or registration with the trade office?
Not every entrepreneur needs to reinvent the wheel, but you do need to make sure your wheel is TÜV-approved.
Draft a Business Plan
Ah yes, the business plan. Germany loves structure, and nothing says “serious founder” like a neatly formatted PDF with revenue projections and a cash flow chart.
Your business plan should include:
- Executive summary (yes, even if it’s just you and a dream)
- Market analysis
- Operational setup
- Financial projections
- Details on your business structure
- Required permits, licenses, and professional qualifications (especially for foreign entrepreneurs)
This document is often needed when applying for a residence permit, especially if you’re from a non-EU country. It might also be requested by the tax office, bank, or even the IHK (local Chamber of Industry and Commerce) during business registration.
Pro tip: German officials aren’t known for loving vague startup buzzwords. Keep your plan realistic, well-researched, and Deutsch-compliant.
Choose the Right Legal Structure
Your future company in Germany needs a legal identity and yes, Germany has options. Lots of them. Choosing the right one depends on your funding, risk tolerance, and whether or not you have a co-founder named Klaus.
Here are the greatest hits:
GmbH (Limited Liability Company)
If you’re building a startup or looking to protect your personal assets, the GmbH (Gesellschaft mit beschränkter Haftung) is one of the most popular structures for a company in Germany.
- Liability: Limited to the company’s assets (great if you don’t want your personal car on the line for a business mistake).
- Capital required: €25,000 in share capital (at least €12,500 upfront).
- Registration: Requires entry in the commercial register and involvement with a notary.
- Ideal for: Growing businesses, funded startups, and founders planning to scale.
- Extra steps: You’ll need to register with the tax office, open a business account, and report to the Chamber of Industry and Commerce (IHK).
If you’re starting a business in Germany as a foreigner and want to establish credibility with partners and clients fast, a GmbH might be your best bet, just be prepared for the paperwork.
UG (haftungsbeschränkt) (Mini-GmbH)
A lighter version of the GmbH, the UG is perfect for a leaner launch.
- Liability: Limited, like the GmbH.
- Capital required: Starts from just €1.
- Registration: Same as a GmbH, including notary involvement and registration with the commercial register.
- Ideal for: Startups, solopreneurs, or side hustlers who want limited liability but not the full €25k commitment (yet).
It’s a popular entry point into entrepreneurship in Germany, especially for non-EU founders who need a company structure for a business visa or residence permit.
Sole Proprietorship (Einzelunternehmen)
The sole proprietorship (Einzelunternehmen) is the simplest and most affordable way to start your business in Germany, especially if you’re just testing your idea or working as a freelancer.
- Liability: You’re personally liable.
- Capital required: None.
- Registration: Requires business registration with your local Gewerbeamt. No notary needed.
- Ideal for: Freelancers, self-employed professionals, or anyone starting a business in Germany as a foreigner who wants to move quickly and keep it simple.
- Tax-wise: You’ll still register with the tax office, but things like accounting and reporting are less intense.
This is a great option for solo entrepreneurs, but keep in mind: no limited liability means your personal assets are always on the table.
GbR – Partnership (Gesellschaft bürgerlichen Rechts)
If you’re starting your own business with one or more partners and want to keep it informal, the GbR is a flexible way to begin.
- Liability: Shared, and fully personal.
- Capital required: None.
- Registration: You’ll still register with the trade office and possibly the IHK, depending on your business activities.
- Ideal for: Small teams, early-stage founders, and new businesses testing the waters before committing to a formal limited liability company.
Great for collaborative ventures but trust between partners is a must, since you’re all equally exposed legally.
Freelancer (Freiberufler)
Technically not a legal structure, but important to mention if you qualify. Some professions in Germany such as designers, writers, consultants, and IT specialists may fall under Freiberufler status.
- Liability: Personal.
- Capital required: None.
- Registration: No need to go to the Gewerbeamt, just register with the tax office directly.
- Ideal for: Solo service providers in liberal professions.
- Visa-friendly? Possibly, depending on your activity but you’ll still need a solid business plan and proof of income if you’re from outside the European Union.
If you’re working on a self-employed basis in a recognized freelance profession, this is the most lightweight way to get going.
Don’t forget that the structure you choose affects everything: from how you register your business, to what taxes you’ll pay, to whether you can even open a business account.
Visas, Permits, and Other Fun Ways to Delay Your Launch
If you’re starting a business in Germany as a foreigner, especially from a non-EU country, congratulations! You now qualify for the extra spicy version of bureaucracy, complete with visa requirements, residence permits, and forms that ask for your grandmother’s cat’s maiden name.
To start your business legally, you’ll likely need:
- A residence permit for self-employment (if you’re staying long-term)
- A visa to start a business (unless you’re from the EU or a visa-exempt country)
- Proof of a viable business idea and business plan
- Sometimes, approval from the Chamber of Industry and Commerce or even the Federal Employment Agency
The kind of permit you need depends on your business. If you’re launching a construction company, for example, expect additional safety and trade certifications.
Heads-up: If you’re planning to open a GmbH or register as a sole proprietorship, you’ll need to sort your visa before you register your business. Yes, it’s a bit of a catch-22. Welcome to German paperwork.
Register Your Business
Once your permits are sorted, it’s time to register your business – a step that somehow feels like you’re applying to join the German Avengers.
Depending on your business type and location, you may need to register with:
- The Gewerbeamt (local trade office)
- The Tax Office for your tax ID, VAT number, and business tax registration
- The Commercial Register (especially if you’re setting up a GmbH or any formal company in Germany)
- The IHK or HWK (the Chamber of Industry and Commerce or Chamber of Crafts)
You may also need to prove you have a business address, a business bank account, and proper health and safety certificates depending on your business type.
Oh, and don’t forget: You must register your company before you can legally send an invoice, hire employees, or make business transactions.
If you’re opening a sole proprietorship, registration is a bit simpler but you’re still required to visit multiple offices and maybe even fax something. (Yes, fax machines are still a thing here.)
Say Hello to the Tax Office
Whether you’re running a full-scale GmbH or starting as a freelancer, once your company in Germany is registered, the tax office becomes your pen pal.
Expect to:
- Receive a tax ID (Steuernummer)
- Submit your tax registration forms
- Register for VAT (Umsatzsteuer) if applicable
- Deal with trade tax, income tax, and/or corporate tax
- File annual tax returns
- Possibly appoint a tax advisor to ensure compliance with the delightful intricacies of the German tax system
And yes, your business bank account and invoicing system need to align with German tax rules. Not just in spirit in literal formatting.
Reminder: In Germany, incorrect invoices can delay payments and trigger audits. Don’t just wing it with a template you found on Google.
Open a Business Account
You can’t start your business in Germany without a business account even if you’re bootstrapping your way to the top. Whether you’re setting up a GmbH, Einzelunternehmen (sole proprietorship), or some other form of company in Germany, a bank account for your business is required.
To open one, you’ll usually need:
- Proof of registration (from the Gewerbeamt or commercial register, depending on your legal structure)
- Passport and residence documents
- Your shiny new tax ID
- A formal business address in Germany
And no, you can’t just use your personal account to receive payments from clients and send invoices. That’s not how the German business world works.
For GmbH founders: Your share capital must be deposited into this business account before your company can be fully registered. Yes, it’s a chicken-and-egg situation. And no, it doesn’t get simpler.
Shortcut: Want to avoid this dance entirely? Empleyo already has a local legal entity and payroll structure in place, no business bank account or share capital deposits required on your end. Just plug in and go.
Don’t Skip the Commercial Register
If you’re setting up a limited liability company like a GmbH, you’re legally required to register your company with the commercial register (Handelsregister). This step makes your company official in the eyes of German law.
But here’s the twist: even if you skip it, the Chamber of Industry and Commerce (IHK) will probably still find you.
Depending on your business activities, you’ll also be automatically registered with:
- The local IHK (for most businesses)
- Or the HWK (Handwerkskammer) for skilled trades
These chambers support entrepreneurs, run training programs, and keep track of what’s going on in the world of industry and commerce. And yes, they’ll want a yearly membership fee. It’s Germany. There’s always a fee.
Note: The commercial register is a must-have for corporations, but sole proprietors (Einzelunternehmen) often don’t need to bother. One tiny perk in a sea of paperwork.
Celebrate… Then Prepare for Lifelong Paperwork
Congrats! If you made it through every step, you’ve officially navigated one of the most complex business landscapes in Europe. You’ve learned how to start a business in Germany, secured your residence permit, opened a business account, and successfully joined the ranks of self-employed foreign entrepreneurs living their best (and slightly over-regulated) life.
But here’s the catch: the paperwork never really stops.
Expect to:
- File regular tax returns
- Keep your business registration up to date
- Renew your residence permit if needed
- Work with a tax advisor to stay compliant
- Respond to the occasional love letter from the tax office, IHK, or federal ministry for economic affairs and climate action
Pro tip: Life in Germany as a foreign business owner can be deeply rewarding but also deeply exhausting if you’re doing it all alone.
Still wanna start a business in Germany?
You’ve read the steps. You’ve seen the hoops. You now know that starting a business in Germany as a foreigner can feel like a full-time job before your business even begins.
Between the registration requirements, the hunt for a residence permit, the bank paperwork, the tax office emails, and your new best friend at the Gewerbeamt, it’s no wonder so many would-be founders hit pause before they ever register with the trade office.
But here’s the good news:
You don’t have to go through the entire legal and bureaucratic circus to get your company in Germany off the ground.
At Empleyo, we help international founders, startups, and remote teams start a business in Germany without needing to set up a GmbH, open a sole proprietorship, or memorize the IHK’s phone extension.
Whether you’re:
- A non-EU founder who needs a visa to start
- A startup testing the market before going all in
- A team ready to hire talent in Germany without opening an official company with the trade office
- A solo entrepreneur trying to navigate self-employment and life in Germany without getting lost in translation
We’ve got your back.
Think of us as your shortcut to scaling, the kind of startup portal that actually gets you closer to launching, instead of burying you in PDFs.
You still get all the perks of a local presence – minus the paperwork, delays, and need to prove your business model to three agencies and a fax machine.
Because let’s face it: the tax rate depends on a lot of things, but your time and sanity shouldn’t be part of the cost.
Ready to start your business the easy way or at least the smarter way?
Let’s skip the red tape and get straight to starting your own business in Germany with Empleyo as your partner in making it happen. Book your free discovery call here to get started!
