Due to its growth rate and economic stability, Germany has attracted many multinationals and private investors. Starting a business in Germany, however, is easier if you get a residence status. Both German residents and non-residents must follow the vast requirements; failure to abide by the law can lead to business closure.
Here are some tips to help you in the early stages of your business:
See also: How to Find a Job in Germany
1. Conduct a Market Analysis
Regardless of the country, you must always conduct a market research and analysis before starting a business. There are two types of market analysis: PESTLE which analyzes the external environment, and SWOT which analyzes the business’ internal environment. PESTLE analysis is conducted on the target country’s political, environmental, societal, technological, ecological, and legal systems. If the business operations go against any of these systems, it may not be advisable to start the business. On the other hand, SWOT analysis is done to determine the startup’s strengths, weaknesses, opportunities, and threats. The business’ strengths must exceed its weaknesses and the opportunities its threats.
2. Get a Residence Permit
As self-employment in Germany is tied to residency, it is impossible to start a business without a residence permit. Consequently, it is advisable to consult and seek advice from the already settled foreign investors, experts in residence permits, and labor officers in Germany.
3. Obtain a Business Name
You can get a business name from the Berlin Chamber of Industry and Commerce. Run a name search and then apply for registration of the name.
4. Notarize and File the Articles and Memorandum of Association
File the articles of association, which consist of the deed of appointment of directors, notarized articles of association, and a list of the business’ shareholders at your local Commercial Register through the notary public.
The German government passed the Act on Modernization of Cost Rules thus restructuring the system of notarial and judicial fees. Restructuring of the systems was done to facilitate transparency and economic development.
5. Notify the Local Office of Business and Standards
Startups such as restaurants and brokers must apply for a trading permit. However, if no trading permit is required, the business still has to obtain a trading license from the local Trade Office. The licensing procedure covers registration formalities with the local labor office, the relevant Chamber of Industry and Commerce, the Central Statistical Office, and the Social Security and Federal Health Insurance Office.
6. Register with the Relevant Professional Association
Professional associations are carriers of occupational accident insurance. Registration with the relevant professional association ought to be done within a week after the business has been founded and after the articles of association have been notarized.
7. Notify the Local Labor Office
The local Labor Office must be notified of the establishment of the business, which can be done either over the phone or in writing.
8. Register Employees for Social and Health Insurance
Registration is done at the Social Security Office, which notifies the annuity insurance carrier and the local labor office. The office is also responsible for the collection of payment for annuity, unemployment, and mandatory health insurance.
9. Send the Documentation to the Tax Office
Registration is done not later than a month after the notarization of the Articles of Association. The trade office notifies the tax office of the activities of the business. After notification by the trade office, the tax office sends the business a questionnaire requesting the business’ data.
See also: Top 10 Companies to Work For in Germany
After all the above requirements have been fulfilled, the business can proceed to begin its operations.
Have you started a business in Germany and would like to share your advice with us? Let us know in the comments section below!