In Germany, a sole proprietor is a person who runs a business by themselves. A limited company is an official GmbH run by one or few persons and is one of the most popular forms of company ownership in Germany. After registering your sole proprietorship or limited liability company with your local tax office, you will be issued a tax number which enables you to pay tax and receive a tax return. Despite being a business owner, sole proprietors and limiteds will pay tax at the personal tax rate rather than corporate rate. This is due to the size of your business and number of involved partners.Not all sole proprietors have to pay contributions to the German pension fund, so find out from your local tax office if you will need to do this. You will be able to lodge tax-deductible expenses for your work on things like stationary, travel arrangements, office space and equipment, among other things. Always save your receipts on all purchases of this kind.