Registering a sole proprietorship in Germany: a simple step‑by‑step guide

If you're considering starting a sole proprietorship, you're at the beginning of a new chapter, though you'll face some bureaucratic bumps along the way.

But don't worry, there's no need to fret - with proper planning, setting up your sole proprietorship can be smoother than you imagine. This article takes you step by step through the registration journey, offering helpful tips to ensure you start confidently and well-informed.

A sole trader is a sole proprietorship that operates a trade (Gewerbe). It’s the fastest way to start self‑employment in Germany if you’re selling products or providing commercial services. True to its name, it’s a business structure where one person calls the shots: no co-founders, fewer legal documents, less endless meetings.

Looking to go solo? In Germany, it's the top pick for startups. You can launch as an individual without minimum capital, without notarization, and with relatively little red tape.

“Einzelunternehmen” is the legal umbrella for solo self‑employment. Legally, it refers to any independent activity conducted by a single individual, without co-founders or partners.

• Small trade (Kleingewerbe)

• Registered merchant (eingetragene:r Kaufmann/Kauffrau, e.K.)

• Freelancer (Freiberufler:in)

All three are started by individuals but with different legal frameworks.

If you operate a modest trade - for example, as a craftsperson, online seller, or small shop - you’re typically treated as a small trader.

In practice, that usually means:

• No commercial register entry (no Handelsregister for a non‑merchant small trade),

• No mandatory double‑entry accounts if you are not a merchant under the HGB and you stay below current tax thresholds,

• Cash‑basis accounting (EÜR) is generally sufficient,

• Trade registration (Gewerbeanmeldung) at your local Gewerbeamt,

• Tax registration with your Finanzamt (Fragebogen zur steuerlichen Erfassung),

• Mandatory chamber membership - IHK or HWK (depending on activity),

• Unlimited personal liability.

About thresholds: you can generally use EÜR unless you are a merchant under the commercial code or you exceed current tax triggers (AO §141) - profit over €80,000/year or revenue over €800,000/year - in which case double‑entry bookkeeping and annual accounts apply.

Register your self-employment activity for free & apply for the tax number online with our English native solution.

If your trade must be managed on a commercial basis due to its nature and scale, you must register in the commercial register as a merchant (Ist‑Kaufmann/Kauffrau). Smaller businesses can also opt in voluntarily (Kann‑Kaufmann/Kauffrau) to signal professionalism.

What this entails:

• Handelsregister entry,
• Double‑entry bookkeeping and annual accounts under the HGB,
• Publication obligations for larger entities,
• Mandatory IHK membership,
• Unlimited personal liability.

For growing and B2B‑focused businesses, e.K. can be a strategic step.

If you work in a liberal profession under §18 EStG - e.g., doctor, lawyer, architect, designer, translator, certain IT/technical advisory - you’re a freelancer, not a trader.

This brings several advantages:

• No Gewerbeanmeldung
• No IHK/HWK membership
• No trade tax (Gewerbesteuer)
• No Handelsregister entry
• EÜR generally suffices for profit determination

The Finanzamt confirms whether your activity qualifies as a freelance profession. If you also provide commercial services on the side, you may need a parallel trade registration for that part (and pay trade tax on the trade income).

Many founders combine a small trade with the small‑business VAT rule to keep admin light - but don’t confuse them: small trade describes the trade type and its commercial obligations; the small‑business rule only affects VAT.

The good news upfront: Starting a sole proprietorship is not only affordable but also relatively straightforward. What exactly you need to do, however, depends on whether you want to work commercially or as a freelancer.

To keep things clear, we’ve outlined the key steps for you.

If you want to run a business - for example, selling products, doing crafts, or offering a commercial service - follow these steps:

1. Business registration at the local trade office

The first step leads you to the trade office of your city or municipality (often within the Ordnungsamt, the public order office). There, you apply for business registration. What you need:

• Valid ID or passport
• Current registration certificate (if not visible on the ID)
• Possibly a power of attorney and ID copy if someone else registers for you
• Possibly additional permits or evidence (e.g., police clearance or master craftsman's certificate for regulated professions)

The registration costs typically range between €15 and €60, depending on the municipality.

2. Automatic notification to the tax office (Finanzamt), IHK, and trade association

After registration, your data is automatically forwarded to other entities:

• The Finanzamt will send you the tax registration questionnaire (Fragebogen zur steuerlichen Erfassung). You’ll provide expected revenue/profit, choose your bookkeeping method (often EÜR), and request your tax number (Steuernummer).
• The responsible Chamber of Industry and Commerce (IHK) or Chamber of Crafts (HWK) is informed - membership here is mandatory.
• The relevant statutory accident insurance fund (Berufsgenossenschaft, BG) is also informed. Within a week of founding, you must actively report your self-employment there.

3. Business account & bookkeeping

A separate business account isn't mandatory but highly recommended to keep personal and business finances separate. You should also get simple bookkeeping software, or maintain an Excel spreadsheet if you prefer minimalism. However, it often pays off to consult a tax advisor.

4. Planning to hire? Apply for a company number (Betriebsnummer)

If you plan to hire employees, you'll also need a company number, which you can apply for online through the Federal Employment Agency.

Freelancers - such as architects, doctors, artists, or IT consultants - are exempt from business registration. Instead, everything is handled directly through the tax office:

1. Registration with the German tax office

You fill out the tax registration form, either via the ELSTER government platform, or through our free company creation solution. Here, you state your activity and expected income. After review, the tax office provides:

• Your tax number
• Possibly your VAT ID (if you choose to request one)

Important: Whether your activity gets classified as freelance is officially decided by the tax office. If anything’s unclear, a quick call in advance is always the right idea.

2. Trade association & insurance registration

Freelancers are also required to report their founding to the relevant trade association. For most free professions, this is the Administrative Trade Association (VBG). The association checks if contribution is due (and how much). It will simultaneously offer accident insurance for you and possibly your family members.

If you’re unsure about any tax requirements, it’s best to seek help from an expert advisor - especially if you don’t have much experience with the German tax office.

Starting a sole proprietorship is one of the most cost‑effective ways to begin self‑employment. Still, budget for a few standard items so nothing catches you off‑guard.

Trade registration fees in Germany aren’t unified nationwide; they vary by city/municipality and by channel (online vs in person). Expect roughly €15–€60. A rough “middle” figure often quoted is ~€38.50. Extra charges can sometimes apply for certain required documents (e.g., a police clearance or specific permits for regulated trades).

A quick comparison:

• Berlin (online): €15
• Stuttgart (by mail or email): €62 (additional fees can apply depending on your case)

Tip: Check your local trade office (Gewerbeamt) website in advance for the exact fee and required documents.

If you must (or choose to) register as a registered merchant (eingetragene:r Kaufmann/Kauffrau, e.K.), you’ll need an official entry in the commercial register (Handelsregister)at the local court. Combined notary and court fees are typically in the €150-€300 range, depending on region and complexity.

If you operate a small trade (Kleingewerbe) that doesn’t fall under commercial obligations, no Handelsregister entry is required - you simply register your trade at the Gewerbeamt.

Trades are mandatorily members of the Chamber of Industry and Commerce (IHK) or, for crafts, the Chamber of Crafts (HWK). Contributions are scaled by turnover/profit and vary regionally.

Here are some typical patterns (these should be considered indicative; be sure to check your local chamber):

• Very low annual earnings (e.g., up to ~€5,200): often contribution‑free,
• ~€5,200-€24,500: modest annual contributions from ~€30-€40,
• Above ~€24,500: higher contributions (often from ~€60),
• Registered merchants (e.K.) often pay an additional base fee (commonly starting around ~€150, chamber‑dependent).

A Steuerberater isn’t mandatory, but can be a smart investment to avoid errors and optimize taxes:

• Typical hourly rates: ~€100-€250 (experience/region dependent),
• Simple annual packages for small businesses: ~€1,000-€2,000 (complexity varies).

• Business account: €0-€50/month depending on features and provider
• Insurance: depends on your field (e.g., professional liability, business liability, legal protection, health)
• Domain & hosting: ~€5-€50/month depending on plan
• Company number (Betriebsnummer) via the Federal Employment Agency (Bundesagentur für Arbeit): free (only if you hire staff)

As soon as you begin a self‑employed activity intended to generate profit on an ongoing basis, you must register.

• Sole traders (trades) register at the Gewerbeamt - ideally before you start, whether full‑time or part‑time.
• Freelancers don’t register a trade; they notify the Finanzamt (ideally within four weeks of starting, or earlier).

There’s no fixed “income allowance” that lets you operate a trade without registration. Keep these distinctions in mind:

The Kleinunternehmerregelung (small‑business VAT rule) only affects VAT. It does not remove the obligation to register a trade. If you operate a trade, even part‑time, you must register it at the Gewerbeamt - regardless of revenue.

Small‑business VAT thresholds from 2025:

• Up to €25,000 prior‑year revenue, and
• Prospectively no more than €100,000 in the current year

If you stay within these limits, you don’t charge VAT - but you still register your trade.

Anyone who stays within these limits does not have to declare or pay VAT – but: registering a business is still mandatory.

Occasional, non‑profit‑oriented activity (e.g., selling a used item, occasional craft sales) can qualify as hobby income (Liebhaberei), which is not a trade. But once your activity becomes regular, shows profit intent, or looks professional (website, ads, offers), the Finanzamt will likely classify it as a trade - meaning registration is required even at low turnover.

Bottom line: there’s no “invisibility threshold.” What matters is the nature, regularity, and profit intent of the activity.

A side business is simply a commercial sole proprietorship you run alongside a main activity (employment, studies, retirement). It must also be registered.

What typically defines a side business:

• Your main income still comes from non‑self‑employed work
• You spend fewer hours (e.g., under ~20 per week is a common rule of thumb)
• Your primary focus and social security base remain with your main job

Important: A side business isn’t a special legal classification - it’s an ordinary small trade with smaller scope. When registering, indicate that it’s part‑time; this helps with future social security and tax assessments.

Tax and social security notes:

• Taxes: include side‑business profit in your annual income tax return. Profits above the basic allowance (2025: €11,784) are taxed. Keep proper records or an EÜR even part‑time.
• Health insurance: statutory plans may levy contributions on self‑employment profits even if you’re employed.
• Students: watch semester‑hour limits and income thresholds to maintain student insurance status.
• Informing your employer: many contracts require approval for side activities. Even if not, notifying your employer helps avoid conflicts of interest and working‑time breaches.

Yes! Germany’s administrative services are in the process being digitized under the Online Access Act (Onlinezugangsgesetz, OZG), and many states and municipalities now let you register a trade online around the clock via their portals.

Typically, you’ll authenticate with an eID‑enabled ID card, a BundID account, and sometimes an ELSTER certificate or a state‑portal login. In some towns, the front end is digital but the back‑office review still happens offline, so be prepared for a little processing time.

That said, there’s now an easier route for the tax side - especially if you want everything in plain English.

If you’re a freelancer (Freiberufler:in) or a sole trader (Gewerbetreibende:r), Qonto’s guided flow files your tax registration (Fragebogen zur steuerlichen Erfassung) directly with your local Finanzamt - for free and 100% online. You don’t need to create an ELSTER account, and all explanations are in clear English.

What Qonto covers

• Guided tax registration with the Finanzamt (free), in English, no ELSTER signup required.
• Optional business account with integrated invoicing, receipt capture, and accounting integrations.

Scope to keep in mind

• Freelancers: you do not register a trade; the Qonto flow fully covers your registration with the Finanzamt.
• Sole traders: you still need to complete your trade registration (Gewerbeanmeldung) with your local Gewerbeamt. Qonto handles the tax‑office side; the municipal trade filing remains a separate step you can do on your state/city portal.

Register as self‑employed with Qonto (free)

If you prefer to file directly with your administration, most states now offer online trade registration via their portals. For example:

• North Rhine‑Westphalia (NRW): unified online service used by cities such as Düsseldorf, Köln, Dortmund.
• Berlin: digital filing via the Berlin service portal.
• Bavaria: central authority portal with access to trade registrations.
• Baden‑Württemberg: comprehensive state services including digital trade registration.

Requirements commonly include an eID‑enabled ID card, BundID, and sometimes ELSTER or a state‑specific login. Where online processing isn’t fully rolled out, your application is still submitted digitally and finalized by your local administration.

Please note: In some municipalities or smaller towns, the processing of online registration is not yet fully digital, but involves subsequent review by the administration.